News Release - Business Council of B.C. updates B.C. Economic Review and Outlook, Forecasts Headwinds and Challenges for Provincial Economy
Vancouver, BC – October 23, 2019 - The Business Council of British Columbia (BCBC) has downgraded its forecast for the province’s economy in its latest B.C. Economic Review and Outlook (BCERO). The Council now sees the economy expanding by 1.8% (real GDP) in 2019, down from 2.0% in the previous BCERO publication.
Key highlights of the updated outlook include:
- Growth has been downgraded to 1.8% from 2.0% for 2019. Next year, we project a slight pick up to 2.2%, bolstered by high levels of non-residential construction, including LNG Canada’s massive Kitimat project and some other public sector projects;
- Despite slower growth, the job market remains decent, although employment levels continue to fall in resource-dependent regions. There are also signs of a broader overall softening in job creation due to the crisis in forestry and very weak retail sales; and
- The earlier boom in sectors tied to real estate and residential development continues to slowly unwind;
- Non-residential construction remains a notable bright spot for the B.C. economy, along with a growing population.
“Since the last B.C. Economic Review and Outlook, external factors have played a role in the slowdown now evident in the provincial economy,” said Ken Peacock, Chief Economist at BCBC. “Economic growth is expected to remain sluggish over the remainder of the year, leading to a poor hand-off into 2020. This will have a negative impact on the provincial government’s revenue forecast.”
The B.C. economy is in reasonable shape compared to the rest of Canada, but the headwinds from weaker U.S. and global growth and the unsettled international trade environment are weighing on the province’s prospects. In the Q2 outlook, we noted that growth in B.C.’s international merchandise exports was likely to turn negative. That has now happened, led by a steep fall in the value of wood product exports.
Considering the deteriorating global landscape, we see further downside for B.C.’s exports in 2020. On the domestic side of the economy, consumer spending is muted, with real retail sales declining on a population-adjusted basis. The worsening outlook for exports and B.C.’s increasingly cautious consumers have prompted us to trim our 2019-20 forecast for the second time this year.
“We now expect the B.C. economy to grow by just 1.8% this year,” said Mr. Peacock, “which is down from 2.0% a few months ago. We have also cut our growth forecast for 2020, to 2.2% from 2.5% in our previous Q2 report.”
As economic activity continues to downshift amid growing uncertainty, the Business Council is increasingly concerned about the province’s waning competitiveness, especially in the natural resource, manufacturing and transportation sectors that form the backbone of B.C.’s export economy. The tax burden on business has increased significantly in recent years, and provincial and federal legislative and regulatory developments have imposed additional costs on companies in some key sectors that underpin B.C.’s prosperity.
Looking ahead, BCBC believes policy-makers in Victoria and the incoming federal government in Ottawa need to focus more attention on the challenge of building a productive, innovative and competitive British Columbia economy.
The next B.C. Economic Review and Outlook is scheduled for release in early January 2020.
To download the full BCERO, visit the click here.
About the Business Council of British Columbia
Now in its 53rd year as the premier business organization in British Columbia, the Business Council of B.C. is a non-partisan organization made up of 200 of the leading and largest companies, post-secondary institutions and industry organizations from across B.C.'s diverse economy. The Council produces high quality public policy research and advocacy in support of creating a competitive economy for the benefit of all British Columbians.
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