B.C. struggling against recession, says RBC



    Weakness widely felt across the province

    TORONTO, June 15 /CNW/ - The weakness in British Columbia's economy has
spread and accelerated in recent months, pointing to an overall decline of 1.9
per cent in provincial real GDP for 2009, according to the latest provincial
forecast released today by RBC. However, with the worst of the recession
likely passed, B.C.'s economic future is looking brighter, and 2010 should
show a rebound to a 2.9 per cent growth.
    "British Columbia's economic performance has deteriorated significantly
since the middle of last year," said Craig Wright, senior vice-president and
chief economist, RBC. "Weakness has spread beyond the long-suffering forestry
sector into mining, construction and manufacturing. The service sector has not
been spared either, as transportation and retail trade also have staggered."
    With little hope of a meaningful rebound in U.S. housing construction in
the near term, the report expects that B.C.'s forest products sector will
remain focused on rationalizing production capacity. This will continue to
weigh on exports, employment and private capital spending. The mining sector
will fare little better, with weaker coal prices and waning demand prompting
cuts in output.
    The RBC report also points out that the provincial housing sector is
still in a fragile state. Housing starts are forecast to drop by 57 per cent
in 2009 to a total of 14,700 units, the lowest tally since 2000. Significant
job losses and surging unemployment since September mean consumers will be
hard-pressed to step up spending until their economic prospects improve later
this year.
    "Consumers have gone into hiding over the past several months, shunning
major expenditures such as automobiles, home furnishings and costs related to
home renovations - this has contributed to significantly lower retail sales,"
noted Wright.
    The report anticipates that the substantial ramp up in public
infrastructure spending - slated to jump by 15 per cent in this fiscal year -
will help to partly offset the weakness in the rest of the economy. This will
also help set the stage for a return to overall growth next year, which will
be further fueled by an expected recovery in commodity markets and higher
tourism activity arising from the 2010 Olympic and Paralympic Winter Games.
    The main theme of the RBC Provincial Outlook is that tremendous weakness
late last year and early this year has prompted a downward revision to real
GDP growth forecasts across the board for 2009. Recent developments lend
support to RBC's view that a general recovery will be established by the
second half of 2009 and sustained in 2010. In 2009, expectations are that the
economies of only three provinces - Saskatchewan, Manitoba and Nova Scotia -
will grow, while all other provincial economies will contract. Ontario (deep
troubles in the auto sector) and Newfoundland and Labrador (sharp drop in
mineral and oil production) are taking the biggest hits, with Alberta
(cutbacks in business and residential investment) being the other province
showing above-average decline in activity. However, RBC continues to project
that growth will return to all provinces next year.
    The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales and
housing starts.
    According to the report (available online as of 8 a.m. EDT today, at
www.rbc.com/economics/market/pdf/provfcst.pdf), provincial forecast details
are as follows:

    
                      Real GDP         Housing starts         Retail sales

                   Y/Y % Change          Thousands            Y/Y % Change
                08     09     10      08     09     10      08     09     10
                --     --     --      --     --     --      --     --     --

    N.& L.    -0.1   -3.5    3.0     3.2    3.2    3.0     7.6    0.1    4.8

    P.E.I      0.9   -1.8    2.0     0.7    0.5    0.7     5.6   -1.3    4.1

    N.S.       2.0    0.2    2.5     4.3    3.2    3.5     4.2   -2.8    4.5

    N.B.       0.0   -0.5    2.7     4.2    3.5    3.5     5.9   -2.2    4.1

    QUE.       1.0   -1.6    2.3    47.9   38.9   37.0     5.1   -1.5    4.5

    ONT.      -0.4   -3.4    2.2    75.6   52.7   65.0     3.5   -3.0    4.2

    MAN.       2.4    0.5    2.8     5.6    3.9    5.3     7.2   -2.6    5.4

    SASK.      4.4    0.7    2.8     6.8    3.3    3.7    10.6   -1.9    5.8

    ALTA.     -0.2   -2.5    2.9    29.0   16.7   28.0    -0.1   -7.8    5.7

    B.C.      -0.3   -1.9    2.9    34.3   14.7   23.0     0.3   -6.5    5.9

    CANADA     0.4   -2.4    2.5     211    141    173     3.4   -3.7    4.8


                    Employment        Unemployment rate

                   Y/Y % Change               %
                08     09     10      08     09     10
                --     --     --      --     --     --

    N.& L.     1.5   -2.6    1.1    13.2   14.7   14.8

    P.E.I      1.3   -2.3    1.0    10.7   12.5   12.6

    N.S.       1.2   -0.4    1.0     7.7    9.3    9.6

    N.B.       0.9   -0.5    0.6     8.6    9.5   10.3

    QUE.       0.8   -1.0    1.1     7.2    8.8    9.4

    ONT.       1.4   -2.6    1.0     6.5    9.3    9.9

    MAN.       1.7   -0.1    1.3     4.1    5.1    5.6

    SASK.      2.2    1.5    1.2     4.1    5.2    5.7

    ALTA.      2.7   -1.0    1.4     3.6    6.4    6.7

    B.C.       2.1   -2.5    2.1     4.6    7.8    7.8

    CANADA     1.5   -1.7    1.3     6.1    8.5    9.0
    





For further information:

For further information: Craig Wright, RBC Economics Research, (416)
974-7457; Robert Hogue, RBC Economics Research, (416) 974-6192; Stephanie Lu,
RBC Media Relations, (416) 974-5506


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