Only four provinces are forecast to see real GDP growth above 2% this year: British Columbia, Ontario, Manitoba and P.E.I, says the Conference Board of Canada’s Provincial Outlook: Spring 2016 report.
Out of that group, B.C. is expected to come out on top, with its housing sector likely to be one of the main drivers of its economic growth. The report predicts the province will continue to lead the country in terms of growth in 2016 and 2017, with gains in real GDP of 3% in both years.
“British Columbia’s economy has been growing by 3% since 2014 and this […] is expected to continue for the foreseeable future,” says Marie-Christine Bernard, associate director of Provincial Forecast. “Conditions remain difficult in the mining sector but strength in forestry, construction, transportation and the real estate industry put the province in [top] position.”
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However, since housing remains one of the main drivers of growth in B.C., one potential downside is housing starts are forecast to retreat in 2017, even though they’ll remain at high levels and continue to support economic activity. Further, rapid price growth has increased the risk of a real estate correction in the region.
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The ongoing strength in the province’s housing market is due to a number of factors. These include: low interest rates, which aren’t expected to increase until 2017; an influx of job seekers coming from the rest of Canada, including from Alberta; and interest from foreign buyers.
B.C’s manufacturing sector is also strong because it’s benefiting from the weaker Canadian dollar and the Seaspan Shipyards’ multi-billion-dollar contract to build non-combat vessels. The loonie is expected to appreciate somewhat over the near term, it will remain at competitive levels and support the province.
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Overall, the strength of B.C.’s economy may lead to solid increases in employment; close to 50,000 jobs are expected to be created in the province throughout 2016 and 2017.