B.C. will end 2019 with slower than expected economic growth, according to a Business Council of BC (BCBC) economic review and outlook.
“Economic growth is expected to remain sluggish over the remainder of the year, leading to a poor hand-off into 2020,” Ken Peacock, chief economist for the BCBC, said in a news release. “This will have a negative impact on the provincial government’s revenue forecast.”
For the second time this year, the BCBC has had to adjust its economic growth projections for B.C.’s economy for 2019. It was originally forecast at 2.2%, then downgraded to 2%. The BCBC has now downgraded it again to 1.8%.
It cites B.C.’s “crisis in forestry,” and “very weak retail sales” as some of the internal factors affecting B.C.’s economy.
B.C.’s forest industry has been hammered by multiple sawmill closures and curtailments, due to falling lumber prices in the U.S., high stumpage costs and a decline in available timber.
External factors affecting B.C.’s economy include cooling economic growth in the U.S. and uncertainties over international trade.
A trade war between China and the U.S., and Britain’s pending departure from the European Union, all appear to be putting a drag on a global economy that, just a year ago, was still firing on a cylinders.
The BCBC expects a bit of boost in 2020 from non-residential construction, largely from the $40 billion LNG Canada project and public sector infrastructure projects. But B.C. exports are expected to fall in 2020.
The BCBC has adjusted B.C.'s growth forecast for 2020 to 2.2%, which is down from 2.5% since the last outlook.
“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 BCBC warns.
“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.”
Last month, B.C. Finance Minister Carole James ordered ministries to cut discretionary spending by $300 million, in anticipation of declining government revenue.