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B.C.'s projected deficit rises to $13.6B amid additional COVID-19 supports

Last Updated Dec 17, 2020 at 9:58 am PST

Summary

B.C.'s latest economic update confirms what we know: province is spending more money on COVID-19 than what's coming in

Deficit is nearly a billion dollars more than was projected in September, rising to $13.6 billion

VICTORIA (NEWS 1130) – B.C.’s projected deficit for the 2020-21 fiscal year has risen by nearly a billion dollars to $13.6 billion since the last update was provided.

The province had forecast back in September a budget deficit of $12.8 billion.

The new figure includes the one-time stimulus cheques through the B.C. Recovery Benefit and Recovery Supplement that many British Columbians will be getting. This comes with a price tag of $2 billion.

The fiscal update shows the province is taking in more revenue than it had projected in its first quarterly update.

The fiscal update shows that while we’re not back to where we were before the pandemic hit, B.C. is not faring too poorly.

“While there’s still a long road ahead, this update offers hopeful signs for all of us,” Finance Minister Selina Robinson said Thursday. “Our debt is still affordable, even after the fiscal deficit and increased borrowing, and our projected decline in GDP is less than at Q1, with a partial economic recovery on the horizon next year.”

Robinson notes the debt “remains affordable” due to low interest rates, despite the province increasing its borrowing forecast.

Despite the positive outlook for 2021, the province notes B.C. will not be back to where it was likely until late 2022 or early 2023.

Overall, it’s a picture of what’s going well and balancing out what is not, such as increases in personal spending balancing out year-over-year spending on things like clothing, home furnishings, gas, and vehicles.

As has been the case for many months, jobs are still down in sectors like construction, tourism areas, and restaurants, but are up in science and technical services, health, and public administration.

Industries like tourism, hospitality, recreation, and retail are not expected to recover entirely until travel is once again widely allowed.

Job gains and remaining struggles

“The real GDP forecast for 2020 has improved since the first quarterly report. B.C.’s record-high capital investments continue to fund new projects across the province,” Robinson said.

Despite huge job losses and impacts to the economy in the spring, at the onset of COVID-19-related lockdowns, the minister noted there’s been improvement within the labour market.

She said B.C. lost close to 400,000 jobs in March and April. Since the worst of the lockdowns, she pointed to “substantial job growth for seven consecutive months, bringing our total employment to 98.5 per cent of pre-pandemic levels.”

“This is the highest job recovery rate of any of Canada’s four largest provinces,” Robinson added.

While there have been gains in jobs, Robinson said some sectors — such as retail and service, which have been hit hard by social distancing measures and travel restrictions — continue to struggle.

“Notable declines have been in the wholesale and retail trade, transportation and warehousing, accommodation and food services, and the information culture and recreation sectors,” she explained, adding youth and young adults have been hard-hit, mostly because these demographics “dominate restaurant and retail.”