While B.C.'s economy has muddled along relatively well over the past couple years, the global economic situation is clearly taking its toll.
Central 1 Credit Union's latest forecast for the province paints a gloomier picture for 2012 than its initial analysis at the start of the year. In March, it pegged 2012 GDP growth at 2.4%. Its September forecast downsized economic growth to 1.7% by the end of the year.
The growth forecast for 2013 has also tumbled to 2.2% from 2.8%.
The expected surge in economic growth has now been pushed forward a year into 2014, with GDP growth rising to 2.9% and hitting 3.5% by 2016.
Global factors seemed to have played a role in B.C.'s diminished growth so far this year. A Scotia Economics report released in August noted for a second year in a row, the global economy had lost momentum in the first half of the year. Both periods were affected by market volatility stemming from renewed fears over the solvency and stability of Greece and other key Eurozone countries.
That uncertainty has clearly had a ripple effect in key B.C. export markets. China has been among them with the world's second-largest economy showing persistent signs of slowing to new lows. That's been reflected with lower demand from the Chinese economy for key B.C. exports, including lumber and copper. (See Mining List data, page 31.)
The natural gas market has also faced challenges, which has forced the provincial government to cut spending further because of a higher deficit than earlier forecast.
Concerns over the U.S. economy have also not abated with fears of a "fiscal cliff" coming at the end of the year as $750 billion in tax and spending measures meant to boost the economy are on the line until after the U.S. presidential election in November. If decisions aren't made in time, some fear the result could be another U.S. recession.
That worst-case scenario would likely push B.C. on a downward slope of its own. But so far, it's something that Central 1 doesn't think is going to happen. It pegs the risk of another U.S. downturn at between 30% to 40%. Not entirely reassuring, but not bad either. •
