TORONTO, Sept. 10, 2012 /CNW/ - British Columbia's economic performance
has been mostly positive this year, with encouraging signs developing
in key export markets and vibrant activity in domestic sectors,
according to the latest RBC Economics Provincial Outlook. Looking ahead, RBC forecasts that softness in the provincial trade
sector will be the key factor in slowing real GDP growth to 2.3 per
cent this year, down from 2.9 per cent in 2011, and slightly stronger
than the national average of 2.1 per cent for 2012.
"Year-to-date employment in British Columbia grew at one of the fastest
rates in Canada and retail sales outpaced the national average," said
Craig Wright, senior vice-president and chief economist, RBC. "At the
same time, sales of new motor vehicles increased by nearly 10 per cent
and home building activity remained strong. More plainly put: B.C.'s
economic indicators are largely positive."
RBC notes that, despite sky-high home prices in the Vancouver area
market, the number of housing units under construction surged by 17 per
cent year-over-year in the first seven months of 2012. The market for
existing homes, however, showed signs of cooling; resales fell
significantly in the Vancouver market where much of the weakness was
concentrated, while resales in the rest of province were virtually
flat. RBC anticipates that residential investment will only slightly
contribute to economic growth in B.C. in 2012.
In 2012, U.S. housing construction finally entered the early stages of
recovery, which augured well for B.C.'s exports. There was a 17 per
cent increase in softwood lumber exports to the U.S. in the first half
of 2012 - welcome news in the province following dramatic declines over
the past eight years. Still, RBC notes that lumber exports to the U.S.
have a long way to go to return to their pre-U.S. housing crash levels.
"Unfortunately, the breakthrough in B.C.'s lumber exports will be almost
entirely offset by setbacks in other commodities and markets," added
After a spectacular rise for six straight years, provincial lumber
exports to China fell this year. At the same time, natural gas exports
to the U.S. dropped significantly, and exports to Europe were
undermined by that continent's economic woes. Overall, B.C.'s total
merchandise exports were little changed so far this year, while
merchandise imports rose sharply, by more than eight per cent,
indicating that the trade sector is likely to be a drag on provincial
growth once again.
Next year, RBC notes that British Columbia's economy will experience
increasing benefits from two major projects that are underway in the
province: the federal government's $8 billion order with
Vancouver-based Seaspan Marine for seven non-combat ships and the $3.3
billion modernization of Rio Tinto's aluminum smelter in Kitimat.
Provincial real GDP growth is expected to climb to 2.7 per cent in
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 7 a.m. ET today at rbc.com/economics/market/pdf/provfcst.pdf.
For further information:
Craig Wright, RBC Economics Research, 416-974-7457
Robert Hogue, RBC Economics Research, (416) 974-6192
Elyse Lalonde, Corporate Communications, RBC Capital Markets, 416-842-5635