Despite pressures in some sectors, the B.C. economy will remain strong heading into the Vancouver-Whistler 2010 Winter Olympics, predicts the Royal Bank of Canada's chief economist.
Craig Wright told a Vancouver Board of Trade luncheon that the province's economy will grow by approximately four per cent this year and in 2006.
"I think we've seen a transition in the economy from a number of years of disappointing weakness and as we go forward, there's a number of positives to suggest B.C. will continue to be a leader across Canada in terms of growth prospects," Wright told reporters after his speech at the Pan Pacific Hotel.
"Last year, you led Canada and this year you'll probably be second, so it's a transition from a dismal decade to a dynamic decade and ongoing strength."
B.C. will also face challenges as the hot economy faces "cyclical pressures" in the near term and adjusts slightly downward. The construction sector will be among the hardest hit,along with tourism, which "gets hit twice" by a rising Canadian dollar that encourages more people to travel outside Canada, and Americans who prefer to stay home in the wake of 9/11 and similar geopolitical shocks.
Businesses and government have to avoid direct spending, said Wright. "The focus on any money - either fiscal dividends they have or profits they have - should be on the investment end, and that (investment) will pay long-term dividends and cushion the adjustment as we go forward."
The province's shortage of skilled trades workers will pose its biggest challenge in the next few years. But the problem, which is prevalent across Canada, should be offset by more immigrants, more in-migration from other provinces and a decline in new-housing starts, which will shift some of the workforce to Olympic-related projects.
The province will continue to benefit from continued strong growth, continued low unemployment (which will ease the burden of increasing consumer debt loads), decent employment gains, a fairly strong consumer sector, decent investment and "okay numbers in the trades."
But Canada's softwood lumber dispute with the U.S., which is largely B.C.-based, will not deter investment, regardless of the outcome, he noted.
"Short term, it may not show up in the numbers," said Wright. "Longer term, I don't think we're looking at significant risks. It gets tons of media attention within B.C. The attention diminishes as you move outside the province or, indeed, outside of the country."
The public teachers strike won't have any long-lasting negative effects either, he predicted.
But at least one Vancouver-based business operator who attended the luncheon had hoped to hear more about potential Olympic-related benefits from Wright, who reeled off countless figures in his speech.
"While it was interesting, it was a financial report," said Maurice Cardinal, president of Area46.com Media Communications.
"I was a little disappointed that there wasn't more information specifically related to what a small and mid-sized business organization should be preparing for in the ramp-up to 2010. For smaller and mid-sized businesses, the ramp-up is the most important part of creating some type of a profit strategy. Everyone can be involved in the Olympic, but not everyone can profit. It's very hard for small and mid-sized businesses."
Area46.com is helping tourism, mining, manufacturing and companies in a variety of other sectors launch promotional campaigns related to the Games. Cardinal said his firm's research shows B.C. firms, which are mostly small and mid-sized, are waiting "and they don't realize the window is very small" when they should be trying to build a "global vantage" right now.
Companies from Calgary, Seattle and Toronto are beating out B.C. firms on Olympic contracts, he said. For example, Toronto-based Bell won the telecommunications contract over Telus.
"We need some local large companies to really swing for B.C.," said Cardinal. "And that's what we're trying to do, but on a smaller level with small business."
Lane Mearns, CEO of Calgary-based American Wireless Technologies Inc., which is setting up a research and development facility in Vancouver in January, said Wright showed the value of technology solutions to the Olympics given the critical shortage of manpower.
American Wireless is teaming up with U.S.-based Industrial Software Solutions, known by its Wonderware brand, on a $10-million Olympic sponsorship, said Mearns. Under the deal, the two companies will provide tourism and security-related network technologies to the Vancouver Olympic Organizing Committee (VANOC).
Jason Hong, president of Argo Ventures Inc., a Vancouver-based real estate firm that invests in shopping centres, said Wright expressed the same view that he has on B.C.'s economy - it will go through an adjustment and then continue to grow.
(Monte Stewart can be reached at firstname.lastname@example.org)