BC to see fastest growth, Quebec to follow: report
- December 7, 2015
In yet another report about economic growth for Canada's provinces, BC is expected to post more than 3 per cent growth in the next two years followed by more modest growth by Quebec of 2.1 per cent in 2016 and 3 per cent in 2017, according to the latest figures in the Conference Board of Canada's latest Provincial Outlook.
British Columbia will be the only province expected to post growth of better than 3 per cent over the next two years. According to The Conference Board of Canada's latest Provincial Outlook, real GDP is forecast to grow 3.1 per cent this year and 3.6 per cent in 2016.
"The bright outlook for the province is largely thanks to the construction industry. A major investment in a LNG project could get underway if all conditions are met," says Marie-Christine Bernard, associate pirector, provincial forecast. "This would be a game changer for the province, providing a considerable boost to the economy."
If all conditions are met and regulatory approval is granted, construction on the Petronas $36 billion dollar liquefied natural gas terminal could start as early as next year. Beyond the resource sector, the province's manufacturing, services and broader construction industries are all expected to contribute to growth. Vancouver's real estate market continues to soar as local and foreign buyers fuel price hikes and transactions in the single-detached home segment. The strength in the housing market is boosting the finance, insurance, and real estate industry, which will grow by 6 per cent this year and 3.3 per cent in 2016. The dynamic housing market is also leading to higher sales of durable goods, such as home appliances and garden equipment. Retail sales are poised to increase by 6.6 per cent in 2015, and growth is expected to remain above its 20-year average until at least 2019. Also supporting the fast pace of consumer spending is the improving labour market. Job creation should be strong again in 2016 and 2017.
Manufacturing is expected to provide a solid base for the provincial economy over the next few years. Wood product manufacturing will get a boost this year from healthy U.S. home construction, while production of the non-combat vessels for the federal government is expected to ramp-up at the Seaspan Shipyards in Vancouver. The province's manufacturing sector is poised to grow by 4.2 per cent in 2015 and will average 2 per cent growth from 2016 to 2020.
Following modest growth this year, Quebec's economy is expected to increase by 2.1 per cent in 2016 and another 2 per cent in 2017.
"Robust demand south of the border and a Canadian dollar that remains well below parity with its U.S. counterpart will give a boost to Quebec's exports," says Bernard from The Conference Board of Canada. "Exports are forecast to increase by 3.9 per cent in 2016, and that, in turn, will boost machinery and equipment purchases and non-residential construction."
The anticipated jump in U.S. demand will give a bump to Quebec's manufacturing sector, which will see output growth rise from 0.8 per cent in 2015 to 2.9 per cent in 2016.
The report says the increase in manufacturing will boost investment in machinery and equipment by 4.2 per cent next year. However, with few major non-residential investment projects under way, non-residential construction will contract again this year but should grow modestly going forward. All in all, the Conference Board expects business investment to rebound by a modest 1.9 per cent in 2016 and 2.1 per cent in 2017. However, residential investment will be a drag on growth over the near term as housing starts are not forecast to post positive growth until 2018.
Consumer spending was a key economic driver of growth in 2015 and will continue to support the economy in 2016. With a 2.2 per cent increase in wages and salaries per employee, sound employment growth, and a declining savings rate, retail sales are forecast to advance 3.7 per cent in 2016.