Photo: Patrick Doheny/Flickr
The BC economy is poised to experience “modest” growth through 2021 against the backdrop of a cooling provincial housing segment.
That’s the scenario put forward in one financial-services company’s latest forecast.
In Central 1’s BC Economic Outlook Report 2018 – 2021, the credit union projects the province’s GDP will increase by 2.9 per cent this year, down from the 3.9 per cent growth recorded last year.
For 2019 and 2020, Central 1 anticipates tamer annual gains of 2.6 and 2.8 per cent, respectively, and then in 2021 an expansion of 2.3 per cent.
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“I think the key here is the economy itself is actually quite strong,” Bryan Yu, Central 1’s deputy chief economist, tells Livabl. “The housing cooling itself is not a reflection of the economy.”
If it were, he suggests, the downturn would have been sharper and more rapid. “The housing market has slowed largely due to policy factors,” he adds.
Tighter federal lending rules were implemented at the start of the year and have eaten away at housing demand. They have made it tougher for many homebuyers to qualify for mortgages, especially in pricey local markets like Vancouver.
“It’s the ability to obtain financing which is the problem for a lot of individuals,” says Yu.
So the province likely won’t be able to count on residential construction and investment levels seen in recent years to support economic growth.
But other segments are improving and should mitigate some of the impacts from the pullback, the Central 1 report suggests.
“We’re sort of rotating away from this household growth… and moving it more towards business investment,” Yu explains.
Exports are also forecast to rise steadily, with service exports, which include tourism-related services, showing particular strength. However, there are downside risks on the export front.
“The export environment faces significant uncertainty given an increase in protectionism emanating from south of the border,” the report reads.
“Expansion of trade tariffs on Canada and more broadly would slow global trade, economic growth and commodity prices.”