A prolonged commodities downturn has put a crimp on economic growth in the Thompson-Okanagan region, but there’s another, potentially greater challenge waiting in the woods.
In its latest economic briefing, B.C. Central 1 Credit Union offers a bright overview of the province’s performance with strong gains in export sales in July. Export volumes were also up by seven to eight percent so far in 2016.
The value of proposed projects in B.C. remains high at $329.3 billion in the first quarter. While down from the fourth quarter, this was up 11 percent from a year ago and double the level observed in 2013.
However, low commodity export prices and higher import costs remain a drag on incomes and corporate profits, said chief economist Bryan Yu.
A weak mining environment will keep much of the $21 billion of proposed projects on the shelf for a while, he noted. That includes the Harper Mine project, which was put on hold during its environmental assessment as a result of weak commodity pricing.
The North Thompson project alone, worth roughly $1.5 billion, was the biggest factor between a 59 percent increase in major capital projects delayed in the Thompson-Okangan in the first quarter of 2016 compared to the same period last year.
Yu characterized economic growth in this region as steady but not in the same league as on the Lower Mainland. Fewer workers commuting to energy-sector jobs in the North and Alberta has also affected the regional economy, he said.
And the positives?
The Okanagan housing market is humming along and forestry is performing well, Yu said.
“The forestry sector should be in real positive status at this time,” he added, with a caveat. Unless negotiators in Ottawa can achieve a softwood lumber deal amid the political volatility of a U.S. election year, the regional economy could be in for a big hit.
“But a potential trade barrier, that is definitely a risk, not only in the Thompson-Okanagan but for a lot of forestry regions of B.C.,” he said.
On a recent swing through rural areas including the Cariboo and Clearwater, MP Cathy McLeod found that concern top of mind among people she consulted.
B.C. may be showing economic strength, but its status is vulnerable with tariffs looming in the absence of a softwood lumber deal.
“I think the prime minister needs to be having a conversation with the outgoing president to say, ‘Let’s get it done,’ ” McLeod said.