JOCK FINLAYSON
By Jock Finlayson, ICBA Chief Economist
BRITISH COLUMBIA – Preliminary estimates from Statistics Canada show that B.C.’s economy grew by a modest 1.6% after inflation in 2023, down sharply from almost 4% the year before. The pattern of growth varied significantly across the industries that make up the provincial economy.
Figure 1 provides data on output (real GDP) growth by industry in 2023.
Figure 1
Transportation and warehousing led by way, followed by public administration (i.e., government), mining/oil & gas production, professional, scientific and technical services, and health care. Notable declines in the value of production were recorded in the utilities sector, manufacturing, primary forestry/agriculture, and wholesale trade.
The B.C. construction industry posted a 1.8% gain in real GDP last year, a bit higher than growth in the overall economy.
Economic activity continues to “normalize” following the COVID shock. If we consider the longer time period 2019 to 2023, the growth dynamics look somewhat different than they did last year.
Figure 2 depicts the total cumulative change in output by B.C. industry over the last four years.
Figure 2
At the aggregate level, the B.C. economy expanded by 9.5% during the four-year period, which captures the effects of the COVID-induced recession in 2020 following by the bumpy post-pandemic recovery.
An expanding public sector has been a key trend shaping the B.C. economy in recent years, with public administration, education and health care all growing faster than the economy as a whole since 2019.
Among private sector industries, professional, scientific and technical services and construction ranked first and second, respectively, in cumulative economic growth over 2019-2023. Segments of the business community suffering absolute declines in output over 2019-2023 included transportation/warehousing, primary forestry/agriculture, manufacturing, utilities, and accommodation/foodservices. The significant drop in output in the transportation/warehousing industry is partly explained by the marked weakness in air transportation, where the value of real GDP is barely half the level recorded in 2019.
For construction, the impressive GDP growth seen over 2019-2023 includes the positive impact of several multi-billion-dollar projects in the broad energy sector, as well as steadily climbing capital spending across the public sector and rising housing starts. With energy-related capital spending trending lower following the recent/imminent completion of a handful of big projects and housing starts slowing amid higher borrowing costs, the province is set to experience a weaker investment backdrop in the next couple of years.
Source: ICBA
