B.C.'s economy should pick up a little steam in 2013 and then percolate at above-average growth rates between 2014 and 2016, according to a new report by Central 1 Credit Union.
The credit union's chief economist, Helmut Pastrick, predicts B.C.'s economy will grow at just 1.7% this year – down from 2.6% in 2011 – but should rise to 2% growth in 2013, and then grow to 3.5% by 2016.
Although the forecast could be affected by the recovery in the U.S., the European credit and banking crisis, and a "hard landing in China's economy," the report states domestic policies and trends will be more important drivers for the B.C. economy.
"The biggest risk to this continuing recovery is another recession, but I think that is a low probability," Pastrick said. "I also think we will continue to muddle through the euro crisis with a series of patchwork measures."
A provincial election and reversion to the provincial sales tax (PST) are among the domestic trends that could have an impact on the B.C. economy, the report states. But the biggest impact will come from an industrial boom expected in Northern B.C., which includes new or expanded mines and oil and gas pipeline proposals.
"Business investment spending driven by several major projects is a key source of growth," the report states. "Non-residential construction spending will reach new highs, while machinery and equipment spending will only match pre-recession levels.
"Without these major projects, this spending would be 5% to 10% lower and would reduce overall GDP growth by about 0.3 to 0.5 percentage points."
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