Thank goodness for megaprojects.
That is a major takeaway from Central 1 Credit Union’s three-year forecast for the B.C. economy, which comes amidst fears of a global recession.
Central 1’s deputy chief economist Bryan Yu’s fiscal outlook, while not gloomy, certainly suggests we are in for some challenging times. “Global economic growth remains in a fragile state,” Yu wrote.
The bad signs are becoming more numerous, including global trade uncertainty, a continued slowdown in the housing construction sector and a weakened forest industry.
Housing starts are expected to drop off significantly after recent high levels that were largely the result of presales. The wild ride of B.C.’s real estate sector is over and the reverberations will be felt far and wide through an economy that was largely driven by it for a number of years.
But riding to the rescue against this worrisome backdrop are your provincial and federal governments – and a few private investors spending big bucks building great big things.
The massive LNG Canada project, when it starts to take shape, will revitalize much of the province’s northern economy, as thousands of jobs will be created. In his report, Yu singled out the project for its long-term economic benefits.
Closer to home, construction of the TMX pipeline is scheduled to resume this fall and the new Pattullo Bridge, Broadway Skytrain extension and Surrey SkyTrain extension will soon begin to generate an enormous amount of economic activity.
The Site C dam also continues on its construction schedule. At one point this summer, more than 4,500 people a month were employed at the site. BC Hydro is spending almost $7 billion on other parts of its operations.
On top of those megaprojects, the B.C. government plans to spend about $11 billion building all kinds of schools, hospitals and roads – or improvements to existing ones – over the next three years.
The previous BC Liberal government and the BC NDP share a zeal for building or revitalizing infrastructure and since so much of it was built in the 1950s and 1960s, that kind of capital spending is going to continue no matter which party holds power.
Yu noted the magnified importance of capital spending by governments.
“Government investment in public schools and hospitals has contributed to more than a 60-per-cent increase in building permits this May,” he noted.
There are a few other bright spots on the horizon, according to Yu. Economic growth will dip a bit - but still hover just over two per cent a year - employment numbers should continue to be solid and consumer confidence will remain strong.
But if that dreaded recession does indeed hit B.C., we may be thanking all those construction projects – not just the megaprojects – for preventing this province’s economy from sliding perhaps as far downwards as other provincial economies.
Keith Baldrey is chief political reporter for Global BC.