BC ranks last in per-capita economic performance, report finds

(Image courtesy of CBC)

A new report from the Business Council of British Columbia (BCBC) says BC’s economy is expected to post below-average growth through 2027 as private-sector activity remains weak and major construction projects conclude.

The report, Searching for the Private Sector’s Lost Mojo, forecasts real GDP growth below 2 percent in 2026 and 2027, compared with a long-term average of about 2.5 percent. Adjusted for population, BC’s real GDP per capita fell 1.7 percent in 2024 after a small decline in 2023, the weakest performance among provinces. BCBC attributes the decline in part to the completion of four large projects — Trans Mountain, Site C, LNG Canada and Coastal GasLink — worth about 100 billion dollars combined.

The economic base of BC. Chart courtesy of the Business Council of BC (BCBC).

The council says economic conditions have diverged sharply between the public and private sectors. In 2024, public administration, healthcare and education grew faster than the population, while most private industries grew more slowly or contracted. Construction and manufacturing both shrank. Over the past five years, only a small number of private industries have grown faster than the population, including professional services, finance and insurance, real estate and leasing, and construction.

Employment trends mirror the output data. According to the report, public-sector employment has increased 39 percent since 2019, while private-sector employment has grown 6 percent over nearly seven years. BCBC estimates private-sector employment is about 300,000 jobs below its pre-pandemic trend, while public-sector employment is about 115,000 jobs above trend.

BC is also experiencing near-record levels of out-migration. The report shows between 60,000 and 70,000 residents left for other provinces in the past year, similar to peaks seen in the mid-1970s and late 1990s. BCBC notes that those leaving tend to be younger and skilled, with implications for the tax base.

Government spending is providing near-term support, with BC running the largest provincial deficit in Canada as a share of its economy at 2.5 percent of GDP. The report states this level of spending is not sustainable. It also notes that national economic challenges predate shifts in United States policy, citing a decade of weak Canadian output per person and business investment per capita that is tracking about 20 percent below levels a decade ago.

Investment in BC outside publicly funded projects is described as subdued. Several proposed resource projects, including LNG Canada Phase 2 and Ksi Lisims LNG, are awaiting final investment decisions and would not begin construction until later in the decade. Residential construction has also slowed, with building activity declining from recent highs.

The report highlights uncertainty stemming from the August Cowichan decision, which raised questions about the legal status of fee simple title where Aboriginal title may be declared. BCBC says this may delay investment as “people and lenders adopt a wait-and-see approach.”

The council concludes that federal and provincial governments should review tax and regulatory settings affecting the private sector. It says the Canada Mutual Recognition Agreement on the sale of goods is a positive development for reducing trade barriers.