No economy is recession-proof, but Vancouver Island is diversifying and becoming better-equipped to be able to stave off any slowdowns, says a senior economist.
The annual State of the Island economic report was released Wednesday at the Vancouver Island Economic Summit in Nanaimo. Susan Mowbray, partner at MNP, presented the report to delegates at the Vancouver Island Conference Centre and her advice was not to panic.
“Growth is expected to slow, there’s no question about that, but there’s no indication it’s going to stall yet,” she said. “And that is because of that diversification.”
Mowbray said because Vancouver Island has “a small, open economy” that isn’t independent, outside factors do have an effect. The pace of growth or lack of growth on the Island might depend on a range of influences, she suggested, such as global tensions and trade uncertainties, large-scale infrastructure projects elsewhere in B.C., and contraction of the forest industry.
The economic report notes that on Vancouver Island, population and employment growth contributed to overall growth, “albeit at a more moderate pace than in 2017.” Mowbray said growth in 2019 is going to be lower than 2018, and 2020 will be lower still, some of the reasons being slowdowns in housing and construction “and just a general malaise in the economy” brought on by global factors.
Vancouver Island’s unemployment rate is not only the lowest in B.C., but the lowest in Canada, Mowbray said, and the Island and the Lower Mainland are experiencing “very acute” effects of a tight labour market.
“It’s made it really difficult for employers to be attracting and retaining the workers that they need,” she said.
The report found that the Island’s tourism industry continued to perform well in 2018, especially considering a “relatively unfavourable [currency] exchange rate,” Mowbray said.
Conversely, the forestry industry had a “difficult year” in 2018, the report showed, and challenges have continued or worsened in 2019. Mowbray pointed to a lack of available trees, the absence of a softwood agreement, Teal-Jones Group ceasing harvest activity and the Western Forest Products labour dispute as some of the long- and short-term factors. A drop in production combined with mill closures and curtailments have resulted in a decline in shipments of forest-related products.
“There’s still going to be a forest industry on Vancouver Island – it’s just going to be a lot smaller,” Mowbray said. “Now, if I’d said that 13 years ago at the first summit, it would have been cause for significant concern, and don’t get me wrong, it’s still certainly a cause for concern.”
However, she noted that although there are more than 2,000 fewer forest-industry jobs on the Island since 2015, that same time period has seen the creation of more than 40,000 overall jobs. Film and TV, technology, craft brewing and cannabis, for example, aren’t large industries on the Island, relatively, said Mowbray, but “collectively they make a big difference and they do matter.”
It’s part of a shift toward a Vancouver Island economy that’s less dependent on any one industry, she said.
“By diversifying, Vancouver Island’s economy is becoming less dependent on cyclical swings in individual markets – such as what’s happening with forestry – and more resilient,” Mowbray said. “I’m not going to say recession-proof because no economy’s recession-proof, but more able to weather the storms.”
The 2019 State of the Island economic report was prepared by MNP for the Vancouver Island Economic Alliance. Pete van Dongen, MNP’s marketing manager for the Island, said the report has become a model for other regions to follow. He talked about how Vancouver Island has changed and grown since the first economic summit in 2007.
“I can’t help but think how our discussions today and tomorrow and the relationships that we build and the actions that follow from this event will change the course of our businesses, our communities and our Island as we look years into the future,” he said.
The room is packed for 'The Here, Now and Soon of Clean Tech!' session happening now at the 2019 State of the Island Economic Summit where Island business and community leaders are planning economic futures through green initiatives. #Nanaimo #VISummit @NanaimoBulletin pic.twitter.com/lqKTFfXm3H— Chris Bush (@ChrisBushphotog) October 24, 2019