2023–2024 Departmental Results Report – Operating Context
British Columbia’s economy performed better than expected
Global economies, including Canada’s, experienced slow growth in 2023 due in part to persistently high interest rates.Footnote 1 The British Columbian economy performed better than projected in 2023, with a real Gross Domestic Product (GDP) of approximately $304 billion and an annual real GDP growth rate of 1.6%.Footnote 2 This was more than twice the forecasted real GDP growth rate for British Columbia. (0.7%), and it exceeded the national average (1.2%).Footnote 3 British Columbia was the second-largest contributor to Canada’s real GDP growth in 2023 (22.6%), behind Ontario (60.1%) and ahead of Alberta (22%).Footnote 4
British Columbia has a diversified economy, rooted in regional strengths
Northern British Columbia provides access to the Indo-Pacific, critical minerals and the Canadian High Arctic, while natural resource extraction in the North and Interior drive manufacturing activity. Professional, scientific and technical services are prominent in the Mainland/Southwest, connecting Canada to a high-tech corridor that runs along the Pacific coast and to the Indo-Pacific by rail, air and sea facilitating goods exports. Deep investment and business connections with Indo-Pacific countries are built upon decades of immigration, helping to attract investment. These relationships offer an opportunity to increase Canada’s exports to the region (currently $226 billion in two-way trade).
Indigenous people contributing to economic growth
First Nations in British Columbia are expanding opportunities for economic growth across a wide range of sectors, including through resource-related projects that support the transition to a clean economy. There are currently 79 clean energy projects owned or operated by First Nations in British Columbia – more than any other province in Canada.Footnote 5 There were 22,690Footnote 6 Indigenous-owned companies in British Columbia in 2021. First Nations-owned businesses and governments generate 58,000 full time jobs annually.Footnote 7
Exports and service-sectors kept the British Columbia economy strong
In 2023, British Columbia exported $56.2 billion in goods and services, the second-highest value of exports ever recorded for the province.Footnote 8 Natural resource products continued to drive provincial exports, including energy ($19.7 billion), wood products ($7.7 billion) and metallic mineral products ($6.5 billion). Global demand for these products is expected to increase over the short-term and benefit from the low Canadian dollar.Footnote 9, Footnote 10, Footnote 11 At the same time, British Columbia’s economy continues to diversify with growth in the services sectors. In 2023, 76% of British Columbia’s GDP was generated by service-producing sectors, led by real estate (18.6% of GDP) and professional, scientific, and technical services (7.9%).Footnote 12 Service sector exports were 29.2% ($22.5 billion) of total exports in 2021. Personal travel services ($5.6 billion in 2019) led services exports, except during the pandemic in 2020 and 2021, when education travel services became the province’s largest service export sector ($3.8 billion in 2021).Footnote 13
High interest rates, labour disruptions, and declining major project investments
Despite strong macro-economic performance, businesses in British Columbia continued to face challenging business conditions. In July 2023, interest rates peaked at 5% and remained at that level for the rest of the year. Further, British Columbia experienced twelve prolonged labour strikes in 2023, including a two-week strike at the Port of Vancouver. These factors created a challenging environment for British Columbia businesses in conducting business and getting products to market. Several major construction projects that drive regional economies in northern British Columbia were completed in 2023, with far fewer expected to start in 2024. At the end of year, the value of capital investment in major projects across British Columbia had dropped by 23.5% from 2022 levels, resulting in short-term employment gaps in communities that were relying on construction jobs.
Population growth outpaced housing construction, adding to affordability pressures
The cost of living in British Columbia increased in 2023 due, in part, to new housing construction not keeping pace with historic population growth. In 2023, British Columbia’s population growth rate was the highest since 1971 (3.3%). Housing costs remained the highest in the country, with the average house price reaching $1,017,310 in May 2023 (compared to $728,011 in Canada),Footnote 14 while the average rent in Vancouver was over $3,000.Footnote 15 Affordability challenges for British Columbians were somewhat offset in 2023 by wage growth. Average wages grew by 6.5%, which was faster than the national average of 5%. By December 2023, British Columbia had the highest average wages of any province in Canada, although this had an adverse impact on the cost of labour.
Economic growth impacted by natural disasters
The 2023 wildfire season was the worst ever recorded, resulting in over $720 million in insured losses.Footnote 16 Wildfires in the Okanagan (McDougall Creek) and Shuswap (Bush Creek East) destroyed critical infrastructure and created backlogs at ports. Climate change disasters from wildfires and floods are expected to increase.
Looking ahead
The economic outlook for British Columbia will vary across the province, with capacity to lead and partner in economic development activities more limited in some regions than others. A lack of business investment continues to create a challenging business environment. However, there is global market demand for British Columbian products and services ranging from critical minerals to professional and technical expertise. Increasing economic participation by Indigenous communities supports economic diversification, especially in remote regions of the province. In addition, British Columbia’s post-secondary institutions attract top-talent, helping to create the workforce of the future.