British Columbia will be the fastest-growing province in Canada in 2010, spurred on in part by hosting the Olympic Games, the Conference Board of Canada said in a report released Tuesday.
B.C.’s economy is expected to grow by 4.2 per cent in 2010, compared to a two-per-cent contraction in 2009. The next-best performing province, Saskatchewan, should grow 3.7 per cent.
The jump comes from a rebounding housing market in both the United States and B.C., rising commodity prices and the Olympics.
Housing starts in both the United States and B.C. are important contributors, Conference Board economist Alicia Macdonald said in an interview. With U.S. starts expected to rise, so too will the fortunes of the local forest industry, which sells much of its product to the U.S. The manufacturing industry, which includes sawmills, will also benefit.
Housing starts in B.C. fell dramatically in the latter part of 2008 and early 2009 as the Olympic infrastructure projects were completed, dragging down the construction sector, Macdonald said. But next year, housing starts are expected to return to more normal levels, and that, along with the government’s infrastructure program, will build up the construction industry.
“We won’t get back to where we were in 2007 quite yet but still, it will be growth from the low levels in 2009,” Macdonald said.
Strengthening commodity prices and recently announced lower royalty rates for natural gas will fuel the mining exploration sector, she said.
Last but not least, the 2010 Winter Olympic Games will impact tourism, with food services, accommodation, recreation and entertainment all getting a big boost.
“Buoyed by the Vancouver Winter Olympics and a rebound in the forestry sector, British Columbia is expected to stand on top of the podium for economic growth next year,” the Conference Board said in a news release accompanying its report.
But following this gold-medal performance in 2010, B.C.’s growth will slow down to 3.5 per cent in 2011, below the national average.
“The Olympics is obviously only a couple of weeks, it’s not like it’s going to last forever,” Macdonald said. “So we’re going to have a little bit of an Olympic hangover in 2011 with commercial services growth quite a bit weaker.
“And we’ll also see some of the infrastructure investment programs start to come off.”
In Canada real gross domestic product is expected to fall 2.1 per cent in 2009, but grow by 2.9 per cent in 2010. Stronger growth of 3.6 per cent is expected for 2011.
“In comparison with the United States, Canada fared much better through this cycle, in part because Canada entered the recession with much sounder financial institutions, strong momentum in the domestic economy and a relatively healthy fiscal situation at the federal and provincial levels of government,” the report said.