2015 is looking good for business in B.C.
Forecasting the future is always difficult. Nevertheless, as a bright new year dawns, there are many reasons to be optimistic about what will happen in the economic and business sectors in British Columbia in 2015.
Exports will boom this year. The low Canadian dollar will ensure that just about anything we want to sell will seem like a real bargain in many of the countries to which we export, especially the United States.
Lumber sales will be particularly strong for at least three reasons:
The American economy has been picking up and will continue to do so in 2015. The U.S. does not produce enough wood to meet all its needs.
The number of housing starts (a very important indicator of the demand for lumber) will also continue on an upward path.
The Softwood Lumber Agreement (SLA) under which Canadian lumber producers gain what limited access they now have to American markets is due to expire in October.
The American lumber lobby seems reluctant to extend the SLA. Any replacement could be even less favourable to Canada and could take a long time to be put into place. In any case, there will be a period of uncertainty. Those selling lumber in U.S. markets will have every incentive to maximize their sales well before October. Some are also wisely developing more customers in Asia and elsewhere outside the U.S.
In 2015, exports will more likely be in services rather than traditional things you can drop on your toe, like lumber.
One such service is education — specifically education to non-Canadians, whether they buy education from Canadian institutions operating abroad or come here as international students. In some years, the foreign exchange brought into Canada by international students exceeded sales of traditional commodities like softwood lumber or coal.
International students and their parents They know Canada is clean, safe and stable, and Canadian high-quality education is globally recognized. Currency exchange rates are another thing of which they are aware. Expect the low Canadian dollar to increase even further the share of footloose students who come here.
Tourism is another service sector that will prosper. The low loonie will encourage more Canadians to take their holidays in Canada at the same time as it is attracting visitors from the U.S., and those who might otherwise have gone to the U.S.
Well-designed and well-marketed tourism products should find it easier to sell to capacity in 2015 than in many other years. One constraint will be attracting and retaining sufficient skilled and motivated staff.
The construction sector may also be facing possible labour shortages. Because of low energy prices and other factors, 2015 may not see the start of any of the much-discussed LNG projects. Far more likely is the commencement of the Site C dam this year. This mega-project by itself could create scarcity in construction trades, even though investment in commodity-related projects will be down because of low prices. Residential construction will also continue in the Lower Mainland and the southern parts of the province. Housing prices may not continue to climb, but do not hold your breath waiting for the so-called housing bubble to burst.
Entrepreneurs should have a great year in 2015. Interest rates are likely to remain low in Canada (but not necessarily in the U.S.) making capital and debt much less costly.
Again, the low loonie makes Canadian businesses and products more competitive globally.
Here, too, services will likely win out over conventional products with most successful entrepreneurs producing the kinds of products that come on a smartphone.
Ordinary British Columbians can anticipate a good year, even if they have to cut back on holidays abroad. Interest rates are likely to remain low, so the burden of carrying any mortgage or other debt will not increase.
Jobs will be available to those who have or can get suitable skills and head to the growing sectors discussed above. Gasoline, ferry fares and other goods and services with a large energy component will be cheaper, leaving a bit more disposable income in our pockets.
All in all, good reasons to be optimistic about 2015.