Vancouver's economic outlook looks good—with one caveat

A new Conference Board of Canada report says Vancouver can expect growth over the next few years, with a warning

The good news: Vancouver’s economy is improving, a trend that’s expected to accelerate further in 2015. The (potentially) bad news: the dark shadow looming over Vancouver’s chapter of the Conference Board of Canada’s latest Metropolitan Outlook, released Monday—if investments in LNG falter, so too could the Board’s favourable forecast for Canada’s westernmost province.

One of Vancouver’s biggest winners, according to the report, will be the manufacturing sector, where output will increase by 4.2 per cent this year and 5.9 per cent next. This is thanks, in part, to a $3.3-billion contract awarded to Vancouver Shipyards by the federal government last year to build non-combat vessels.

Investment spending, on the other hand, has been wanting in 2014, declining 1.1 per cent, though the tides are expected to turn next year; the report says Vancouver will see investment spending go up 2.3 per cent, largely on the back of LNG.

Which brings us back to the potential bad news—the Conference Board’s caveat. “If investments in the province’s burgeoning LNG industry do not proceed as expected, economic growth in Vancouver could be lower than forecast in the medium term,” the report says.

This warning comes just weeks after Malaysian oil and gas producer Petronas threatened to abandon its planned $10-billion investment in an LNG pipeline and terminal, of which it presently owns 62 per cent. The reason? Concerns over the B.C.’s impending LNG tax, expected to be tabled Tuesday, which, at seven per cent on profits from LNG exports, the company says is too high.

Still, the takeaway from Monday’s report should be considered more encouraging than not: “Vancouver’s economic outlook is solid,” it concludes, which “will lift employment by 2.4 per cent in 2014 and by another 1.9 per cent in 2015 as the labour market recovers from a 0.1 per cent drop in 2013.”