Amid an escalating U.S.-China trade war, a decelerating global economy, and a steadily diminishing B.C. budget surplus, the provincial government recently published its revised economic outlook. As usual, the picture is mixed, although with more downside than upside risks.
Drawing on the government’s updated forecast and other recent data, below I list a few positive features of today’s B.C. economy. A follow-up column will look at areas where the economic news is far less cheerful.
In B.C., the biggest driver of economic growth tends to be the expanding population. More people mean a greater demand for goods, services and housing. Population growth in B.C. is running at 1.4 per cent, well above the figure for Canada. That translates into another 65,000 residents every year. The bulk of this reflects international immigration, which stands at around 45,000 annually. On top of that are thousands more non-permanent immigrants who are in the province on work and study visas.
There is a caveat. What ultimately matters for prosperity is how much GDP the economy produces relative to the size of the population. Adding more warm bodies doesn’t do much to boost prosperity, if GDP and real incomes are barely growing when measured on a per person basis – as is presently the case for Canada.
In the past two years, B.C. has experienced slight gains in both per capita GDP and average incomes, adjusted for inflation. But the gains are considerably smaller than the numbers for total GDP growth would suggest.
A notable bright spot for B.C. is non-residential construction. The value of non-residential building permits hit a record $5.1 billion last year, and a further sizable jump is on track for 2019.
Some examples of significant construction investments are LNG Canada’s huge new project in Kitimat; B.C. Hydro’s Site C dam and reservoir; the expansion and rebuilding of hospitals in several communities; major capital projects underway at the Vancouver and Prince Rupert ports and Vancouver International Airport; and new investments in transportation infrastructure.
At the same time, B.C.’s job market has also been healthy. So far in 2019, employment has been growing at an annualized rate of more than three per cent. At 4.4 per cent, B.C.’s unemployment rate is the lowest in the country. More recently, there has been an easing in the pace of job creation. This may signal weaker economic conditions going forward.
Finally, business has been brisk in several industry sectors.
Tourism, which accounts for almost six per cent of GDP, has been booming, though there are signs this year that that activity is levelling off. As economic growth slows in the U.S., China and Europe, B.C. tourism operators may have less reason to smile.
The advanced technology sector (representing seven per cent of provincial GDP and 110,000 direct jobs) is growing and continues to show strength in several sub-sectors, notably clean technology, digital services and other IT-producing industries.
The film and television industry is another growth star, with revenues expected to reach $4 billion in 2019. It’s operating at full capacity, which may limit the prospects for further growth in the near-term.
Agri-food is another growth engine. The value of B.C. agri-food exports has increased sharply in recent years. And the medium-term outlook is positive, notwithstanding restrictions on imports of some Canadian agricultural commodities recently imposed by China.
Add it all up, and there is evidence that the province’s financial health will continue to chug along even as the global backdrop becomes less favourable. But B.C. faces several home-grown problems that are weighing on the economy. I will explore some of these in my next column.
Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia