The British Columbia economy remains on a healthy growth track, supported by rising exports, substantial increases in consumer spending, and high levels of activity in the housing sector.
- The outlook for economic growth in BC this year has again been revised upwards. Real GDP is now forecast to expand by more than 3% for the fourth consecutive year.
- By 2018, however, growth is expected to downshift to a more sustainable pace near 2.3% as consumer spending comes off the boil and export growth moderates.
- BC’s job market has been on fire for the past two years. So far 2017 has seen another hefty increase in the number of people working. Total employment in BC is poised to grow by a very healthy 3.5% this year, although in recent months labour demand appears to have slowed.
- BC’s export sector is benefitting from a sunnier global economic backdrop. International merchandise exports continue to make headway, in part due to stronger commodity prices. Coal and natural gas have seen the largest export gains.
- Robust consumer spending has made a big contribution to BC’s impressive economic growth performance. Job growth, rising incomes, still low interest rates, a booming tourism sector, and high-levels of spending on housing-related goods and services have all contributed to strong gains in retail sales and in overall consumer outlays.
- Slightly higher interest rates and a tightening of mortgage lending requirements for banks will dampen housing activity in BC in 2018-19. We do not anticipate a major market correction, however, notwithstanding eye-watering housing prices in urban areas of the province.
- While we expect BC’s growth trajectory to moderate in 2018-19, the momentum the BC economy has enjoyed over the past three years means there is some upside risk to the forecast. The key near-term downside risk is the future of NAFTA and rising American protectionism.