BCBC recaps the weekly business and economic news stories from the week ending September 4 relevant to British Columbia's economy.
1. Market volatility continues for a second week
Global market volatility continued this week following the dramatic losses in late August followed by a modest rebound. This week saw advances followed by a slight drop at the end of the week. BC based resource companies didn't escape the impact of the markets amid increasing challenges for commodity producers.
For more on the market activity this week and questions around what the recent positive US job numbers mean in advance of the US Federal Reserve’s mid-September click HERE.
Note, the next Bank of Canada meeting on its overnight interest rate is this coming Wednesday, September 9th.
2. Why are we calling it a “technical” recession?
Economists across the country this week voiced their opinions on the state of the Canadian economy now that is has entered a “technical” recession. Some economists note that a technical recession is still a recession, while others point to concurrent positive economic indicators that accompany Canada’s slump in GDP growth. With positive job and retail numbers as well as a shrinking trade deficit due to increased exports, it is too soon to panic note many economists, including BCBC’s Jock Finlayson.
Economist David Rosenberg outlines the somewhat conflicting data between our GDP growth rates and the recent gains in the national job numbers HERE.
You can also hear BCBC’s Jock Finlayson on CBC Early Edition sharing his insights on the Canadian and BC economy HERE.
3. Who is talking about Canada’s development and infrastructure activities?
Two global economic publications this week looked at Canada – and in one case Metro Vancouver specifically – regarding infrastructure financing, the availability of cheap money in a low interest rate environment and its role in development.
The Wall Street Journal looked at the over 50 projects valued at more than $15 billion clustered around Metro Vancouver’s rapid transit services. The article notes that land prices have increased in some circumstances by nearly 150% - which begs the question: what are the municipalities doing with all this new property tax revenue? Perhaps – as the Business Council has suggested – a portion could be put towards paying for improved transit services?
Read the WSJ article HERE.
The Economist has taken wealthier nations to task on potentially squandering the opportunity to borrow cheap money to invest in improving failing infrastructure in this low-interest rate environment. Although the article did single out Canada and Austria as having stepped up our infrastructure spending (Canada’s has risen from 2.5% of GDP a year in 2000-2006 to 3.3% in 2007 – 2012) – the Business Council continues to advocate for governments to look at the opportunities to borrow today to build infrastructure that will facilitate economic growth well into the future.
Read The Economist Article HERE.
4. BC top spot for tech start-ups
According to a recent report by the Conference Board of Canada, Canada receives a C rating on innovation performance, ranking 9th among 16 peer countries. However British Columbia is a bright spot having earned an overall B rating and an A+ grade when it comes to ‘entrepreneurial ambition.”
Details of the report can be found HERE and news coverage specific to BC’s outcomes can be found HERE.
5. Petronas: $5 Billion and 662 days later…
This week, Business in Vancouver highlighted the money spent to-date by Petronas as work to advance its $36 billion LNG project in northwest British Columbia continues. According to recent remarks by Michael Cuthbert, president of Progress Energy and Pacific NW LNG, the Canadian Environmental Assessment Agency review is nearing day 670 and the company is spending an average of $2 billion per year. Read more about his comments and the nature of the investment HERE.
