Some of the optimism about the global economy evident in early 2014 has diminished in recent months, causing forecasters (including the Business Council) to revise down their growth projections. The change is not dramatic, but the tone has shifted in a more cautious direction.
- Projections for the global economy have been scaled back since the outset of the year, mainly due to weaker growth in emerging markets.
- The US economy experienced a significant but temporary setback in the first three months of 2014; it should regain lost momentum in the coming quarters. With job creation picking up, consumer spending gaining ground and fiscal drag fading, the American economy is on a path to more solid economic growth.
- BC’s export sector made some gains over the past year, with most of the improvement stemming from rising sales to the US. A setback in shipments to China is tempering BC’s overall export performance.
- The domestic side of the provincial economy is mixed. Job creation remains underwhelming and consumer spending, while improving, is far from robust. On the other hand, housing market activity has perked up in response to lower mortgage rates and non-residential construction spending is at a reasonably healthy level.
- The timeline for LNG and other large capital projects in BC has been pushed back. Combined with the soft BC job market and a slightly weaker global economy, this has caused us to shave our growth forecasts for 2014-15. We now look for real GDP to expand by 2.2% this year and 2.9% in 2015.