B.C Forestry sector to outperform provincial growth in coming years

VANCOUVER (Scrap Monster): The B.C Forestry sector growth has slowed down recently. However, analysts at financial services form Central 1 Credit Union believe that the industry outlook still remains bright. Furthermore, it expects forestry sector to turn out to be a major contributor to region’s economy in 2015 and 2016.

The demand remains subdued when compared with the peak levels witnessed during mid-decade. The impact of mountain pine beetle infestation is likely to put pressure on the industry over a longer term. Despite all these factors, the huge rise in demand pushed B.C’s timber harvest during the entire year 2013 to nearly 71 million dry cubic metres. Timber harvests in Coastal region spiked up due to increased demand from Asian region especially Japan and China. The slump in U.S housing badly impacted northern B.C forestry sector growth.

Lumber production by the region recovered almost 30% from the lows of 2009, however, the annual production during 2013 were still only 75% of the peak production. The rising lumber exports to China and gradual pick up of momentum in US housing market aided regional exports.

The slowing Chinese economic growth and fall in demand from Japanese reconstruction sector may also limit B.C’s forestry growth going forward. Central 1 notes that B.C’s forestry sector growth is likely to depend mainly on stronger US housing market. It expects US housing starts to rise 20% during 2015. The lumber exports to China are also likely to remain strong. The growth in forestry related output will increase from 2.5% in 2014 to nearly 4% in 2015 and 2016.