Brighter days ahead for B.C. economy: Central 1 forecast
The slow economic growth that British Columbia faced in 2012 will shift to a higher gear later in 2013 and beyond, says a new economic forecast by Central 1 Credit Union.
“The U.S. is expected to gain speed during 2014 to 2017, which will help lift B.C.’s economy to higher growth rates after 2013,” said Helmut Pastrick, chief economist for Central 1, the trade association and financial facility for credit unions in British Columbia and Ontario.
Domestic developments will also shape the province’s economy and in particular, the reversion to the provincial sales tax (PST) system from the harmonized sales tax (HST) will lift consumer spending and provide some inflation relief, though this will add business costs.
Real GDP growth is forecast to inch ahead by 2.2 per cent in 2013, following 2012’s slowdown to 1.9 per cent, before accelerating to 2.8 per cent in 2014 and averaging 3.7 per cent in 2015 to 2017, the report says.
“The housing slowdown this year will reduce residential investment,” Pastrick said. “The mild correction in the housing market will pull down economic growth in 2013 and 2014. Fewer housing starts in 2013 are a near certainty in an environment of declining housing sales and prices.”
The unemployment rate will decline fairly steadily and fall below 5 per cent in 2016, averaging 4 per cent in 2017, which will result in pressure for higher wages, Pastrick said.
- Another year of moderate growth in 2013, higher growth prospects in 2014 through 2017
- U.S. economy poised to break out of its subpar recovery lifting B.C. exports
- Business investment spending will kick into higher gear after 2014
- Declining government spending will pull down growth
- Housing slowdown in 2013 will reduce residential investment
- Consumer spending receives lift from switch to PST, but adds costs to businesses
- Export-oriented industries to lead growth upturn
- Construction industry tops growth ladder among domestic industries, public administration slowest
- Low population growth until later in forecast
- Labour market tightens, unemployment rate below 4 per cent in 2017