Scotiabank chief economist Warren Jestin was in the Okanagan this week to speak at Vernon and Kelowna chamber of commerce lunches and to a UBC Okanagan finance class.
The Okanagan Saturday
British Columbian's need liquefied natural gas (LNG) to improve their standard of living.
"Without LNG, standard of living will stagnate in the province," Scotiabank chief economist Warren Jestin said after speaking at a Kelowna Chamber of Commerce lunch at the Coast Capri Hotel this week.
"When it comes to economic boosters, nothing compares to natural gas."
B.C. is currently grappling with how quickly vast reserves of LNG from the northern part of the province can be extracted and the pipeline construction needed to get the resource to the coast for shipping to lucrative Asian markets.
Some want to surge ahead with extraction, production and transport, while others are concerned about the effects of all those activities on the environment.
"I think B.C. is on the right track," said Toronto-based Jestin.
"Energy has great potential. If the province can go head and mitigate the risks, then it will be a winning combination."
While LNG extraction will certainly be a boom for the northern B.C. economy, the economic impact is expected to ripple positively through the whole province.
There will be construction jobs, pipeline jobs, port jobs, engineering and consulting jobs, and orders from suppliers across B.C.
The Okanagan is expected to benefit by supplying workers, and consultants and suppliers from here can land contracts to feed what is expected to be a huge LNG industry.
"At the end of the day, the standard of living in B.C. hinges on energy," said the economist.
"Energy is the biggest and most lucrative export we have. Forestry is improving, but it can't bring the benefits that oil, gas and pipelines can."
To get the full positive impact of LNG, B.C. has to move quickly, according to Jestin.
"Plants and pipelines have to be built and long-term contracts with buyers in Asia signed," he said.
"It's a race, because the U.S., Australia and Trinidad all want to sell their LNG to China and India too."
Generally, Jestin is optimistic about B.C.'s and Canada's economies for 2014 with 2.2 per cent and 2.5 per cent growth respectively
That's improvement from the 1.3 and 1.8 per cent growth last year.
As a commodity-rich country with sound government, good infrastructure, good education and a reputation for quality, Canada's economy is stable and poised for growth.
However, our fortunes are increasingly tied to what else is going on in the world.
Seventy-four per cent of our exports go to the U.S., so it's important that the American economy has started to grow again.
And the Canadian dollar dropping to around 90 cents U.S. from par is actually a good thing because it makes our exports more attractive.
Jestin expects the Canadian dollar to stay in the high 80s-low 90s cents U.S. range for the foreseeable future.
While the U.S. is our biggest trade partner, Canada has to continue to cultivate exports to Asia and Europe to diversify.
Jestin also expects moderate interest rate increases as the Canadian and U.S. economies pick up steam.
"It means higher bond rates, which is good for investors," he said
"But, it also means mortgage interest rates will go up a bit."
Overall, Jestin has been astonished at the speed of change since the 2008-09 recession.
"It shook things up," he said.
"People, companies and countries had to look for new ways to do things. Technology and new markets are driving the change. It creates challenges, but also opportunities."