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British Columbia
Economic Outlook
Carol Frketich, BC Regional Economist
British Columbia Overview
 Strong Domestic Economy
 Record Low Unemployment
 Real Income Growth
 Low Inflation & Declining Interest Rates
 Global demand for commodities
Western Canada Leads Economic Growth
Annual growth in real GDP
5%
Canada
4.5%
4%
3.7%
3.1%
3.1%
3%
2%
BC
3.3%
2.8%
3.1%
2.7%
3.2%
2.9%
2.7%
2.4%
2.3%
1.9%
1%
0%
2003
2004
2005
Sources: Statistics Canada, CMHC forecast
2006
2007
2008F
2009F
BC’s Domestic Economy is Strong
 Investment
 Infrastructure – 228 major
projects (over $20 million)
started in the Lower
Mainland alone – estimated
value $53 billion
 RAV line - $1.9 billion
 Vancouver airport expansion -
$1.8 billion
 Vancouver convention centre -
$883 million
 Golden Ears Bridge - $650
million
M&E investment - Mining
 2007 Investment in
mining exploration
reached a record $416
million
 Overall, there were 472
exploration stage
projects in BC in 2007.
# Wells Drilled
1600
1400
1200
1000
 Oil and gas rights
reached over $1billion
in 2007, shattering
previous record of $647
million set in 2003.
Source: Ministry of Energy, Mines and Petroleum
Resources
800
600
400
200
0
00 01 02 03 04 05 06 07
Residential Investment adds to growth
Total BC Housing Starts, units
Single
Multiple-unit
50,000
40,000
30,000
20,000
10,000
0
1988
Source: CMHC Forecast
1993
1998
2003
2008F
Renovation and New Construction
$ billions
10
New Construction
$8.8 billion in 2008
8
6
4
Renovation
$7.0 billion in 2008
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
F
20
08
F
2
Sources: Statistics Canada historical, Canada Mortgage and Housing Corporation forecast (F)
BC’s Domestic Economy is Strong
 Investment
 Infrastructure
 Machinery and equipment
 Residential
 Labour Markets
 Growth industries
BC’s Tight Labour Market
Annual increase in employment,
thousands of jobs
Unemployment rate, per cent
10
80
60
8
Ontario
40
6
20
BC
4
0
Alberta
-20
2003
2004
2005
2006
2007
Source: Statistics Canada
2008F
2009F
2
2003
2004
2005
2006
2007
2008
Top Ten BC Growth Industries
Industry
Growth
Growth
2003-2006 1997-03
Construction – other
15.0
0.7
Transportation engineering construction
14.9
-4.3
Non-residential building construction
14.7
-4.1
Residential building construction
12.7
1.7
Meat product manufacturing
11.9
2.9
Primary & fabricated metal product mfg.
11.2
3.0
Warehousing & storage
10.2
2.4
Computer & peripheral equipment mfg.
9.9
18.4
Cement & concrete product mfg.
9.5
-2.1
Electric power engineering construction
9.4
6.1
Source: Statistics Canada, BC Business Council
BC’s Domestic Economy is Strong
 Investment
 Infrastructure
 Machinery and equipment
 Residential
 Labour Markets
 Growth industries
 Retail sector
 Consumer confidence
 Population growth
Consumer Confidence Trending Lower
Consumer Confidence, 1991=100
130
120
110
Energy
Price Spike
100
90
2002
2003
2004
Source: Conference Board of Canada
2005
US Sub-prime
concerns surface
2006
2007
2008
Migration & Population Growth
People
60,000
Net International
40,000
20,000
Net Interprovincial
0
-20,000
1993
1995
1997
Sources: Statistics Canada and CMHC forecast
1999
2001
2003
2005
2007
2009F
Trade Sector Challenges & Opportunities
 High C$
 Port of Prince Rupert
 US housing slump  High Commodity prices
Thousands of units, SAAR
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: U.S. Bureau of the Census
Commodity Prices Surged
2002
2007
Agricultural Products
Non-Precious Metals and Minerals
Precious Metals
Energy
Forest Products
0
100
200
300
400
US$ index; 1997 = 100; annual average
Source: TD Economics
500
Inflation in Canada Trending Lower
Consumer Price Inflation, per cent
5
Canada
Total CPI
4
Canada
Core CPI
3
2
1
0
2003
2004
Source: Bank of Canada
2005
2006
2007
2008
Risks to the Outlook
BC Key Economic Indicators
Real GDP (% change)
Net Migration
Employment (% change)
2005
2006
4.5
3.3
2007 2008F
3.1
2.9
48,44 48,276 54,952 56,800
4
3.3
3.1
3.2
2.6
YTD
2009F
na
3.2
na
56,300
2.6
2.0
Unemp. Rate (%)
5.9
4.8
4.2
4.2
4.2
4.3
Retail Sales (% change)
4.4
6.8
7.2
na
4.2
na
Avg weekly wages (%
change)
$ Exports (% change)
2.6
3.1
3.0
na
3.1
na
10.2
-2.0
-6.0
na
-9.7
na
Sources: Statistics Canada, CMHC Housing Market Outlook Q2 2008