Challenges remain as BC economy begins to stabilize
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Although B.C.’s economy is beginning to show signs of improvement, the global economic downturn continues to have a negative impact and British Columbia continues to face fiscal challenges, Finance Minister Colin Hansen announced today with the release of the Province’s Second Quarterly Report.
“Several of British Columbia’s major economic indicators are beginning to stabilize following the sharp global economic downturn,” said Hansen. “However, the Province’s economic recovery remains subject to a number of significant risks. Within this challenging environment, government will continue to protect vital services while we implement economic stimulus and infrastructure programs and ensure that B.C.’s fiscal plan remains on target.”
(Photo: Finance Minister Colin Hansen)
Between July and September, major economic indicators such as housing starts, retail sales, employment, manufacturing shipments, exports and non-residential building permits have begun to stabilize compared to late-2008 and early-2009.
Total revenue is projected to be $37.4 billion in 2009-10, a decrease of $232 million compared to the September Budget Update. The decline in total revenue is offset by $107 million in lower spending and a $125-million reduction in the forecast allowance. Total expense is projected to be $40 billion. B.C.’s projected deficit is unchanged from the September Budget Update and remains at $2.8 billion for 2009-10.
The B.C. government remains committed to its economic stimulus and infrastructure programs. Since the September Budget Update, an additional $1 billion in new accelerated infrastructure projects has been approved, bringing the total commitment to $4.4 billion. To date, British Columbia has negotiated $811 million in funding from the federal government for accelerated infrastructure projects. Additional cost-sharing agreements are expected to be finalized in the coming months.
The Province’s taxpayer-supported debt-to-GDP ratio, a key measure of fiscal sustainability, is projected to be 16.1 per cent by the end of 2009-10, slightly lower than the 16.2 per cent forecast in the September Budget Update. As recently announced, the Province continues to maintain its Triple-A credit rating.
Private-sector forecasters now estimate that B.C.’s annual real GDP will contract by 2.3 per cent in 2009, and then grow by 2.8 per cent in 2010 — the highest in Canada. However, the Ministry of Finance’s September Budget Update economic forecast continues to be more prudent than the private sector’s, with B.C.’s real GDP forecast to decline by 2.9 per cent in 2009 and then grow by 1.9 per cent in 2010.
In preparation for Budget 2010, the Minister of Finance will meet with members of the independent Economic Forecast Council in early December to obtain their views on the economic outlook. A revised five-year economic forecast will then be developed for Budget 2010.
British Columbia’s 2009 Second Quarterly Report is available online at http://www.fin.gov.bc.ca/qrt-rpt/qr09/Q2_09.pdf.
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