Victoria has managed to successfully navigate the economic uncertainty created by the ongoing trade dispute with the U.S., but storm clouds are gathering on the horizon.
Those are some of the findings from the Conference Board of Canada's latest outlook for the Victoria economy.
“This year, Victoria will be one of the better performers as its economy is among the most service-centric in the country. With tariffs from the United States and China targeting goods-producing industries (such as aluminum and canola), the city's service-centric economy is relatively insulated. Victoria's per capita GDP will grow by the fastest rate of all cities we cover at 1.1 per cent in 2025," said Shane Brimacombe, senior economist at the Conference Board of Canada.
Victoria's bustling service sector has allowed the city to insulate itself in the face of protectionism from the United States, with real GDP forecast to grow 2% in 2025, falling to 1.8% for 2026 and 2027, before rising to 1.9% in the following two years.
But international migration restrictions will see population gains in the city fall to a 15-year low in 2025 and weaken further in 2026.
"A strong streak of job gains dating back to 2021 will come to an end in 2026 when employment falls 1.7 per cent as immigration restrictions catch up with employment and tariffs weigh on good-producing sectors," according to the Conference Board of Canada (CBoC) outlook.
Despite the trade chaos, Victoria is on track to add jobs in 2025 – however, the 7.7% increase in employment witnessed in 2024, will fall to just 0.7% in 2025.
"Employment gains will slow after a number of years of rapid increases," said Brimacombe. "We expect average annual job growth to come in at 0.7 per cent from 2026 to 2029, leading the city's economic growth to come in the bottom third of the 24 cities in our outlook during this period.”
The outlook forecasts that a pullback in services-sector hiring, on top of stumbling goods production, will result in job losses in 2026. "Goods sector employment will fall 3.9 per cent in 2026, while services sector employment will shrink 1.4 per cent – adding up to a 1.7 per cent loss in total employment."
A friendlier economic environment is expected by 2027, with projected job growth of 1.7%, 1.4% and 1.3% from 2027 to 2029.
The retail sector is in the midst of a roller-coaster ride, with employment expected to climb 21.2% in 2025, bouncing back from a rough 2024 when jobs fell 14.1%.
"With the trade war progressing, we expect retail trade jobs to fall 7.8 per cent in 2026 and 1.3 per cent in 2027," said the CBoC.
Even government roles aren't as secure as they once were, with public administration employment averaging 8.4% growth since 2023.
"With the federal government planning to cut spending and the provincial government’s record deficit in fiscal year 2024-25, we expect public sector jobs to fall 8.0 per cent in 2026," according to the outlook.
A tightening labour market is expected to put upward pressure on wages, expected to rise an average of 2.2% over the next four years and outpace the projected 1.9% increase in inflation.
And that tightening job market will be felt in housing construction. The 16.2% drop in housing starts seen in 2024 will be offset by expected 16.5% growth this year, with 4,870 units on stream for 2025.
"This strength will be short-lived, however, as labour constraints will limit home builders’ ability to maintain current levels," said CBoC, which predicts housing starts will fall to 3,660 units in 2026, 3,430 units in 2027, and an annual average of 3,330 units in 2028 and 2029.
Construction jobs are on track to rise by 3.1% in 2025, in line with increased home building and the beginning of the second phase of the redevelopment of the Belleville ferry terminal. The $416-million terminal that serves as a link with Washington state is expected to be complete in 2028.
"While the redesigned terminal will expand passenger and cargo capacity between Vancouver Island and Washington state, current tensions between Canada and the United States may delay the return on investment, given weaker trade and travel between the two countries," said the outlook.
And the limited home building is anticipated to lead to a deepening housing crisis for Victoria.
"The average resale price of a home has stabilized at $1,000,000 since the beginning of 2022, well out of the price range of the average Canadian," said the CBoC. "With fewer new houses on the way, it paints a stark picture for middle-class residents of the city who are looking to become homeowners."
