British Columbia’s economic and fiscal plan remains stable in the face of a slowing global economy and high interest rates as the Second Quarterly Report forecasts a lower deficit than in the previous fiscal update.
“People’s budgets have been squeezed by global inflation and high interest rates are making the already high cost of buying or renting a home even more expensive,” said Katrine Conroy, Minister of Finance. “While other governments cut the services people rely on when times are tough, we have built a strong fiscal foundation and will continue to support people.”
The Province’s updated financial position shows $1.4 billion more in revenue. This is driven by improved 2022 personal and corporate income tax results based on the latest Canada Revenue Agency assessment data and an additional $358 million of expected federal funding for wildfire recovery. B.C. is now projecting a $5.6-billion operating deficit this year.
As outlined in the First Quarterly Report in September, the fiscal plan was impacted by record spending to protect people and communities from the devastating wildfire season and volatile global natural gas prices. B.C.’s economy is diverse and layers of prudence are built into the fiscal plan, including contingencies and a forecast allowance, which shielded the Province from greater impacts.
B.C.’s debt affordability remains among the best in Canada with low debt-servicing costs and an improved debt-to-GDP ratio of 17%.
B.C.’s open economy is being impacted by slower economic growth around the world as well as high interest rates in Canada. B.C.’s economic activity has shown resiliency through 2023, particularly in housing starts and population growth, while exports and consumer spending have slowed. B.C. is on track for modest economic growth of 1.0% in 2023, which is slightly lower than previously forecast.
“As B.C. experiences slower global growth, our actions to build a diverse economy and put people first help bring stability to our economic and fiscal plan,” Conroy said. “We will continue supporting people by helping to ease the pressure of everyday costs, delivering the homes, schools and hospitals people rely on, and building a clean economy that works better for people who live here.”
Next week, the minister of finance will meet with the Economic Forecast Council to discuss the economy and future forecasts ahead of Budget 2024. The Third Quarterly Report will be released alongside the budget on Feb. 22, 2024.
- Housing starts are up 11.8% year-to-date and the Province’s forecasts for 2023 and 2024 are above historical average.
- B.C.’s employment has grown by 1.4% year-to-date to October 2023, including a net increase of 15,430 private sector and self-employed jobs.
- B.C.’s population grew 3.0% year-over-year, which is helping support the labour market. Net migration to B.C. in the first half of 2023 is up 25.1% compared to the same period in 2022.
- Building the schools, health facilities, housing and transportation infrastructure that communities need is expected to cost $11.2 billion this year, $1 billion lower than forecast at the first quarter, with some transportation expenses shifted to future years.
- Capital projects approved since the First Quarterly Report include:
- Nanaimo long-term care facility
- St. Paul’s Hospital Clinical Support and Research Centre
- University Hospital of Northern B.C. redevelopment site preparation
- Highway 1 improvements through the Fraser Valley – 264th Street to Mt. Lehman Road
To access the Second Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports