Departmental Results Report, 2022-23 – Operating Context

Globally, 2022-23 was a year of economic uncertainty. A surge in demand for goods and services, as pandemic restrictions eased, put pressure on supply chains and prices. Russia’s illegal invasion of Ukraine drove up prices for energy and food. These and other factors contributed to increased inflation in many countries, including Canada. In response, interest rates increased as central banks looked to dampen demand. Additionally, the year behind saw many countries implement new industrial and trade strategies in order to strengthen trade alliances and ensure resilient supply chains.  

Strong Economic Growth in Canada and BC

In this global context, Canada’s economy was one of the fastest growing in the G7^{Footnote 1} . Growth was driven by an increased demand for Canadian commodities and a strong labour market, with historic levels of immigration.

In 2022, BC’s economic growth of 3.6% was in line with the national growth rate^{Footnote 2} . Many of the sectors that were hardest hit by the pandemic experienced a strong recovery, especially in the arts, entertainment and recreation sector (+28.3%), accommodation and food services (+19.6%), and transportation and warehousing (+10.2%)^{Footnote 3} . As the fastest growing segments of BC’s economy in 2022, they helped restore the tourism industry and strengthen Canada’s trade gateway to Asia.

The unemployment rate in BC neared a historic low of 4.6% in 2022^{Footnote 4} and many BC businesses reported labour shortages. These were most pronounced in hospitality, health care, and construction^{Footnote 5} . Factors contributing to labour market imbalances included a steady number of retirements, shifting work preferences among job seekers, and structural mismatches between job requirements and skills availability^{Footnote 6} . Notably, the reverse trend was observed in BC’s tech industry at the beginning of the year, with a wave of layoffs amid wider industry downsizing in North America^{Footnote 7} . Additionally, in late 2022, mill curtailments and closures resulted in layoffs in the province’s forestry sector^{Footnote 8} . After peaking in the second quarter of 2022, job vacancies started to decline, but did not return to pre-pandemic levels^{Footnote 9} .

Inflationary Pressures Impacted British Columbians

Across the province, rising prices and interest rates contributed to escalating costs for households. Inflation in BC peaked at 8.1% in May 2022, reaching a forty-year high. Affordability was a major concern as the cost of living increased rapidly, due to food, shelter, and transportation cost increases^{Footnote 10} .

In 2022, British Columbians contended with the highest housing prices in Canada, with an average cost of over $1 million for a home, compared to the national average of approximately $780,000^{Footnote 11} . In recent years, average housing prices in the province have accelerated, rising over 40% from 2019 to 2021^{Footnote 12} . Growth in real median after-tax income did not keep pace over the same period, rising just 5%^{Footnote 13} . In the latter half of 2022, rising interest rates led to a decline in housing prices.

First Nations made Important Contributions to BC’s Economy

Approximately 16% of Canada’s Indigenous population resides in BC,^{Footnote 14} making up 5.9% of the province’s total population. From 2016 to 2021, BC’s Indigenous population – many of whom live and work outside of major urban centres – grew by 7.3%, slightly less than the provincial growth rate (7.6%)^{Footnote 15} .

First Nations contributed approximately 2.6% of BC’s real GDP in 2021^{Footnote 16} . In 2022, the Indigenous employment rate (65.4%), exceeded that of the non-Indigenous population (61.8%)^{Footnote 17} . First Nations were also a major employer in BC, supporting approximately 77,000 full time jobs in regions across the province^{Footnote 18} . With the introduction of federal and provincial legislation codifying the United Nations Declaration on the Rights of Indigenous peoples, Indigenous peoples will have a greater role in the province’s economic development.

Record Numbers of Newcomers

In 2022, BC welcomed over 150,000 newcomers from outside Canada, an increase of 123% from 2021^{Footnote 19} . Immigrants comprise 29% of BC’s population – the second highest share among all provinces^{Footnote 20} . Recent immigrants to BC are highly educated, with 73% having completed post-secondary studies, compared to 54% for non-immigrants^{Footnote 21} . Immigrants continue to be a driving force of BC’s labour supply, making up approximately one-third of the provincial labour force^{Footnote 22} . Immigration is expected to grow further with new immigration regimes introduced by both the federal and provincial governments.  

Looking Ahead

Looking ahead, slower growth is forecast for Canada’s and BC’s economies in 2023, as interest rate hikes take hold and consumer demand cools. As demand slows, inflationary pressures are expected to ease further.