It’s looking unlikely that the word “growth” will be associated with B.C.’s economy this year.
GDP growth forecast for B.C. in 2024 is set for 0.2 per cent, a drop from the estimated 1.1. per cent tallied in 2023, according to a report released Tuesday from Deloitte Canada.
But the financial services firm expects the West Coast economy to swing back to 3.1 per cent growth in 2025.
This year’s slowdown can be reflected in reduced consumer spending, and less active business and investment activities, leading to a higher unemployment rate in 2024.
“B.C. will be one of the lower-growth provinces this year because of its high reliance on the real estate industry, and the fact that consumers are already heavily indebted because of the high price of real estate,” Dawn Desjardins, Deloitte Canada’s chief economist, said in an interview.
“So we think that from the consumer side in 2024, at least at the beginning of the year, we’re probably going to see some pretty slow economic activity.”
Business investment in the province will also likely be affected negatively as the construction of a few megaprojects, including the LNG Canada facility, winds down, according to the report.
“It will take a turnaround in the economy as businesses look to improve their productivity, find new ways for expansion. But that takes the economic outlook looking firmer, interest rates being lower, to really ignite that cycle,” said Desjardins.
She said many metrics suggest that business confidence has been weaker which may lead to slowing employment growth in 2024, but not necessarily widespread job cuts given that many companies have had a difficult time filling positions in recent years.
And the report predicts that the B.C. economy will start rebounding in the second half of the year and continue into 2025.
“We forecast that inflation will settle back on target by the middle of 2025. The Bank [of Canada] is expected to begin cutting rates as soon as the path to two per cent [inflation rate] is clear, likely in the spring, sparking a recovery in the second half of the year,” she said.
“Real economic growth is projected to accelerate sharply then … because as rates move down, it produces confidence among both consumers and businesses and gets them spending once again.”
The opening of the LNG Canada terminal in B.C. will also help boost exports, she added. The first phase, which is expected to produce 14 million tonnes of liquefied natural gas a year, is on track to begin shipments around 2025.
As B.C. businesses are looking to make their way through this economic downturn in 2024, it will be critical for them to watch where interest rates are going, be able to maintain their labour force and keep an eye on what's next, according to Desjardins.
“Whether that's clean technology or digitizing their businesses, there are a few things that companies are already doing and will look to do more of once they get a better sense of how the economy is going to perform as we go to the latter part of this year and into 2025.”
