B.C. puts people first as wildfires, global economic challenges affect first quarter
B.C.’s First Quarterly Report shows the province’s economy is proving resilient amid challenges, including a devastating wildfire season, high interest rates and costs, and a slowing global economy.
“With a diverse economy and strong financial planning, B.C. is in a good position to weather global uncertainties as well as keep people safe through this wildfire season and drought,” said Katrine Conroy, Minister of Finance. “Through challenges like the pandemic, global inflation and high interest rates, we have led the country in making smart investments in people and the services and infrastructure they depend on.”
The updated year-end deficit is projected to be $6.7 billion, which is an increase of $2.5 billion from Budget 2023. The change is mainly due to spending to protect people and communities from wildfires as B.C. faces the worst wildfire season in the Province’s history, and volatile global natural gas prices, leading to a drop in natural gas revenues.
B.C.’s faster-than-expected economic recovery from the COVID-19 pandemic helped lay the foundation to weather the challenges ahead. The first-quarter fiscal update shows lower taxpayer-supported debt this year, as a decrease in total provincial debt in 2022-23 put B.C. in a strong position to navigate a cooling economy.
“Supporting people and communities has made our economy stronger and better able to withstand challenges, and we will continue to have people’s back now and for the long term,” Conroy said.
The province will continue to be affected by global uncertainties, yet B.C.’s economy is proving resilient. B.C. is seeing better-than-expected performance this year in housing starts and the labour market, which have helped lead the province to an improved economic forecast of 1.2% growth in 2023.
“During hard times and slower economic growth, the old government chose to cut services and increase fees, which was the wrong approach,” Conroy said. “No matter what, we’re putting people first and making decisions that support the services and infrastructure they depend on to build a good life.”
New home construction was up 15.5% year-to-date to August and is expected to continue to trend at an above-average pace. Employment in the province increased by 1.3% year-to-date to August, while B.C. continues to see a lower unemployment rate than the national average.
British Columbia has among the best credit ratings of all provinces and one of the lowest debt-to-GDP ratios in the country, which translates into low debt servicing costs for B.C.
Projected capital spending increased by $413 million, mostly to support improvements to health-care facilities and housing projects. The update also includes several projects approved for construction since Budget 2023, including Phase 2 of the Burnaby Hospital redevelopment.
The longer-term outlook in the financial plan forecasts that global economic headwinds will affect B.C. and the rest of Canada in 2024, with slower economic growth and higher unemployment. Levels of prudence are built into the fiscal plan, including $5.5 billion in contingencies and a $700-million forecast allowance this year to respond to unanticipated changes or expenses.
Learn More:
To access the First Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports
A backgrounder follows.