B.C.’s economy is expected to shrink by 6.1 per cent in 2020, getting back to pre-pandemic output part-way through 2022 with the help of housing and industrial construction, Canada’s credit union organization says.
Central 1 Credit Union’s latest forecast has the B.C. economy growing by 4.0 per cent in 2021, then recovering the rest of the 2020 loss in 2022 as service business rebounds more slowly than goods production. Unemployment is expected to remain at around 10 per cent by the end of 2020, gradually improving to six per cent by 2023.
“Ongoing recovery is set to persist through 2021 and beyond, aided by major construction projects such as the LNG Canada project and the Site C dam, which were initiated prior to the pandemic, but will remain below pre-pandemic levels into 2022,”said Bryan Yu, deputy chief economist for Central 1, releasing the forecast Sept. 9.
Statistics Canada’s labour force survey finds that B.C. has recouped more than half of the 400,000 jobs lost from February through April, with re-opening of businesses closed by the pandemic bringing back mainly part-time employment. Retail spending returned to near February levels in July, with pent-up demand for vehicles, clothing and other discretionary purchases likely a factor, Yu said.
A surge in lumber demand and prices has helped B.C. recover more quickly than Alberta and Ontario, which are more dependent on energy and automotive production, among the hardest-hit sectors.
“The housing cycle has been a huge surprise from what was anticipated at the early stages of the pandemic, and is likely propelled by a combination of pent-up demand in March and April, substantial cuts to mortgage rates and a shift in consumer preferences given the advent of work from home and constraints to leisure activities,” Yu said.
As the B.C. forest industry struggles with log supply and costs, other factors are expected to slow the housing market. Housing stars are forecast to decline by more than 20 per cent this year, and rise only modestly after that, with fewer pre-sales and a slowing of B.C.’s population growth due to low travel and immigration.