Construction boom to boost growth

Friday, December 30th, 2005

Paul Luke

B.C.’s economy will stay in the pink next year and beyond as the province ramps up a slew of huge capital projects, Bank of Montreal says.

Powered by infrastructure building, the province will post 4.0-per-cent growth in GDP next year, up from 3.5 per cent in 2005, the bank said yesterday in its provincial outlook.

That performance will hand British Columbia third place in the national growth rankings, right behind top-placed Newfoundland and runner-up Alberta, BMO’s forecast said.

National growth in 2006 will rise to 3.5 per cent from 2.9 per cent in 2005, the bank said.

“Next year, the westward tilt is expected to continue, although Newfoundland and Labrador will be the exception to the rule as major developments in the mining and oil sectors ramp up to full production,” said Rick Egelton, chief economist at BMO Financial Group.

“In British Columbia, a construction boom — in part due to preparations for the 2010 Winter Olympics — will increase growth.”

That boom will help to drag B.C.’s unemployment rate down to 5.0 per cent next year from an average of 5.9 per cent this year, BMO said.

In 2007, the jobless rate is expected to sink even lower to 4.8 per cent.

A myriad of big infrastructure investments will dominate activity in industrial, commercial and institutional construction next year, the bank said.

The bank identified the $1.7-billion Richmond-Airport-Vancouver line and the 10-year, $1.8-billion expansion of the Vancouver airport as two of the largest projects.

The bank said demand for lumber will soften as the North American housing boom winds down over the next few years.

“An abrupt decline in commodity prices — particularly lumber prices, which might result from a quick end to the U.S. housing boom — could result in significantly lower growth over the medium term,” BMO said.

The province’s GDP growth will ease to 3.5 per cent in 2007 and 3.2 per cent between 2008 and 2010, BMO said.

Still, that will outpace national growth of 3.2 per cent in 2007 and three per cent from 2008 to 2010, BMO said.

The loon should trade between 86.4 cents and 87 cents US over the next year, the bank said.

Central Canada, Manitoba, and New Brunswick will continue to grow next year as manufacturers adjust to the stronger loon, BMO said.

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B.C.’s economy will dine at a multibillion-dollar banquet of construction projects. Those listed by Bank of Montreal include:

– The planned $800-million Coquitlam light-rail service, the $626-million upgrade of the Sea-to-Sky Highway, the planned $650-million Golden Ears Bridge, an $800-million expansion of the Port Mann Bridge and the $800-million South Fraser Perimeter Road.

– A $615-million expansion of the Vancouver Convention Centre is already underway, as is a $670-million upgrade of the Trans-Canada Highway through Kicking Horse Canyon.

As well, there are two proposals for multibillion-dollar pipelines from the Alberta oil sands to Kitimat and two other proposals to build LNG terminals at Kitimat and Prince Rupert.

Other projects underway or proposed are three ski resorts, two generating stations and a water-treatment plant.

The 2010 Winter Olympics has it own $620-million infrastructure budget.

© The Vancouver Province 2005

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