BC housing market rebound around the corner

Sludge will cling to B.C.'s supernaturally beautiful face next year as the province thrashes its way out of an economic mud puddle, new studies suggest.

Global economic recovery and a nutritional supplement in the shape of the Winter Olympics will propel B.C. to above-average growth in 2010, the Conference Board of Canada and Bank of Nova Scotia said in separate reports released yesterday.

B.C.'s real gross domestic product will shrink by 2.5 per cent after contracting 0.1 per cent in 2008, the conference board said. "The B.C. economy has taken a beating," the board said. "This recession has been the worst in 27 years and the injuries will linger."

Forestry and manufacturing, currently suffering through through double-digit contractions, will post moderate growth in 2010, the board said.

A rebound in the housing market is around the corner as new home starts rise 21,500 next year from a feeble 14,500 in 2009, the board said. "However, it will take two more years before housing starts rebound to a level that reflects demographic requirements," it said.

B.C.'s GDP will expand by 3.4 per cent next year, the country's second fastest growth after Saskatchewan's 3.5 per cent, the board said. But the recession will continue to squeeze households across B.C. well into next year, it warned.

The province will lose almost 57,000 jobs this year and regain fewer than half of those in 2010, it said.

The board predicts B.C.'s jobless rate will climb to 8.2 per cent in 2010, from 7.6 per cent this year. "Higher unemployment will result in decreased consumption for both goods and services and will lead to a 7.1-per-cent contraction in nominal retail sales this year."

Scotiabank is more optimistic about the provincial labour market, projecting the unemployment rate will slip to 7.4 per cent in 2010 from 7.6 per cent this year.

But the bank is less bullish than the board on the outlook for B.C.'s GDP next year, foreseeing growth of 2.7 per cent and a third-place GDP finish behind Saskatchewan and Alberta.

Natural gas, a key growth driver in B.C., has been "exceptionally weak" in 2009, the bank said. Natural-gas prices will post only a modest recovery next year, though long-term prospects for B.C.'s gas industry are good, it said.

Nationally, the conference board said Canada will end 2009 with a contraction of 1.9 per cent, but that GDP will rise 2.7 per cent in 2010. "Boosted by federal fiscal stimulus and a turnaround south of the border, the recovery will take shape as the second half of 2009 progresses."

Last week, the Bank of Canada declared the recession in Canada had ended. Bank governor Mark Carney said the economy is expected to grow 1.3 per cent for the current quarter ending Sept. 30, followed by a three-per-cent gain for the final three months of 2009.

("B.C. growth above average" prepared by Paul Luke/Vancouver Province)