BCBusiness in partnership with BCEDA
Experts say B.C.’s economy is in for a few more years of steady if not spectacular growth, thanks in large part to northern energy projects
Perhaps we’re a bit spoiled in British Columbia. After a few runs of economic activity that would make some of the most bountiful regions in the world blush, things slowed down some in the past year, and are projected to remain on that trajectory for the foreseeable future.
But even at a slowing pace, B.C. was among the best-performing provinces in terms of real gross domestic product in Canada last year. Much of the same is expected for 2019.
B.C.’s real GDP is projected to grow at a rate of around 2.4 percent in 2019, according to Vancouver-based Central 1 Credit Union – an increase from the 2.2 percent the province saw last year. Some prognosticators, like the Ottawa-based Conference Board of Canada, are slightly more bullish, estimating that B.C. will see a real GDP increase of 2.5 percent – a rate the think tank projects will be eclipsed only by Atlantic provinces Newfoundland and Prince Edward Island.
While that’s a far cry from the recent past, like 2017, when, mostly due to a red-hot housing market, B.C. posted a real GDP growth rate of 3.8 percent, the 2019 numbers are still some of the best in the country. By comparison, Canada as a whole is slated to post a growth rate around 1.7 percent, according to Central 1.
“Key segments of service exports will help underpin the province’s still respectable economic expansion: tourism, international transportation services, film and television production, and an array of other business services will all continue to grow at a solid clip,” the B.C. Business Council predicted in its fourth quarter 2018 B.C.Economic Review and Outlook. Aided by a favourable exchange rate, tourism revenue grew 41.3 percent in the decade from 2007 to 2017, when receipts reached $18.4 billion, and the number of visitors grew another 6.4 percent, to 6.1 million, in 2018.
But the real driver of provincial growth over the next few years will be energy investment in the North, centred around the LNG Canada liquefied natural gas terminal in Kitimat and associated pipeline construction and natural gas drilling, authors KenPeacock and David Williams wrote. Collectively budgeted at $40 billion, these projects represent the largest private-sector capital project in Canadian history.
ENERGY FROM THE NORTH
Indeed, Jobs, Trade and Technology Minister Bruce Ralston thinks there are reasons to celebrate B.C.’s economy right now, even in the midst of a real estate downturn. “Certainly [residential] construction activity is important,” Ralston concedes. “But we have a very robust program of public infrastructure [building], which is set to roll out in the next three years, and has a ‘priming the pump’ effect on the rest of the economy.”
Ralston points out transportation as being one of the main beneficiaries of that spending. “Whether it’s assisting the Prince Rupert Port Authority, whether it’s clearing bottlenecks to Vancouver or Roberts Bank, it helps the trade network, the rail network, to drive our exports.… In order to be competitive we have to move from local and regional economies to international economies. So I see the role of trade and exports being an important part of the business plan for more and more businesses.”
The area with a particularly rosy outlook is naturally northern B.C. “We attracted the largest private sector investment in the history of the province,” Ralston notes of LNG Canada, whose proponents’ final investment decision last fall will be felt across the region in the coming years, from Dawson Creek to Kitimat. “In central and northern B.C. they’re very optimistic about their prospects in ways they haven’t been in decades,” he says.
Central 1’s Hobden supports that notion. “If you had to pick one region that’s counter to the current trends in the province, [the North] would be it,”says Hobden. “It’s not booming, but it’s on an upswing, it’s accelerating.” He points out that while the big resource developments do come with concerns, they are a boon for an economy that needs them.
“In an ideal world, we’d have a much larger, diversified economy. We don’t. Those mega-projects, if they don’t go, they’re missed. And if they do go, they’re noticeable.”