Operating Context

While countries around the world continue to recover from the COVID-19 pandemic, the global economy is transitioning to a period of greater economic uncertainty. Increased borrowing costs, weakening consumer demand, and lower levels of business activity and household spending signal a period of slower growth in the global economy. Despite a strong recovery from the pandemic, there are significant economic challenges across Canada due to heightened inflation, rising interest rates, supply chain disruptions, and ongoing geopolitical tensions. Factors such as technological change, an aging population, and climate change are also influencing structural transformations in Canada’s economy.

While growth is expected to slow more sharply in BC than the rest of the country over the coming year,^{Footnote 1} BC’s economic diversity and resilience will help the province navigate this uncertain economic context.

In 2021, BC’s real gross domestic product (GDP) was valued at $282.1 billion, ² an increase of 6.1% compared to 2020.^{Footnote 3} BC has strengths in the goods-producing sectors (e.g., natural resources, energy, and construction) and services sectors (e.g., tourism, transportation, and real estate). Emerging sectors with growth potential include digital technology, clean technology, life sciences, advanced manufacturing, and the ocean economy. Innovation in the traditional sectors, along with growth in emerging sectors, will create opportunities to maximize the province’s economic potential to build a sustainable and resilient economy.

Exports are a source of prosperity for BC. In 2021, the province exported $99.0 billion^{Footnote 4} in goods and services, which continued to see strong growth in 2022.^{Footnote 5}  While natural resources and energy account for over 70% of BC’s exports in commodities,^{Footnote 6} service exports (which include financial services, transportation and logistics, and resource development) are growing. In 2019, service exports made up 47.6% of the province’s total international exports, compared to a share of 29.7% at the national level.^{Footnote 7} BC’s largest trading partners are the United States, China, and Japan. With the Government of Canada’s announcement of the Indo-Pacific Strategy, BC businesses are in a unique position to gain greater access to markets and supply chains in the Asia-Pacific region.

Although there exist promising opportunities for growth, BC faces a number of ongoing challenges. British Columbians continue to grapple with the effects of climate disasters, rising costs of living, housing affordability, and labour shortages. In 2021, climate disasters had a significant impact on BC communities and businesses. The summer wildfire season was the third worst in the province’s history, while flooding and landslides caused significant supply chain disruptions and damage to key infrastructure. Looking to 2023 and beyond, building economic resilience is critical for communities across the province that are vulnerable to future climate shocks.

Like Canadians across the country, British Columbians are struggling with rising costs of living. From July 2021 to December 2022, the Consumer Price Index (CPI) in BC rose by 7.6%, with large increases in the cost of food and transportation.^{Footnote 8} Along with households in Ontario, BC households carry the highest debt loads in the country and are more sensitive to interest rate changes.^{Footnote 9} Furthermore, housing affordability continues to be a challenge for workers and businesses. Although residential house prices fell in most regions of the province from 2021 to 2022 (11.5% decrease), they remain elevated.^{Footnote 10} For rural and remote areas, housing supply shortages affect the ability of communities to attract workers and investment to promote growth.

BC’s labour market dynamics also continue to evolve. An unemployment rate near an all-time historic low at 4.2%^{Footnote 11} , along with a wave of retirements, contributed to a tight labour market, with the number of job vacancies exceeding the number of job seekers. Labour shortages were felt across industries, especially in hospitality, construction and transportation. Businesses across the province continue to report difficulties in recruiting talent, especially in rural communities. Through a combination of reduced labour demand and greater immigration, labour shortages are expected to ease somewhat. BC remains a popular destination for newcomers, with immigrants comprising 33.1% of the labour force, the second highest rate among provinces and territories.^{Footnote 12}

As BC’s economy continues to grow, it is vital to advance the economic inclusion of under-served groups in the province, including women, youth, and Indigenous communities. Women were disproportionately affected by job losses during the pandemic. In a positive development, women filled the majority of new jobs created in the province in 2022.^{Footnote 13} However, wage gaps between women and men continue to persist and are higher for women with intersecting identities.^{Footnote 14} As of November 2022, the unemployment rate for youth aged 15 to 24 returned to pre-pandemic levels (approximately 9.2%), after peaking at 18.6% in 2020.^{Footnote 15} However, relative to the other western provinces and Canada, youth in BC report a lower degree of perceived capability and greater difficulty in starting a business.^{Footnote 16} In 2018, nearly one in five (18.2%) Indigenous-owned businesses in Canada were located in BC (over 3,100 businesses),^{Footnote 17} yet the Indigenous unemployment rate was 8.4% in 2021, exceeding the provincial unemployment rate of 6.5%.^{Footnote 18}

From its innovative natural resource sector to growing technology ecosystems to a vibrant tourism industry, BC is made up of unique economic regions and communities. This diversity across the province offers opportunities through place-based economic development rooted in regional strengths. With seven new offices across the province, PacifiCan is well-positioned to support place-based economic development and deliver high-impact local investments and quality advice that address unique needs at the community level.