International merchandise trade data for B.C. trade remained stable in September and well above both year-ago and pre-pandemic levels.
September exports edged down 3.3% to a seasonally adjusted $4.68 billion, while imports rose 3.3%. Year over year, exports rose 34.7% , while imports rose a comparable 35%. That said, trade momentum has peaked with exports easing since June as the surge in lumber prices rolled back.
Year-to-date exports are up 37.1% over the previous year and up 19.6% over 2019. Growth has been led by resources, particularly forestry, energy and metal and mineral products. Stronger commodity prices have been a key driver. Year-to-date import volumes are up 21% and up 8.5% from 2019.
Real gross domestic product (GDP) in B.C. contracted 3.8% during 2020, compared with a national contraction of 5.2% . In comparison, GDP contracted 5.1% in Ontario, 5.5% in Quebec and 7.9% in Alberta. Varying severity of COVID-19 waves and public health restrictions factored into the divergence, alongside effects of commodity-sector performance and major project investment.
While consumption eased, spending was reallocated to housing. Residential investment rose 3.4%, reflecting resale transactions and renovations.
On the investment front, private investment in non-residential structures was surprisingly strong at 10% but almost fully offset by a plunge in machinery and equipment investment (-21%). This likely reflects the ongoing construction of projects already underway pre-pandemic while businesses pulled back sharply as COVID-19 triggered a downturn in tourism, hospitality and to a lesser extent discretionary retail while uncertainty increased. Government projects remained a substantial support, with a 9.9% expansion.
Cross-border trade was a significant drag on the economy last year. Exports fell 9.7% from 2019, driven by declines in international exports as interprovincial exports held steady. International goods exports fell 9.8%, while service exports plunged 24%, reflecting declines in tourism. Imports contracted about 8%.
Central 1’s forecast is for real GDP growth to reach 5.3% this year and 4.2% in 2022. •
Bryan Yu is chief economist at Central 1 Credit Union.
