Jock Finlayson is executive vice president and chief policy officer of the Business Council of BC. (Submitted)

Jock Finlayson is executive vice president and chief policy officer of the Business Council of BC. (Submitted)

COLUMN: B.C.’s biggest economic and business stories of 2019

Jock Finlayson is executive vice president and chief policy officer of the Business Council of BC

As the new year beckons, it’s a good time to reflect on the major economic and business stories of the year that’s about to end. To keep the task manageable, the focus here is limited to Canada and B.C.

One surprising development in 2019 was the return to a period of falling interest rates.

When the year began, most economic forecasters were expecting both the Bank of Canada’s policy rate and market-based interest rates to continue creeping higher, on the heels of earlier rate increases in 2018.

Instead, the interest rates facing savers and borrowers dropped over the last half of 2019 – not just in Canada, but in the U.S. too.

As of late November, the market yield on 10-year bonds issued by the federal government stood at a paltry 1.6 per cent.

With inflation running around two per cent, this means buyers of 10-year government bonds are locking in a negative return after inflation. That would appear to be an unappetizing investment. Yet there is no shortage of demand for government bonds yielding microscopic returns.

READ MORE: Bank of Canada holds interest rate, warns economy’s resilience to be ‘tested’

Another notable story in 2019 was the continued troubles afflicting the Western Canadian energy sector, above all the oil and gas industry that accounts for up to one-fifth of Canada’s exports in a typical year.

While the Canadian industry has been innovating and cutting costs in an environment of lower prices, escalating government-imposed regulatory burdens, stalled pipeline development, and rising oil and gas production in the United States mean the overall energy landscape has shifted in ways that disadvantage Canada.

The result is tens of billions of dollars of foregone economic value because of persistent price discounts on Western Canadian oil vis-à-vis oil produced in the U.S., significant job losses in the Alberta energy patch, investment outflows to the U.S., and the departure from Canada of at least one major energy company head office – Encana – with more likely to follow.

All in all, energy policy and recent energy investment patterns show Canada in an unflattering light.

KEEP READING: Encana moves headquarters from Calgary to U.S., changes name to Ovintiv

For B.C., the crisis gripping the forest industry is clearly top of mind.

More than a dozen lumber manufacturing plants in the interior and north have stopped operating – some permanently. Thousands of well-paying jobs have disappeared, and more are at risk. Lumber production and export shipments are down significantly compared to 2018 levels, helping to drive a decline in B.C.’s total exports.

The NDP government has responded by providing some assistance to some laid-off forest workers and forestry-dependent communities. But it seems curiously indifferent to the long-term economic health of the province’s most important export industry.

Policy-makers are overlooking the fact that a viable B.C. forest industry depends on the presence of strong companies with the size and scale to withstand market cycles and invest in developing new markets and in keeping existing mills efficient.

It is troubling to watch the leading firms redeploying capital and shifting management attention to other provinces and the U.S.

READ MORE: Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

Finally, there is housing. The past year brought a sharp decline followed by a jump in home sales, as the market adjusted to an onslaught of new and higher provincial taxes, the mortgage “stress test” introduced by the federal government, and other policy measures designed to cool demand and dampen speculation in the Lower Mainland, Greater Victoria, and the Kelowna area.

Housing prices have dropped markedly at the expensive end of the market, but much less so for the average property.

Homebuilding and housing starts in 2019 have been surprisingly resilient, considering the contemporaneous unwinding of froth in the market.

Some industry experts are forecasting a sizable decline in housing starts in 2020, as developers shelve or delay projects against the backdrop of recent policy measures. If starts do plunge, that will detract from economic growth in B.C. in 2020 and beyond.

But with rock-bottom interest rates and a rapidly growing population fueled by record levels of immigration, the demand for housing in “urban B.C.” is expected to remain elevated – a situation that should continue to support the development of new housing supply over the medium-term.

Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia

Like us on Facebook and follow us on Twitter

Just Posted

Gwen Spencer Hethey with her uncle and mentor Major Frederick Richardson. (Courtesy of Greater Victoria Sports Hall of Fame)
‘She was a killer’: The Victoria woman who pioneered female sharpshooting

Gwen Spencer Hethey made military men ‘look like turkeys’ says her son

Anita Troop officially turns 100 on Sunday and cards are pouring in from around the world. (Courtesy Marina Miller)
Cards roll in from around the world for West Shore 100 year old

About 100 cards have come for the woman who turns 100 on Sunday

A cardboard man bearing Queen Elizabeth II’s royal cipher has been placed in a window at the Royal Theatre for at least several days. (Evert Lindquist/News Staff)
Mysterious cardboard figure appears in Victoria’s Royal Theatre window

The identity of the figure, which was moved there amid cleaning, remains unknown

Black Press file photo
RCMP seek suspect in Vancouver Island-wide crime spree

Crimes stretched from Deep Bay to Qualicum, Ladysmith, Chemainus and Youbou

Karl and Stephanie Ann Johanson were thrilled to spot a pair of Sandhill Cranes in the Panama Flats this month, an unusual appearance for such birds. (Photo by Stephanie Ann Johanson)
WATCH: Sandhill cranes an unusual, joyful sight in Saanich parkland

The birds don’t often touch down in the south of the Island

A small pod of Pacific white-sided dolphins pass by close to shore in Campbell River June 16, 2021. Still capture from video courtesy of Kimberly Hart
VIDEO: Dolphin sunset captured from Vancouver Island shore

Spectacular setting for view of travelling pod of Pacific white-sided dolphins

British Columbia’s premier says he’s received a second dose of the Oxford-AstraZeneca COVID-19 vaccine. (Twitter/John Horgan)
B.C. premier gets 2nd dose of AstraZeneca COVID-19 vaccine

John Horgan shared a photo of himself on social media Friday afternoon holding a completed vaccination card

A lotto Max ticket is shown in Toronto on Monday Feb. 26, 2018.THE CANADIAN PRESS
No winning ticket sold for Friday’s $70 million Lotto Max jackpot

The huge jackpot has remained unclaimed for several weeks now

Police are asking for public assistance in locating Anthony Graham who has been charged with the murders of Kamloops brothers Carlo and Erick Fryer. (RCMP photo)
2 charged, suspect at large in killings of B.C. brothers linked to gang activity: RCMP

Kamloops brothers Erick and Carlo Fryer were found deceased in May on a remote Okanagan road

Albert Health Minister Tyler Shandro and Alberta Premier Jason Kenney unveil an opening sign after speaking about the Open for Summer Plan and next steps in the COVID-19 vaccine rollout, in Edmonton, Friday, June 18, 2021. THE CANADIAN PRESS/Jason Franson
Alberta 1st province in Canada to lift all COVID-19 public health restrictions

70.2% of eligible citizens 12 and older in the province have received a dose of the vaccine

Fraser Health registered nurse Ramn Manan draws a dose of the Pfizer COVID-19 vaccine into a syringe at a walk-up vaccination clinic at Bear Creek Park, in Surrey, B.C., on Monday, May 17, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Honour our fathers’ with COVID-19 vaccine protection, B.C. urges

109 new cases Friday, 75 per cent of 12 and up immunized

Freighters have becomd abundant in the Trincomali Channel on the east side of Thetis Island.
Nanaimo ponders taking on waste from nearby anchored freighters

Vancouver-based Tymac petitioning the Regional District of Nanaimo to accept waste at its landfill

(Paul Henderson/ Chilliwack Progress)
Trutch Avenue in Chilliwack to be renamed to remove racist taint

New name to have Indigenous significance as Chilliwack takes new step toward reconciliation

Most Read