LNG Exports Key to B.C.’s Economic Growth, Report Says

B.C.’s economy will expand at a modest pace this year before shifting sharply higher after 2015 as export-led growth is followed by gains in non-residential investment, Central 1 Credit Union says in its latest provincial forecast.

“The lower loonie and growing U.S. economy will drive a trade-sector upturn,” said Bryan Yu, the Central 1 economist who wrote the forecast. “By 2016 we expect several liquefied natural gas (LNG) projects will be under construction, which will boost growth in the north. Economic growth will average above four per cent from 2016 to 2018.”

Central 1, the trade association for B.C. credit unions, updates its economic outlooks every six months.

“Compared to our previous forecast, I see domestic demand growing at a slower pace through 2015,” Yu said. “This reflects a weaker than anticipated labour market performance, which is partly offset by increased trade spurred by the lower dollar. Growth from 2016 onwards has been revised higher due to the combination of stronger exports and increased optimism that multiple liquefied natural gas projects will commence.”

Key findings:

• Interest rates will remain low and rise moderately later in the five-year forecast.
• The Canadian dollar will average 87 cents U.S. in 2018, but could go lower.
• Consumer spending will gain momentum later in the forecast period as economic momentum drives employment and wage gains.
• Home sales are forecast to move modestly higher.
• The jobless rate will remain above six per cent in 2015, but fall below five per cent in 2017.
• The net outflow of B.C. residents to other provinces for work will reverse by 2015 as the economy gathers strength.
• The optimistic medium-term growth outlook is contingent on LNG projects getting underway.