Fewer newcomers and weak housing to weigh on B.C. economic growth: forecast | Daily Hive

B.C. legislature in Victoria. (Claudia G. Cooper/Shutterstock)

British Columbia’s economic momentum is expected to slow markedly in 2026 as a mix of trade uncertainty, weaker population growth, and a cooling housing sector weigh on activity, according to a new forecast released today by TD Economics.

The report projects that real GDP growth in B.C. will ease to about 1.2 per cent in 2026 — well below its long-run trend — before seeing an uptick to roughly 1.8 per cent in 2027 as some of those pressures begin to fade.

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The bank also revised last year’s performance slightly higher to approximately two per cent, citing stronger than anticipated gains in natural gas production alongside resilient construction and consumer spending.

A key challenge for B.C. remains external demand. While B.C. is less dependent on the United States than many other Canadian provinces, TD notes that its export performance has not outpaced peers. Sector-specific tariffs — particularly affecting lumber and base metals — are expected to continue weighing on trade through 2026.

Although liquefied natural gas (LNG) exports are expected to provide a lift in 2027, the report cautions that this will not fully offset a decline in construction activity as major projects wind down. Capital spending intentions underscore that softness, with businesses planning only modest growth of about 0.6 per cent in nominal investment next year.

At the same time, shifting immigration policy is emerging as a critical factor in the province’s short-term outlook. The federal government’s limits on non-permanent residents are expected to hit B.C. more acutely than other regions, leading to a rare contraction in population growth.

That demographic shift is forecast to dampen labour force expansion, keeping employment gains subdued in 2026. Even so, a flatlining labour supply should prevent the unemployment rate from rising significantly. TD expects hiring to pick up modestly in 2027.

Despite slower job creation, households may see some relief from real wage gains, which are projected to provide a modest boost to spending power in the near term.

The housing market, another pillar of the provincial economy, is also expected to remain under pressure. Home sales have struggled to gain traction so far this year, while average prices are still below year-ago levels.

TD suggests a more meaningful recovery is unlikely until 2027, when pent-up demand and improving affordability conditions begin to support activity. Until then, housing starts are expected to trend slightly lower, reflecting softer demand and reduced construction tied to completed mega-projects.

The economic slowdown comes as the Government of B.C. faces a widening fiscal gap. The provincial government’s latest budget projects a deficit of $13.3 billion for the 2026/2027 fiscal year — equivalent to 2.9 per cent of GDP — placing it among the largest shortfalls in its history.

Rising debt levels and spending growth that continues to outpace revenues leave B.C. more vulnerable to potential economic shocks, TD warned. While contingency reserves provide some short-term cushion, the broader fiscal trajectory could limit flexibility if conditions deteriorate further.

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