Vancouver Island’s economic growth isn’t going to take care of itself, and businesses and communities can either be complacent or try to lead and innovate.
Delegates at the Vancouver Island Economic Alliance’s convention this week were presented with the annual State of the Island address, delivered by MNP partner and economist Susan Mowbray on Thursday, Oct. 26, at Nanaimo’s Vancouver Island Conference Centre.
She said businesses and industries on the Island should expect a period of lower growth than what they’re used to, for a variety of reasons. For one, B.C.’s GDP growth is expected to be average, similar to Canada’s overall growth, after faring better than most other parts of the country in the years leading up to and during the pandemic. The State of the Island report noted extreme weather in B.C., stagnation of housing prices, and economic conditions in China as some of the reasons for the slowdown. As well, population growth, Mowbray said, has eroded affordability and B.C. isn’t competitive with other parts of Canada on that front.
Mowbray said while tourism hasn’t completely recovered to pre-pandemic levels, U.S. visitors and cruise travellers are back. Hotel room rates remain strong, but the economist cautioned that that’s partly because hotels have raised room rates in response to their rising costs of doing business.
“At some point, the question of value for money becomes a concern,” she said.
All sectors of Vancouver Island’s economy are challenged in one way or another, her report outlined. Even construction, she said, is slowing down due to interest rates deterring residential construction, and no change on that front is expected in 2024.
Forestry continues to shrink, with supply constraints, softwood lumber disagreement and poor market conditions challenging an industry in transition.
North Island communities that have seen their forestry industry hard-hit are getting a double-whammy with aquaculture struggling as well. Mowbray said the uncertainty of the industry’s regulatory environment is creating a lack of investment, including, ironically, a lack of investment into technology that could potentially help make aquaculture more sustainable.
The Island’s housing market will continue to limit growth potential across the economy in general. Mowbray pointed out that a benchmark house is now $750,000 almost everywhere on the Island, and $1-1.2 million in Victoria. Rich people might be able to buy a house, but not the workers in service industries. She suggested Canadians are starting to notice that a house in Calgary is half the price of a house in Nanaimo.
Mowbray concluded that in the short term, “things are going to be OK” on Vancouver Island. People will continue to move to the region, buy goods, create demand for services, and enjoy a spectacular quality of life. She wonders if long-term, Vancouver Island can do better. Mowbray said the Island has 17 per cent of B.C.’s population but 15 per cent of its GDP, which suggests to her that there aren’t enough investments being made into the economy to maintain the lifestyle people enjoy now.
“We can either be part of the conversation or we can be an observer and I think that’s where we are on Vancouver Island,” she said. “We can continue along that path of relying on population growth and residential real estate to create economic value, or we can take a more difficult path and innovate.”