For the third year in a row, British Columbia will be Canada’s bright spot in terms of economic growth this year, according to RBC’s quarterly economic outlook report released June 12.
B.C. will see its economy grow 3% in 2017, RBC said, which is higher than the Canadian average of 2.6% and up from the 1.9% previously forecast for the province in the bank’s last quarterly report. RBC said the reason for the more optimistic outlook is that not only has B.C.’s economy shown little evidence of a slowdown despite the 40% downturn in Vancouver’s housing market last year, but it appears that downturn has run its course.
“Our view now is that the market will continue to recover gradually through the remainder of the year,” RBC said in the report. “This means that we no longer expect the housing sector to weigh on economic growth as much as we thought previously.
“Still, we see clouds forming over the B.C. housing market again next year when we anticipate interest rates beginning to rise.”
Because of this uncertainty for housing due to the possibility of a rate hike, B.C.’s economic growth is expected to moderate to 1.8% in 2018, which is lower than the average forecast growth for all of Canada next year of 2.1%.
A risk to the B.C. economy this year is the fact that the coalition government between the NDP and Green parties spells uncertainty for two huge projects in the province: the $8.3 billion Site C dam and the $7.4 billion Trans Mountain pipeline expansion. The GreeNDP partnership has already stated it plans to ask for further regulatory review of Site C and that it will use “every tool available” to block Trans Mountain.
As well, uncertainty in the softwood lumber conflict with the United States poses a very real threat to forestry-dependent communities in the province.
Strengths in the B.C. economy include a strong labour market – employment growth of 3.6% is forecast – and sales for provincial retailers, wholesalers, restaurants and manufacturers.
Alberta is expected to come in in second place with 2.9% growth this year, followed by Ontario at 2.7%