B.C. Economic Growth

In its Economic Outlook for 2011 released Monday, the Canadian Chamber of Commerce predicted growth in Canada will be below 2.5 per cent in 2011.

The two key sources of growth earlier in this cycle — consumer spending and housing activity — are cooling down, the chamber reports, and business investment is expected to make a significant contribution to growth over the next two years.  However, Vancouver-area business owners are more optimistic:

“I’m forecasting year over year growth for sure,” said Fiona Rintoul, owner and operator of Flip-flop Shops on West Fourth Avenue in Vancouver.  “It seems to me people are even planning vacations more than a couple of months ago.  I’m just seeing lots of people planning on travelling. More holidays must mean more disposable income.”  Rintoul said she even expects to hire staff for the high season from April to September and may even add an extra position for out-of-the-shop promotion.  “I don’t want to sound like I’m going against all the economists, and maybe the statement that customers seem to have more disposable income is too general, but I haven’t seen a huge resistance to the prices of our products,” Rintoul added. “That could be because we’re such a niche business [that] when you come in you’re looking for something specific and we have it, so you’re going to buy it anyway.  If we were a general shoe store, I may very well see that people aren’t buying as much.’

Restaurateur Fred Soofi, owner and chef of Pasta Polo in Coquitlam, is similarly optimistic for 2011.  “I think Canada will be in really good shape,” Soofisaid.  The economy has not made a huge difference to his business this past year.  “Sales did drop a bit, but also my expenses have dropped too,” he said.

Only 39 per cent of companies plan to increase employment over the next year while 48 per cent plan to maintain employment levels, according to the Bank of Canada’s October Business Outlook Survey.  Businesses expect productivity gains from new equipment or new processes rather than through hiring new staff.

On the bright side, business investment — especially in machinery and equipment — is expected to drive economic growth in 2011-12.  Machinery and equipment imports reached a 13-year high in October, according to the chamber, and the strong Canadian dollar, low interest rates, tariff cuts and high corporate cash balances are expected to support increased capital investment in the future.

All provincial economies are projected to expand in 2011, according to the chamber, with expansion led by resource-based provinces B.C., Alberta, Saskatchewan, and Newfoundland and Labrador.

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