B.C. to outperform Canada
GDP: Economist predicts 3.8 per cent growth for B.C. in 2005
Vibrant construction activity, rising government spending and healthy consumer demand will push B.C.’s economic growth past the Canadian Average this year, letting the province weather the challenges besetting its export sector, economists say.
B.C.’s real gross domestic product will grow by 3.8 per cent in 2005, Credit Union Central of B.C. economist Helmut Pastrick told a business gathering in Vancouver. That’s a more temperate rate than last year’s 4.2- per cent rise but nothing to be gloomy about, he told the Vancouver Board of Trade’s annual outlook conference.
It’s going to be a good year, particularly for our domestic economy,” Pastrick said.
“There’s a fair amount of momentum going forward, even with the drag from exports.”
The consensus among economists is for Canadian GDP growth of three per cent this year, he said. But a swelling loonie and shrinking global growth may trim that number, Pastrick said.
After performing poorly during the 1990’s, B.C. has exceeded Canada in real GDP growth per capita over the past three years, Business Council of B.C. economist Jock Finlayson said.
“That’s an indication to me that perhaps B.C. is on a roll,” Finlayson said. “We’re poised to out-perform the country.”
B.C.’s merchants will enjoy another solid year as retail speding in 2005 rises by an estimated five per cent, down from 6.5 per cent last year, Pastrick said.
While housing starts in B.C. are expected to rise slightly to about 34,000 units this year, non-residential construction is surging ahead, conference speakers said.
Keith Sashaw, president of the Vancouver Regional Construction Association, said to roughly $700 million slated for Olympics-related construction projects has renewed investor confidence.
That investment pales in comparison with the resurgent capital projects such as roads, rapid transit, dams, oil and gas and power, he said.
“When you aggregate it all together, what we’re seeing between now and about 2010 is about $16 billion worth of capital projects,” Sashaw said.
“It’s a great time to be in construction.”
A capital project is any undertaking worth more than $40 million, he added.
The industry should be able to address a shortage of skilled trades by promoting blue-collar careers to youth and to new labour pools such as aboriginals, Sashaw said. Still, 2005 may prove to be the most acute year for skills shortages, he warned.
Conference speakers acknowledged that the high volume of public infrastructure initiatives over the next five years may jeapordize smaller, private-sector projects.
Finlayson cited record drillings in the oil-and-gas sector as another sign of B.C.’s economic health.
“The mining sector, which was in a death spiral over most of the 1990’s, appears to be coming back strongly.” Finlayson said.
The biggest risk for B.C.’s economy this year lies on its trade side, the economists said.
Shadowed by the rising loonie and easing prices for forest products, B.C.’s crucial export sector will, at best, post a bare increase this year, speakers said.
Exports may even impair B.C.’s overall growth by declining in 2005, Pastrick said.
Tourism is expected to post modest growth in 2005 but remains vulnerable to a higher currency, as does the television film industry, Pastrick said.