Slump in housing, forestry slowing B.C. economy
The British Columbia government is downgrading its economic growth forecast for this year but Finance Minister Colin Hansen says the economy remains resilient despite problems outside the province.
The Finance Ministry now forecasts growth of 1.7 per cent in 2008 and 2.3 per cent in 2009. The revised forecasts were contained in the government's first quarterly financial report released Friday.
Last February, the B.C. government forecast growth at 2.4 per cent for this year.
"The operative word is one of caution and also one of volatility,'' Hansen said.
The surplus for the 2008 budget is forecast to be $1 billion, says the report.
Hansen said revenues are forecast to be $1.2 billion higher than budget predictions because of higher than anticipated corporate income tax returns, natural gas royalties and bid revenues from the sale of drilling rights.
Even the downgraded forecast "shows that our economy remains resilient in the face of difficult external conditions,'' Hansen said in a statement issued by government.
With an election set for next May, Hansen said that an increase in the surplus over budget predictions could mean tax cuts, spending on social program and debt reduction.
"As we put together Budget 2009, we'll be asking British Columbians for their ideas and input on what they want to see,'' he said in the statement.
Earlier this month several influential economists said they would be downgrading their growth predictions for the B.C. economy.
Helmut Pastrick, the chief economist at Credit Union Central in Vancouver, said he was cutting his growth forecast in half for 2008, downgrading to 1.5 per cent from an earlier prediction of three per cent.
Pastrick said collapse of the U.S. housing market and B.C.'s slumping forest industry is contributing to the economic slowdown