The Island’s economy is expected to keep growing, but at a moderate rate.
The State of the Island Economic Report for 2018 was presented Wednesday at the Vancouver Island Economic Summit in Nanaimo.
The fourth annual report, prepared by MNP for the Vancouver Island Economic Alliance, looked at Island jobs, industry and trends and how they’re being impacted by local and macroeconomic factors.
“In 2019 we’re expecting this gradual slowing because of [a] slowing of population growth, the slowdown of the housing market and these tight labour market conditions that are making it really hard for businesses to retain their employees or attract new employees…” said Susan Mowbray, manager of economics and research consulting with MNP. “Is the economy still going to perform well? Yes. But it’s not going to be growing as quickly. We’re going to see moderation.”
This year’s State of the Island report looked at the business landscape, workforce and industry analyses of tourism, manufacturing, aquaculture and agriculture, forestry, renewable energy, high-tech and education.
Mowbray discussed the labour shortage that B.C. Premier John Horgan talked about earlier in the day, noting that Vancouver Island’s demographics means the region already has low workforce participation, and interprovincial migration in general, which had been a “really important source of labour,” has slowed.
“We’re still hearing from a lot of businesses that they can’t find staff and that there’s a lot of positions that are going unfilled, which means it’s going to be very difficult for them to expand,” Mowbray said.
She said Canadians can expect stability with U.S. exchange rates, as the loonie is expected to stay at 78-80 cents U.S. for the foreseeable future.
“There’s nothing that indicates it’s going to fall out of that range, which will continue to provide support for those important industries here on Vancouver Island like aquaculture, forestry and tourism,” Mowbray said.
The U.S.-Mexico-Canada trade agreement will have some impacts, she said, mentioning increased competition for wineries and dairy farmers, expansion of U.S. online shopping options into Canada, and possibly higher vehicle prices down the road.
As for job creation, the State of the Island report notes that some of the top-performing sectors right now are construction, health care and social assistance, real estate and rental and leasing, and accommodation and food services.
Mowbray said building permits are up and construction activity is expected to remain high in 2019.
“There’s a lot of construction going on on Vancouver Island; a lot of it’s being driven by the residential real estate market,” she said.
There are some challenges in forestry, she noted, pointing to timber supply shortages and job losses. There’s also been a decline in commodity-grade lumber prices this fall, she said, and if that trend continues, producers will have a harder time absorbing U.S. duties.
“So far demand has remained high and has kept prices up, so producers have been able to pass those duties on to their customers and there hasn’t been a huge impact on production…” she said. “Forestry is going to continue to be really important to the Vancouver Island economy, just like it’s going to be really important to the B.C. economy, but it’s going to be smaller.”
On the flipside, Mowbray suggested TV and film and cannabis production and distribution could be growing industries on Vancouver Island.
James Byrne, MNP regional managing partner for Vancouver Island, said his company believes in what the Vancouver Island Economic Alliance stands for as far as its spirit of entrepreneurship, calculation of risks and rewards, pursuit of big ideas, and diversity of views and perspectives. He said other regions in B.C. look to the Island’s economic co-operation as a model.
“We believe in the potential of Vancouver Island as a region,” Byrne said. “While each of our communities are unique, our collective whole is even greater than the sum of the parts.”