British Columbia led the country in terms of economic growth between 2014 and 2017, but in 2017 it is expected to dip to second spot after Alberta, according to a Conference Board of Canada report released November 22.
Overall, B.C. is expected to see 3.2% real GDP growth in 2017, compared with 6.7% in Alberta. B.C. will regain top spot in 2018, however, with 2.7% growth in 2018, compared with 2.1% in Alberta.
The drop in economic growth in B.C. in 2018 will come because of a decline in the housing sector, the report forecasts.
“Recent steps taken by the provincial and federal governments aimed at taking some of the steam out of red-hot housing markets have mostly succeeded,” the Board said in the report.
“Also, the surge in home prices – the average price of a detached home in Greater Vancouver area is currently about $1.6 million – has hurt demand, leading to a small decline in housing starts this year.”
The Board forecasts housing starts in B.C. to remain flat in 2018, and expects an 18% drop in 2019.
The cooling housing sector will in turn lead to a decline in employment, income, housing and consumer spending growth, according to the report.
Growth in B.C.’s forestry sector will be flat or negative over the next five year, the Conference Board forecasts, due to issues with mountain pine beetle infestations and U.S. duties on Canadian softwood lumber imports.
The future of LNG in the province is facing a “high degree of uncertainty” due to both Petronas and CNOOC’s decisions to scrap plans to build LNG terminals.
Alberta’s strength this year comes from several sectors, in particular a jump in drilling and solid oil production. While this boom is not expected to last, a recent increase in oil prices may strengthen drilling activities.