Housing slowdown may grind the B.C. economic engine to a crawl

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Long a bastion of robust performance, British Columbia’s economy has been projected to ratchet down its performance this year primarily because of the moderating impact of a weaker housing sector.
On January 6, the B.C. Ministry of Finance reported a significant decline in the number and value of transactions in the Vancouver area right after the imposition of a 15 per cent foreign buyer’s tax in mid-2016. Government data revealed that the $14 billion in real estate transactions in Vancouver over the 7 week prior to August 1 dwindled to a mere $3.7 billion in October.
Finance Minister Mike de Jong stated that 2017 growth will be “modest” compared to the previous year, noting that the province’s budget surplus will be around $2.2 billion.
The Royal Bank of Canada predicted that B.C.’s economic growth in 2017 will be at 1.7 per cent. This would be the first time in 6 years that the province will perform below the 1.8 per cent national average.
“It's been very strong in B.C. in the last couple of years, getting major support from the housing market,” RBC assistant chief economist Paul Ferley told CP24.com in an interview.
“There's the feeling that that support is not likely going to persist through the forecast, and with that you get a moderation in the growth rate.”
RBCt added that Ontario and Manitoba will post the strongest economic growth rates this year.
CIBC Capital Markets chief economist Avery Shenfeld concurred with the tone of the RBC forecast, adding that gradually strengthening oil prices will make other provincial economies perform better relative to British Columbia.
“It's going to be a bit harder to stand head and shoulders above everybody else,” Shenfeld said. “Overall, there’s still some things that stay in favour of [B.C.], including migration, including consumer confidence and the absence of the need for a big fiscal restraint.”

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