OTTAWA, Dec. 8, 2016 /CNW/ - British Columbia's economy has been firing on all cylinders this year with real GDP forecast to rise by 3.4 per cent. Next year, the slowing housing market will weigh on the province's economy and a more moderate increase of 2.4 per cent in real GDP is anticipated, according to The Conference Board of Canada's Provincial Outlook: Autumn 2016.
"The housing sector has been one of the main drivers of growth in British Columbia's economy for the last couple of years. As a result of the implementation of a tax on foreign home buyers and affordability issues, housing starts will slow down in 2017 and the province's economic growth will fall closer to the national average," said Marie-Christine Bernard, Associate Director, Provincial Forecast, The Conference Board of Canada.
- Following 3.4 per cent growth in real GDP in 2016, British Columbia's economy will tie Ontario for the top spot at 2.4 per cent in 2017.
- Housing starts are expected to decline by 13.3 per cent in 2017 and investment in residential construction will drop by 3.9 per cent.
- With the exception of Newfoundland and Labrador, all provinces will see their economy expand next year.
Housing starts are on track to expand by more than 30 per cent this year and then decline by 13.3 per cent in 2017. Similarly, investment in residential construction is forecast to decline by 3.9 per cent next year, in the wake of a gain of more than 18 per cent in 2016. While the average price of a detached home in Greater Vancouver has dropped since the new foreign buyer tax was put in place, prices remain well above the $1 million mark, leaving the purchase of a new home out of reach for many families.
Housing is not the only sector of the B.C. economy that will cool over the near term. Difficulty in obtaining both federal and provincial government approval for projects and a still low price environment are the main factors behind the difficulties in the mining sector. Following an anticipated 1.6 per cent drop in production in 2016, the mining sector is not expected to expand next year.
A bright spot in the B.C. economy is the manufacturing sector which has been performing well all year and is expected to continue over the near term.
Growth in employment is expected to ease from 3.0 per cent this year to 1.7 per cent in 2017. The softer job creation expected in the year ahead will weigh on retail sales, where growth is forecast to drop from a gain of close to 7 per cent in 2016 to 3.9 per cent in the new year.
The Provincial Outlook: Autumn 2016 is available via the Conference Board's e-Library.
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SOURCE Conference Board of Canada
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