A British Columbia credit union says the province’s economy will remain strong through 2019, but Metro Vancouver’s once-sizzling housing market will no longer fuel the growth.
The latest forecast from the Central 1 Credit Union says the total amount of goods and services produced in B.C. will climb by 2.3% in 2017.
Central 1 says B.C.’s economic growth this year will fall far short of the 3.8% expansion recorded in 2016, although growth is expected to rebound by almost half of a percentage point to 2.7% in 2018 and 2019.
It says a low Canadian dollar will help the export of goods and services but stronger commodity prices will push up overall price levels, as consumer prices edge up about 2% cent this year and 1.8% in the following two years.
The forecast warns ongoing softwood lumber trade talks and the risk of tariffs could drag growth, and low global gas prices will keep a lid on any major liquefied natural gas projects in the province until at least the 2020s.
After a 33% surge in 2016, housing starts in B.C. are expected to tumble by 13% this year, but Central 1 predicts the drop will be cushioned by other economic factors.
“Household demand will remain the backbone of economic growth, but we will see further rotation towards government spending, trade and an increase in investment, as the contribution from the housing sector diminishes,” says Bryan Yu, the credit union’s senior economist.
Government spending and higher commodity prices are expected to pick up the slack, Yu says, although there could be a chill from potential softwood lumber tariffs.