VANCOUVER, June 25 /CNW/ - British Columbia has been among the
hardest-hit provinces during this recession, as what started out as
forestry-specific downturn eventually spread to the construction, energy and
consumer sectors, according to the Provincial Outlook report from BMO Capital
"Real GDP will likely contract 2.5 per cent this year, with the prospects
for recovery pointing to a slightly above-average 2.0 per cent advance in
2010," said Robert Kavcic, Economist, BMO Capital Markets.
While housing markets in Canada and the U.S. are showing signs of
stabilizing, a significant rebound in construction activity is not expected in
the coming year, largely because of overbuilding during the last cycle.
"Housing starts in the province have plunged to levels last seen at the depths
of the downturns in the early 1980s and late 1990s, and while sales have
rebounded smartly thanks to improved affordability, further cooling by the
autumn is expected," noted Kavcic.
Compounded by a weak U.S. housing market, the forestry sector will remain
under intense pressure. Meantime, low natural gas prices threaten to weigh on
activity in the energy sector despite an improved relative cost versus
Alberta. Indeed, the Province increased the amount of royalty credits given
out to natural gas producers (to build roads and infrastructure) by 20 per
cent to $120 million in 2009.
The impact of the broad-based recession has also been felt in B.C.'s
labour market, where employment was down 2.5 per cent year-over-year through
May - among the worst declines in Canada. While construction employment has
seen the sharpest declines, down about 17 per cent from its peak, service
sector employment has stalled. "The 2010 Olympics should provide a boost to
the labour market and retail sales activity, but the strength will likely
prove short-lived," according to Kavcic. "Indeed, most of the Olympics-related
construction activity is already at or near completion."
The British Columbia government is forecasting a $495 million deficit for
fiscal 2009/10 - its first foray into the red in six years after it amended
its balanced budget law. The Province will provide economic support through
infrastructure spending in a three-year, $20 billion investment plan targeting
transit, roads, schools and hospitals. A revised post-election budget is
expected on September 1, and a significant upward revision to the deficit
forecast is possible.
The complete report can be found at www.bmocm.com/economics.
For further information:
For further information: Media Contact: Laurie Grant, Vancouver,
email@example.com, (604) 665-7596; Internet: www.bmo.com