BC Business
B.C. economy
Amid a strong economic recovery, falling non-private residential investment is one of several weak spots for B.C., a new report warns.
With the dark days of 2020 well behind us, B.C.’s investment climate keeps getting warmer.
The latest edition of BC Check-Up: Invest, an annual report by the Chartered Professional Accountants of British Columbia (CPABC), delivers that good news. The report, which evaluates the province as a place to invest by weighing economic indicators such as housing starts, business activity and capital spending on major projects, also offers a few warnings.
Since the COVID-induced recession reached its low point in the summer of 2020, B.C. has enjoyed one of the strongest economic recoveries in Canada, CPABC notes. One sign of a turnaround is the number of active businesses in the province, which now tops pre-pandemic levels. The total stood at 152,048 this past November, up 2.3 percent from January 2020.
When it comes to industries, though, the pandemic has created winners and losers. Information and culture led the way with 2,052 businesses as of November, an 8.7-percent jump compared to January 2020. Close behind was professional services (up 7 percent), followed by food manufacturing (up 5.1 percent).
As the report points out, businesses that rely on human interaction still face a struggle. One of the biggest casualties is tourism, whose total active businesses fell 1.9 percent during the same period, to 12,867.
“It will be important to help industries still facing challenges through skills training for displaced workers and business support,” said Lori Mathison, president and CEO of CPABC, in a release.
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Mathison went on to highlight an industry that has pulled through the pandemic better than most: “Another sign of investment recovery is that the number of housing starts reached a new record in 2021, largely driven by rising prices and demand.”
Throughout B.C. last year, construction began on 43,360 housing units, a slight increase over the previous high in 2019 and 24.3 percent more than in 2020. Almost 80 percent of those properties were attached units such as condos and townhomes, the CPABC report observes.
Major projects like the Broadway Subway Project and LNG Canada were another bright spot in 2021. Combined, the value of those undertakings grew to $394.3 billion in the third quarter, a year-over-year gain of 6.4 percent.
The picture is less glowing for private non-residential investment, which spans maintenance, upgrades and construction. That category shrank to $4.4 billion last year, from $5 billion in 2020 and $7 billion in 2019, according to CPABC.
Meanwhile, inflation-adjusted gross domestic product per person remains sluggish. CPABC forecasts an average of $53,623 for 2021, up 4.1 percent from the previous year but just below $53,983 for 2019. “While GDP per person is anticipated to surpass pre-pandemic levels in 2022, the COVID-19 pandemic and resulting recession is expected to permanently reduce our provincial GDP outlook,” the report cautions.
On the other hand, B.C.’s net debt-to-GDP ratio keeps rising. That number will climb to 22.8 percent in 2024-25, the provincial government projects, versus 17.8 percent in 2021-22.
Although investment activity has picked up dramatically in the past 18 months, Mathison stressed that challenges remain. “Given the sustained decline in private non-residential investment, it will be important to target policies that encourage and attract business investment to help boost our productivity and incomes,” she said. “It will also be important to create a plan to return to balanced budgets and control debt, particularly as the Bank of Canada has begun to increase interest rates.”