The BC economy remains healthy, with nearly all sectors contributing to the ongoing expansion. The momentum from last year is carrying forward more so than previously anticipated, prompting us to adjust our 2017 forecast upwards.
- The outlook for the BC economy has been revised upwards from our first quarter projection, owing to sustained strength in the job market, robust consumer spending and a slight improvement in the global economic setting.
- That said, economic growth in BC is still expected to ease from the blistering 3.7% pace recorded in 2016 to 2.7% this year and 2.5% in 2018.
- The residential real estate sector remains hot in BC. While measures designed to temper demand (the Foreign Buyers' Tax and tighter mortgage lending rules) did have some temporary effect, sales remain at an elevated level, and healthy demand is pushing prices up, particularly in the apartment and condo segment.
- Most of BC’s export industries are expanding, aided in part by the still-low Loonie.
- Given the strength and momentum the BC economy has enjoyed over the past three years, there is some upside risk to our revised forecast. In particular, additional infrastructure and other large projects could provide an extra economic boost over the next two years.
- There is also downside risk to the outlook. The most significant is the future path of Canadian interest rates. Although we expect the Bank of Canada to move slowly and cautiously, BC consumers are highly leveraged, and rising interest rates will increase mortgage and debt servicing costs. BC's wildfires also pose a growing risk to the economic outlook.