Targeted supports for people and businesses, increased vaccinations and the resilience of people and communities continue to drive a strong economic rebound in B.C. with second quarterly results showing a further reduction in the provincial deficit.
Based on data until the end of September, B.C.’s deficit is projected at $1.7 billion – a substantial reduction from the $9.7-billion deficit originally estimated at Budget 2021, and the $4.8-billion deficit predicted in the First Quarterly Report.
As previously reflected in the first quarter, the reduced deficit is primarily attributed to higher-than-expected revenue from personal and corporate income taxes, increased activity in the retail and housing sectors, strong resource revenues and commercial Crown net income, while expenses remained stable.
“By putting people first, while being nimble and responsive to the challenges the pandemic has introduced, we’re continuing to see positive effects in our financial outlook and our economy,” said Selina Robinson, Minister of Finance. “That approach has helped to support people and businesses through the challenges we have seen so far, while putting us in a good place to be able to continue to provide the supports needed by those affected by the recent disaster.”
There continues to be significant uncertainty about the rest of the year, especially considering still-to-be-determined impacts of flooding and extreme weather events and the ongoing COVID-19 pandemic as many areas of the world continue to experience outbreaks. Higher inflation, increased strain on supply chains and other associated pandemic impacts, which could be worsened by the recent flooding, will also continue to affect economic recovery.
“The future remains uncertain, and we will continue to do what is needed to support people through the challenges we face as a province, whether that is the continued effects of a global pandemic or the response and recovery from the recent extreme weather,” Robinson said. “As we move through the immediate response and look at our next steps, our focus remains on building resilience, not only in our budgets but also in our communities, services and economy now and for B.C.’s future.”
Although private-sector forecasters have lowered real gross domestic product (GDP) projections for all Canadian provinces since August, B.C. is still expected to be among the leaders for economic growth for 2021 and 2022. The province also saw a smaller decline in GDP in 2020 than other major provinces more deeply affected by the pandemic.
The Labour Force Survey for October solidifies B.C.’s position as leading Canada’s economic recovery with another 10,400 jobs added around the province that month, while consumer spending and exports remain strong. High vaccination rates and vaccinations for children five to 11 also signal optimism for B.C.’s future.
In the coming weeks, and as part of the budget process, B.C. will meet with members of the Economic Forecast Council and an ESG Advisory Council to discuss current events and issues affecting the province’s economy and forecasts. B.C. will next report with Budget 2022 on Feb. 22, 2022, which will include more details on the path and timeline to return to balance.
- The Second Quarterly Report provides a general view of the Province’s financials up to the end of September 2021 and does not factor in the effects of recent events, including flooding, infrastructure damage and emergency response.
- The second quarter outlook for 2021-22 forecasts a deficit of $1.7 billion.
- Revenues have risen to $68.2 billion and expenses have remained stable at $68.9 billion for the 2021-22 fiscal year.
- Pandemic and recovery contingencies are $3.25 billion, while the forecast allowance is unchanged at $1 billion.
- For 2021-22, the taxpayer-supported debt-to-GDP ratio is projected to improve to 18.2%, and the taxpayer-supported debt-to-revenue ratio is forecast to improve to 95.0%.
To read B.C.’s Second Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports