B.C. economy to grow 2% in 2012 and 2013: Scotiabank's Warren Jestin
VANCOUVER, Nov. 27, 2012 /CNW/ - British Columbia's output is anticipated to grow 2% in 2012 and 2013, keeping pace with the national average, Warren Jestin, Scotiabank's Senior Vice President and Chief Economist, said today.
"The province should remain a healthy performer," added Mr. Jestin, in an address to Vancouver business leaders at Scotiabank Theatre. "Domestic demand from consumer spending and business investment - particularly in the mining sector - is leading the way."
While home sales have dropped sharply, with a year-to-date decline of 11% province-wide and 22% in Vancouver as of October, consumer demand - driven by continuing employment and earnings gains - has supported 3.3% year-to-date retail sales growth as of September, he said.
"The most pronounced home sale price declines were in Vancouver, where the reduction in high-priced housing sales has contributed to a year-to-date average price decline of 7% as of October," said Mr. Jestin. "Ongoing housing weakness is likely to cut into consumer spending, retail sales and employment in 2013."
Historically high mineral prices have supported continued mining sector development, added Mr. Jestin. Although Natural Resources Canada forecasts have been trimmed, they expect that annual mineral exploration expenditures will increase by 17% in 2012, reflecting expectations of medium-term strength in global demand.
Also, in spite of the economic slowdown in China and Europe that has resulted in a decline in the value of wood product exports of 11% and 16% respectively since the beginning of the year, Mr. Jestin said total B.C. wood product exports have increased by 6% year-to-date as of September. The overall increase is based on impressive year-to-date growth in wood product exports to the U.S. of 26%, reflecting its nascent housing construction recovery.
"Looking ahead, British Columbia's economy may struggle to maintain this momentum as government retrenchment, a strong dollar and weak global demand limit output growth," said Mr. Jestin. "The greatest risk to the forecast is a more pronounced and extended downturn in the housing market, which would negatively impact growth and employment."
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