Ottawa, November 14, 2016—Vancouver will be the fastest growing metropolitan economy in the country this year and next, according to The Conference Board of Canada’s Metropolitan Outlook: Autumn 2016. Meanwhile, Victoria is poised to expand at its fastest rate since 2007 this year.
“Vancouver is on track to boast the fastest-growing metro area economy for the second straight year in 2016, as the region’s housing market remains one of the metro area’s key engines of growth,” said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. “While Vancouver’s economy is forecast to slow next year, partly due to federal and provincial government measures directed at cooling the over-heated housing market, the pace of growth still will be strong enough to maintain the metro area’s first place ranking.”
- Vancouver’s real GDP is expected to grow by 4 per cent his year, and slow to a still solid 2.8 per cent in 2017.
- Real GDP in Victoria is expected to reach 2.5 per cent this year and advance by another 2.4 per cent next year.
- Builders in Vancouver are on track to break ground on nearly 28,400 residential units in 2016, the highest number on record.
Vancouver’s economy is on track to expand by 4 per cent this year, on the heels of a 4.1 per cent gain in 2015. Thanks to record-level housing starts and many non-residential projects, the construction sector will be Vancouver’s top-performer in 2016, with the finance, insurance and real estate sector not too far behind. Despite overall weakness in the global economy, the transportation and warehousing sector, a key industry cluster in Vancouver, will reap the rewards of a low Canadian dollar and grow above 6 per cent for the second consecutive year in 2016. Employment is on pace to climb by 3.9 per cent this year, the strongest gain since 1994.
However, federal and provincial governments’ actions to cool the overheated housing market will take some steam out of the economy over the near term, leading to slower growth in construction and in finance, insurance, and real estate. While it is difficult to predict the extent to which the measures will impact the economy, we estimate output in these two industries will total approximately $290 million lower in 2017 compared to a scenario where no policy changes had been made. All in all, real GDP growth is forecast to slow to a still solid 2.8 per cent in 2017.
Real GDP growth in Victoria is expected to reach 2.5 per cent this year and 2.4 per cent, its highest rate of expansion in ten years, as provincial government spending increases in line with a growing budget surplus. Other areas of the economy are also on the upswing. Solid employment and income growth should keep consumers spending, providing a lift to the wholesale and retail trade sector. In addition, a robust housing market will help drive growth both in construction sector and in finance, insurance and real estate. Meanwhile, the lower Canadian dollar is lifting the fortunes of export-oriented sectors, such as manufacturing and tourism. Employment is forecast to increase by 1.7 per cent in both this year and next.
Along with Vancouver, Toronto and Halifax are expected to be among the growth leaders this year. Meanwhile, the economies of Calgary and Edmonton are expected to contract for a second year in a row in 2016, before rebounding next year.
Join Alan Arcand on November 22, 2016 for a webinar, Beyond Slogans: Comparing Canadian Cities to the World’s Best, which describes how five Canadian cities—Toronto, Montréal, Vancouver, Calgary, Halifax—compare economically and socially against some of the leading metropolitan areas in the world.