B.C.’s economy continues to grow


Friday, December 30th, 2005

BMO experts forecasting a four-per-cent increase for 2006

Sun

The seemingly unstoppable B.C. construction boom, fuelled in part by preparations for the 2010 Winter Olympics, will lead the province to economic growth of four per cent in 2006, up from a robust 3.5 per cent in 2005, the BMO Financial Group says.

BMO’s forecast for B.C. overtakes even Scotiabank’s projection earlier this month of 3.8-per-cent growth for the province, and is way ahead of Bank of Canada’s prediction of 3.5 per cent.

The torrid pace of residential construction in B.C. is expected to decline later in 2006 as interest rates climb and pent-up demand is filled, BMO said in a release Thursday, but major non-residential projects are expected to fill that gap.

Megaprojects — including the building of 2010 Olympic Games venues, athletes’ villages and other facilities, the expansion at the Port of Vancouver, a new container terminal being built at the Port of Prince Rupert, the 10-year expansion of the Vancouver Airport, the Richmond-Airport-Vancouver rapid transit line, the Coquitlam light rail service, the upgrade of the Sea to Sky Highway now under construction, and the Golden Ears Bridge linking Maple Ridge to Surrey/Langley — are expected to add up to almost $6 billion in construction spending by the time the projects are completed.

Newfoundland and Labrador will lead all other provincial economies in growth in the coming year, BMO said, while Alberta and B.C. will continue to exceed the national growth rate in 2006, a major bank forecast Thursday.

Newfoundland and Labrador will post the greatest expansion in 2006 at 5.2 per cent, up from 2.0.

A full year of production from the Voisey’s Bay nickel development and the White Rose offshore oil project will push Newfoundland to the front of the pack, BMO predicted.

Alberta‘s growth will increase to 4.8 per cent from 4.2, boosted by rising oil production and the ramping up of construction on oil sands mega-projects.

“The Canadian economic playing field continues to be tilted to the West,” BMO Financial Group said in its 2006 forecast, noting growth in Saskatchewan, Alberta and B.C. have all exceeded the national growth rate for two years, while all the rest have posted growth at or below the national average.

However, the pace of growth in Central Canada will also pick up steam in 2006, as will the national economy, it added.

The national economy, the report says, will expand at a relatively rapid 3.5-per-cent pace, up from 2.9 this year, which is also above the 2.9 forecast by the Bank of Canada and what it has said is the economy’s non-inflationary speed limit.

The acceleration in the growth of the national economy will be due to an improvement in exports, it said.

“While the sharp rise in the value of the Canadian dollar has hurt Canadian competitiveness and the country’s trade performance over the past three years, exporters and import-competing industries appear to have largely adjusted to the loonie’s more lofty level,” said BMO chief economist Rick Egelton. “This should allow real GDP growth to rise slightly faster than potential.”

As a result, the jobless rate will slip to a new 30-year low average of 6.3 per cent, it said.

Meanwhile, housing construction activity will slow further from its 2004 peak as the Bank of Canada continues to raise interest rates, while the dollar, now near 86 cents US, will strengthen to trade in a range of 86.4 cents US to 87 cents US.

Meanwhile, Saskatchewan’s growth will slip to 2.5 from 3.0.

The adjustment of the manufacturing sector to the stronger dollar, meanwhile, will boost growth in Ontario, Quebec, Manitoba, and New Brunswick, it said. Ontario’s growth will rise to 3.1 per cent from 2.9, Quebec’s to 2.7 from 2.2, Manitoba’s to 3.0 from 2.5, and New Brunswick’s to 3.0 from 2.5.

Nova Scotia‘s growth will also accelerate to 2.5 per cent from 2.0 thanks to stronger exports, while Prince Edward Island will see its growth slow to 1.8 from 2.5, reflecting weakness in construction.

B.C. MEGAPROJECTS = MEGABUCKS:

Major projects expected to sustain the B.C. building boom involve big numbers, including:

$510 million for Winter Games venues, although the need for more money is already apparent;

$1 billion for the expansion at the Port of Vancouver;

$500 million for a container terminal at the Port of Prince Rupert;

$1.8 billion for the 10-year expansion of the Vancouver Airport;

$1.7 billion for the Richmond-Airport-Vancouver rapid transit line;

$800 million for Coquitlam light rail service;

$626 million for the upgrade of the Sea to Sky Highway now under construction;

$800 million for the Golden Ears Bridge linking Maple Ridge to Surrey/Langley, to start in 2006 and open 2009.

Source: Vancouver Sun

© The Vancouver Sun 2005



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