Unlike some reports, Canada did not suffer a recent recession nor is one likely in the near future. And the economic forecast for the Columbia-Shuswap looks relatively positive.
This is the view of Bryan Yu, senior economist with the Central 1 Credit Union, the umbrella organization for credit unions in B.C. and Ontario. Speaking at the Salmon Arm Economic Development Society’s Fifth Annual Business Forum held Oct. 21 at the Prestige Harbourfront Resort, he said there has been a lot of rhetoric in the past couple of months about a potential recession.
“The first six months of the year did see some retraction in some areas,” he said, noting a key driver has been oil prices, so capital expenditures, jobs and incomes have been affected in some areas.
“But the drop in the economy is not broad-based,” he said, noting it has been a very sector-based downturn. “In a recession, everything is affected.”
He said there’s now a divergence in the Canadian economy, which overall is in a low-growth phase due to weak oil and a slow response to stronger U.S. growth.
“If you’re an energy producer, you’re in trouble, or were in trouble. But things aren’t that bad… Economic activity has started to pick up, including energy. We had a soft patch in the first half, the first five months of the year, but things are levelling out.”
He said predicting the price of oil is a bit of a “crap shoot.” It is not going to $80 a barrel, he says, but it could stay around $50 and some are even calling for $35.
Growth in Canada is driven by expectations for the U.S. economy, and the current consensus on the U.S. is for a moderate growth rate, two-and-a-half per cent going forward.
Yu said China’s economy is experiencing weakness in exports, manufacturing and housing, so although 80 per cent of Canada’s export market is the U.S., China is five per cent.
“When this dragon is catching cold, we’re all going to feel a draft.”
Yu says the central credit union predicts interest rates will stay at near-record lows well into 2016 and possibly into 2017. He is also predicting a 73-cent Canadian dollar in 2016 relative to the U.S. currency, making “vacationing in the U.S. a lot harder, but it does help a lot of exporters in Canada.”
Tourist visits to B.C. have been ramping up as the U.S. travel demand climbs, he says, “because we’re on sale.”
Regarding the Liberal Party’s proposal of $60 billion for infrastructure, meaning fiscal deficits over the next two or three years, Yu said it will be a positive for the economy.
He said the Central 1 Credit Union does not get into politics, but has said over the last few years it’s probably a good idea to be spending on infrastructure, which will not mean going into major debt.
Regarding the B.C. economy, he said it’s performing well due to low exposure to oil production, as well as an uplift in housing and those export sectors affected by the exchange rate.
The Thompson Okanagan is in a mild growth phase thanks to manufacturing and housing, with the risk being whether more effects from the Alberta economy will be felt.
As for the Columbia Shuswap, he says it’s seen a 20 per cent gain in 2015 sales to date, but prices aren’t moving much.
“The key is that it’s moving in the right direction.”
And interprovincial migration is fuelling population growth.
Overall, the region is experiencing mild growth, with benefits coming from tourism and forestry.
He said Salmon Arm has been expanding at a stronger pace than the Thompson-Okanagan and province as whole, with solid population growth of 1.8 per cent in 2014, compared to 1.4 per cent for the whole area.
And, “it’s mainly moving in line with the region in terms of the economy.”