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Issue 15-74

Gross Domestic Product (GDP)

Gross Domestic Product at Market Prices

British Columbia’s economy picked up speed in 2014, expanding 3.2% (chained 2007 dollars) after posting a 2.1% increase in the previous year. The gross domestic product (GDP) growth was largely due to final domestic demand for goods and services, which ramped up 3.4% after stalling (+0.0%) in 2013.

British Columbia’s economic growth in 2013 was largely driven by external demand for goods and services, while domestic demand was weak. In 2014, domestic demand for goods and services increased while external demand for B.C. products and services rose at a slower pace.

Household final consumption expenditure increased 3.5% during the year, but non-profit institutions (+0.1%) and governments (-0.3%) kept the lid on current expenditures.

Investment spending also rebounded, expanding 6.2% after slipping back (-6.4%) in 2013. Business investment in fixed capital was up 5.4%, boosted by spending on residential structures (+7.6%) and machinery and equipment (+10.7%). However, investment in non-residential structures was down (-0.6%) for a second straight year.

Intellectual property (which includes investment in R&D and exploration and drilling activities) jumped 8.7% after stalling in 2013, and investment by non-profit institutions (+14.4%) and governments (+11.2%) also contributed to overall economic growth.

British Columbia’s trade deficit grew, as exports of goods and services expanded 2.7%, while imports were up 4.7% during the year.

The value of inventories held by B.C. producers rose significantly (+$1,505 million), indicating that the output of B.C. producers exceeded the demand for their products.

Among the provinces, Alberta (+4.8%) and British Columbia (+3.2%) posted the strongest growth in 2014. Ontario (+2.7%) was the only other province where GDP growth was above the national average (+2.5%). In the north, Northwest Territories (+5.8%) and Nunavut (+3.3%) also saw strong growth, while Yukon (-0.7%) lost ground. Newfoundland and Labrador (-2.0%) and New Brunswick (-0.3%) were the only provinces that saw GDP decline during 2014.

In Alberta, economic growth slowed, with final domestic demand rising just 1.9% during the year as business investment ground to a virtual halt (+0.3%). However, export growth and household expenditures helped keep the Alberta economy on an upward trend. Alberta’s trade balance improved as a downturn in business investment was accompanied by a decline in the value of goods and services imported from other provinces and countries.

Real GDP per capita

At $48,048, real per capita GDP in British Columbia remained below the national average ($49,171), but the gap continued to shrink as growth in this province outpaced the increase in Canada’s real GDP per capita. Alberta ($77,680) continued to have the highest per capita GDP among the provinces, followed by Saskatchewan ($56,249) and Newfoundland and Labrador ($52,347). British Columbia was ranked fourth among the provinces. In Alberta, per capita spending on gross fixed capital formation was nearly two-and-a-half times the national average, and this is one of the reasons for the large gap in per capita GDP between Alberta and the rest of the country.

Household disposable income

Real per capita household disposable income in the province was $28,809 in 2014, up from $28,797 in the previous year. This was the second-highest per capita income in the country, after Alberta ($36,714). Newfoundland and Labrador ($28,368) and Saskatchewan ($28,339) were the only other provinces where real per capita disposable income was above the national average ($27,493).

British Columbia’s household saving rate (saving as a percent of household disposable income)fell back into negative territory in 2014 (-1.9%), after climbing to 0.4% in 2013. British Columbia’s saving rate has been negative in all but one year since 1996, making it the only province that has persistently had a negative saving rate during this period, although other provinces such as Nova Scotia (-4.0%), P.E.I. (-1.5%) and New Brunswick (-0.9%) have also seen negative saving rates during some of this period.

Household disposable income includes income from employment, mixed (unincorporated business) income, and property income, as well as transfer income such as pensions and other payments made by government. A long term trend of negative saving rates means that households are consistently spending more on goods and services than they are receiving in current (after tax) income. This suggests that some of their current expenditures are being supported by income from other sources such as accumulated savings.

GDP by Industry

In the industry account, real gross domestic product at basic prices increased 2.9% in 2014. The GDP growth reflected strength in both the goods (+3.4%) and service (+2.7%) producing industries.

The goods sector picked up speed following weak growth (+0.4%) in 2013. Mining, quarrying and oil & gas extraction (+5.9%) continued to expand, as both the mining and quarrying (+7.5%) and oil & gas extraction (+5.6%) industries made solid gains. Construction (+5.4%) and manufacturing (+3.6%) also picked up speed in 2014. Paper (+8.5%), and food (+5.8%) manufacturing picked up following slowdowns in 2013, while the wood (+3.1%) manufacturing industry continued to expand.

However, other goods-producing industries did not fare as well. GDP in agriculture, forestry, fishing and hunting slipped 3.6%, as activity slowed in both forestry and logging (-9.4%) and crop and animal production (-0.9%). For the second year in a row, GDP in the utilities industry shrank (-1.8%) as both electric power generation (-2.4%) and natural gas distribution (-0.3%) lost some steam.

In the service sector, all major industries except educational services (-4.1%) and public administration (where GDP was virtually unchanged, growing 0.1%) expanded in 2014. Information and cultural services (+0.5%) posted only modest growth, but increases in other service industries ranged from 2.0% in health care and social assistance to 5.1% in the accommodation and food services industry.

Data Source: Statistics Canada

Data available on the British Columbia Economic Accounts page.

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