Weak commodity prices, an underperforming global economy and a struggling province next door will continue to hamper growth in Northeast B.C. over the next three years, according to economists with Central 1 Credit Union.
The credit union released its three-year economic forecast for the region Sept. 15, which paints a “bleak” economic picture through at least 2018.
Central 1, a liquidity manager, payments provider and trade association for 42 B.C. credit unions, released its three-year economic forecast for the region Sept. 15.
It paints a “bleak” economic picture through at least 2018.
“I think the overall tone is that we’re having a weaker period,” said Senior Economist Bryan Yu. “Not only on the employment side—that filters into less population growth, less housing activity, and dampening in home prices going forward at least into next year, before we start to stabilize quite a bit.”
The region’s unemployment rate is expected to hover around 8.8 per cent through the end of 2017. Activity in the housing market is set to bottom out in 2017 after a 29 per cent drop in real estate transactions this year. Low coal and gas prices will continues to drag down growth, while analysts predict greenfield liquefied natural gas projects are “uneconomical” at current natural gas prices.
Thursday’s report was in sharp contrast to Central 1’s last regional economic forecast, which was buoyed by optimism around the B.C. government’s plan to develop a liquefied natural gas export industry.
“There was a lot of hope for liquified natural gas, there were higher prices for commodities, we had much stronger coal markets.,” Yu said. “I think those have shifted considerably over the past couple of years."
Economists used a number of indicators in creating the forecast, including the region’s unemployment rate, number of EI recipients, population growth trends, real estate data and the province’s Major Project Inventory.
Unemployment in Northeast B.C. peaked at 9.5 per cent in early 2016—the highest seen since the 2008 recession.
The Site C dam was a “significant buffer” against higher unemployment rates, Yu said.
“Without the Site C dam, I think we could easily see a negative or maybe even five per cent drop in employment over the forecast period,” he said, cautioning that many employees on the dam live outside the region or province.
While the approval of Pacific NorthWest LNG could improve Northeast B.C.’s economic fortunes, Yu didn’t expect to see any impact in the next three years.
“Within the forecast period, it doesn’t have any impact,” he said. "Even if they were to approve it tomorrow, the question is whether there’s going to be a delay because of the current market cycle, the pricing.”