Storm saps 2021 growth, rebuild boosts expansion in 2022. Assuming closure of the Port of Vancouver and shutdown of flooded areas for two weeks, plus lower transportation industry capacity into 2022, we estimate that the disaster cut 0.5 ppts off of growth in BC in 2021 (relative to our pre-storm forecast). Reconstruction on a timeline similar to the post-2013 Alberta floods adds 0.5 ppts in 2022.
Major projects on track to drive growth. Work on the LNG Canada liquid natural gas terminal and export pipeline and Site C hydroelectric dam should continue to support non-residential capital outlays—in fact, they contributed to an advance of more than 10% during the first year of the pandemic. However, the risk of delays remains.
Labour shortages limit gains. BC recorded a record all-industry job vacancy rate in September 2021, as well as the highest one in Canada (chart 1). Though that certainly reflects the province’s elevated share of lockdown-vulnerable high-contact sectors, shortages are particularly acute in BC’s construction industry, a trend that could put a ceiling on capital investment gains.
Staple BC commodities in high demand. We expect strong pricing for metals such as copper and nickel in the coming years as global industrial activity improves and the green energy transition progresses. We forecast mean Western SPF lumber prices of about 650 USD/k board-feet this year and about 560/unit in 2023, supported by tight supply and hefty US homebuilding.
Outsized interprovincial migration gains likely to ease as omicron is brought under control. However, continued growth in BC’s vibrant technology sector may sustain the province’s attraction post-pandemic.
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