B.C.’s economy will improve slightly this year and next, before accelerating considerably in 2014-2016, says a new forecast by Central 1 Credit Union.
According to Central 1’s chief economist Helmut Pastrick, the provincial economy will grow about 1.7% this year, down from 2.6% in 2011.
“B.C. will grow about 2.2% in 2013, then gain momentum to 3.5% in 2016 as the U.S. starts to recover,” Pastrick said.
“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.”
B.C.’s economic growth through 2016 will be largely driven by domestic demand, according to the report, with consumer spending and the housing sector expected to expand at a moderate pace.
The unemployment rate is declining amid improving job market conditions, and this trend is expected to continue. In fact, Central 1 predicts that B.C.’s unemployment rate will fall to 5% or lower by 2016, from 7% in 2012.
Improving labour markets will support personal income rates in the next few years, but only moderately, the report says. Central 1 forecasts personal income growth of 3.8% in 2012 and 3.3% in 2013. By 2016, however, it anticipates personal income growth jumping to 6.5%.
Industries expected to perform particularly well in the next few years include construction, forestry, wood products and primary metal manufacturing, and retail-wholesale trade services. In contrast, Central 1 expects public sector industries such as utilities to see slower growth.