Central 1 predicts obstacles on path to recovery in British Columbia
VANCOUVER – Economic experts at digital banking provider Central 1 predict that British Columbia is on the path to economic recovery, but it won’t be smooth.
According to Central 1, British Columbia’s economic recovery is driven by private sector growth and a robust real estate market, but depends on the trajectory of the pandemic and the global economic landscape.
Brian Yu, Chief Economist of Central 1, explained that while the province remains on track for full economic recovery, the path still has some bumps and the pace of growth will depend on how the pandemic evolves and how resolution of supply chain disruptions.
Yu’s latest analysis shows that an economic growth rate of 5.3% is expected in British Columbia this year, followed by a slowdown in the province’s growth to 4.2% in 2022 and to 2.6. % in 2023 as the savings revert to a longer-term production trend. This growth slightly exceeds Canadian GDP growth of 5.0% this year and 4.1% and 3.0% in 2022 and 2023.
While inflation and new COVID variants could trigger rapid hikes in interest rates, Yu says high energy prices are good for Canada for nominal GDP and act as a buffer against inflation imports.
âInterest rates are expected to remain accommodative despite a recent rise in five- and ten-year yields catalyzed by high inflation and expectations of earlier US policy rate hikes,â Yu said. âThe overnight rate of the Bank of Canada is expected to remain at current levels up to a rise of 25 basis points well in the second half of 2022, and to rise 75 basis points in 2023. “
Yu believes British Columbia will continue to outperform national performance through 2022, with the private sector leading the growth. He noted that British Columbia’s economy will be supported by robust government spending on capital projects such as the ongoing Millennium UBC line extension.