But Olympics bringing building-capacity risk
Brian Lewis
Province
B.C.’s still-booming economy is outpacing expectations and will hold the No. 2 spot behind Alberta this year, a Royal Bank forecast said yesterday.
However, on the heels of a 3.8-per-cent growth rate this year, B.C.’s economy should grow by four per cent next year. That’s higher than any previous B.C. forecast for 2006.
“B.C.’s growth has outpaced expectations and virtually all sectors of its economy are performing well,” said RBC chief economist Craig Wright.
“But while we expect healthy growth prospects for some time, there is reason to be concerned about long-run risks related to building capacity pressures.”
B.C.’s economy is already operating at near capacity, he explained, while the peak of building for the 2010 Games has yet to occur.
“The challenge will be to use fiscal prudence and long-range planning to sustain solid economic growth.”
A four-per-cent growth rate in 2006 would put B.C. in third place behind Newfoundland (6.5 per cent) and Alberta (4.9 per cent).
The RBC report forecast Canada‘s economy will outperform the U.S. economy next year. It calls for national growth of 2.9 per cent this year in Canada with an increase to 3.4 per cent in 2006.
It also said that Canada‘s economy has shown “impressive resilience” to the higher Canadian dollar and higher energy prices.
It predicts that this resilience will continue.
However, RBC also said that the Bank of Canada will likely continue with its series of small interest-rate increases to keep inflation under control.
The report forecasts a modest decline in the dollar next year to 82 cents US.