BC’s housing market won’t fuel economic growth: credit union

VANCOUVER (NEWS 1130) – A credit union in BC says the province’s economy will remain strong through 2019, but Metro Vancouver’s once-sizzling housing market will no longer fuel the growth.

The latest forecast from the Central 1 Credit Union says the total amount of goods and services produced in BC will climb by 2.3 per cent in 2017.

Report highlights

• After last year’s 3.8 per cent expansion, GDP growth will dip to 2.3 per cent this year, before rebounding to 2.7 per cent in 2018 and 2019
• Provincial growth will continue to fare well compared to other provinces and exceed the national growth rate over the period
• Housing starts decline 13 per cent in 2017, following a 33 per cent surge in 2016
• Employment’s modest growth pace will lower the unemployment rate to near five per cent by the end of 2019, contributing to upward pressure on wages
• A low Canadian dollar will continue to drive goods and services exports higher
• The ongoing softwood lumber trade negotiations are a risk for the sector and will likely drag on growth after a moderate 2016 performance

 

Central 1 says BC’s economic growth this year will fall far short of the 3.8 per cent expansion recorded in 2016, although growth is expected to rebound by almost half of a percentage point to 2.7 per cent in 2018 and 2019.

It says a low Canadian dollar will help the export of goods and services but stronger commodity prices will push up overall price levels, as consumer prices edge up about two per cent this year and 1.8 per cent in the following two years.

The forecast warns ongoing softwood lumber trade talks and the risk of tariffs could drag growth, and low global gas prices will keep a lid on any major liquefied natural gas projects in the province until at least the 2020s.

After a 33 per cent surge in 2016, housing starts in BC are expected to tumble by 13 per cent this year, but Central 1 predicts the drop will be cushioned by other economic factors. “Household demand will remain the backbone of economic growth, but we will see further rotation towards government spending, trade and an increase in investment, as the contribution from the housing sector diminishes,” explains Bryan Yu, the credit union’s senior economist.

Government spending and higher commodity prices are expected to pick up the slack, Yu says, although there could be a chill from potential softwood lumber tariffs.