B.C. forecasting 'staggering' $12.5B deficit due to COVID-19 pandemic
'This could be the worst downturn experienced in our province in recent history,' says finance minister
The British Columbia government is forecasting a $12.5 billion deficit due to the COVID-19 pandemic, five months after the provincial budget featured a marginal surplus.
Speaking at a news conference on Tuesday, Finance Minister Carole James called the projected scenarios "staggering, but not without hope."
"This could be the worst downturn experienced in our province in recent history," she said.
The provincial budget for 2020, tabled just months before the COVID-19 pandemic forced widespread shutdowns, included a $227 million surplus for 2020-21. Now, James said B.C.'s GDP is forecast to decrease by 5.4 per cent for 2020, while Canada's is forecast to decrease by 6.6 per cent.
The B.C. economy could grow back 3.1 per cent in 2021, according to the economic projections.
But James said that current projections are based on a snapshot in time, with a huge number of unknowns, including the possibility of future outbreaks in B.C. or elsewhere, evolutions in public health responses, supports from government and central banks, and the development of a vaccine.
So far, $1.5 billion has been earmarked by the province for economic recovery measures. James said that so far, the government has provided $6.26 billion in financial aid to businesses and individuals.
WATCH | Carole James explains why the government won't cut services, despite the grim economic forecast:
Sales, job numbers plummeted
Slides presented in Tuesday's briefing tell a tale of the week in March when, as James described it, "our entire world changed." The province has lost 235,000 jobs since February. Unemployment numbers in June were up to 13 per cent, the highest numbers recorded since 1987.
James said while 40 per cent of jobs have bounced back as the province has continued with its gradual reopening, not all jobs will be recovered before the end of the year. Youth employment remains at 29 per cent, an increase of 20 percentage points. Data shows that women's employment was hugely impacted, and that as the economy reopens men are re-entering the workforce at a far faster rate than women.
Data presented on Tuesday showed that retail sales fell by 24 per cent between February and April, with the biggest sales losses in clothing, sports, hobbies, books, music, furniture, gasoline, and motor vehicles and parts. Home sales plummeted by 45 per cent between February and May, with home prices dropping four per cent.
The B.C. government has already tabled legislation giving itself room for three years of deficits and James says that will be re-examined each year. But she said the volatility of the situation, including B.C.'s deep economic ties to international markets, makes it nearly impossible to project when the province might eliminate the deficit.
James said the province was lucky that it entered the COVID-19 pandemic "from a place of economic strength." She said that the number of people who have accessed supports — for example, the 600,000 people in the province who have accessed the Emergency Benefit — shows it would be harmful to the economic recovery for the government to pull back on spending.
"We recognize that now is not the time to be looking at cutting programs and services," James said, adding there is no anticipated increase in taxes.
"Now is not the time to be making life more difficult for families."