Quarterly Update: Impact of Slowdown in Asia Showing UP in BC Exports
In our summer 2012 economic update, we held our forecast for BC’s economy to grow by 2% for the year, citing the fact that a slight improvement in the domestic economy would likely offset the impact of a somewhat weaker global economy on the province’s export sector. While recent developments in the housing market prompt some concern about the resilience of the domestic side of the BC economy, elevated activity in non-residential construction is providing a boost to overall spending. Recent data also paint a mixed picture for BC’s exports. The slowdown in Asia is already showing up in BC’s exports, but shipments to the US are gradually recovering.
While it is a close call, as shifting domestic and external growth drivers are largely offsetting, the softer economic outlook for Asia has convinced us to trim our BC GDP growth forecast this year to 1.9% from 2%. Having already cut the outlook for 2013, and anticipating that China’s stimulus efforts will have some traction, we are leaving next year’s growth projection for BC unchanged at 2.2%.
Key factors in impacting BC’s economic outlook:
- The value of BC’s exports to China is down 3.7% year to date
- Excluding natural gas, exports to the US are growing at their fastest pace in seven years
- Retail spending in BC is up 3.9% year to date
- The number of homes in BC sold through the MLS system is down 25% from year-ago levels, average price of a home sold is off by 9%
- Non-residential construction is back to peak, pre-recession levels seen in 2006/2007
A Snapshot of British Columbia's International Exports: Commodities (Still) Rule
The latest issue of the Business Council’s economic newsletter, Policy Perspectives, provides a snapshot of British Columbia’s international exports over the last decade. Resource based products as a share of total exports have increased from 76% in 2002 to 80% in 2011.
- Metallic minerals and energy products more than doubled their share of the composition of BC’s exports with coal, equal to one fifth of the province’s merchandise exports, being a significant contributor to the overall increase
- The value of BC”s wood product exports dropped from $9.3 billion in 2002 to $5.7 billion last year, however with a US housing recovery and the development of new offshore markets in Asia, wood products are set to rebound in dollar terms
- With 80% of BC’s workforce in the service industry, the export of services to international markets is often overlooked. Canada ranks among the top ten global service exports and while there are significant limitations in the available data on services trade at the provincial level, estimates suggest that this could be as high as 20-25% of BC’s international exports
Maintaining a competitive environment for investment and economic development across our key resource sectors – and primary export industries - is critical to BC’s future economic well-being.
Environment and Energy Bulletin
Air Quality Regulation: Canadian and BC Developments
Over the last 35 years, the issue of air quality has become a predominant global environmental concern as a result of increased urbanization, industrialization, a growing demand for energy in all forms, and the world’s reliance upon vehicles as the primary mode of transportation.
Governments in Europe and North America took the initial steps at understanding and eventually regulating air quality in the 1960’s and 1970’s, with Canada implementing a formal regulatory approach in 1999 under the Canadian Environmental Protection Act. Since then, management of air quality has evolved in Canada and in British Columbia, which has its own provincial regulatory regime governing air pollution, including delegating responsibility to Metro Vancouver with respect to air quality in this region.
Post-Secondary Education A Key Determinant of Economic Success
Human Capital Law and Policy v2 n4
Reports from the BC Progress Board and the recent Commission on Reform of Ontario’s Public Services underscore some important facts about globalization and the acceleration of the knowledge economy: people are our most important economic asset – more important than resources, more important than financial capital.
Building Relationships with First Nations
(Published by The Province of British Columbia)
The purposes of this document are to: help companies understand the unique circumstances that frame the legal and business environment in British Columbia; and provide practical assistance and observations for building lasting relationships with First Nations. Relationship between proponents, as well as existing industries, and First Nations can provide solid foundations for effective consultation processes and business partnerships.
This document is divided into two broad sections. The first section provides an overview of the circumstances in the province and the role of proponents and/or existing industries in government’s consultation processes. The second section describes how some companies are building effective relationships with First Nations.
Changes to the Fisheries Act - The Sky is (Not) Falling
Recent changes to the Federal Fisheries Act had been the subject of considerable speculation until the Harper Government’s 2012 Omnibus Budget Bill was tabled earlier this year confirming the details of the proposed changes, some of which became law on June 29, 2012.
The Business Council’s latest Environment and Energy Bulletin clarifies some of the misconceptions about the changes to the original Act, which is nearly 100 years old, and outlines what these changes mean for the business community.
Canada Joins the Trans-Pacific Partnership
Canada is now actively negotiating for a formal spot in what many expect will become the world’s most exciting modern trade agreement – the Trans-Pacific Partnership (TPP). This is good news for British Columbia; as the country’s Pacific province we have more to gain than most other provinces. The benefits of the TPP could include increased exports to Pacific Rim markets, a boost to the local tourism sector and the development of stronger business-business and people-people connections between our province and fast-growing Asian economies. This partnership, however, is about more than trade. It will set a course for how nations manage future economic relations with China and there will be challenges for Canada along the way.
BC More Than Holding Its Own Amid Global Economic Turbulence
At a time of pronounced global uncertainty, BC's economy continues to grow at a decent pace and to outperform many other North American provinces and states. Although there are significant downside risks, BC's economy remains quite resilient with a rapidly shrinking deficit, an increasingly diversified export sector and steady population growth.
Over the 2010-2011 period, BC’s real economic growth averaged 3% - the fourth strongest in Canada and among the top jurisdictions in North America. Although growth will ease over the coming 18 months, this resilience will help to sustain provincial economic activity and keep BC in a relatively strong position even in the face of weaker international conditions.
The Business Council's mid year economic review and outlook anticipates that BC’s economy will grow by 2.0% for 2012 and 2.2% for 2013. Relative to our January outlook there is no change in the forecast for this year, but we have trimmed our growth projection for 2013 due to global turbulence and a slower local housing market.
Modest Growth Trajectory Continues for BC
BC Economic Index v11 n2
According to the latest reading of the Business Council's BC Economic Index, the provincial economy continued to grow in the second quarter of 2012. The pace of growth was moderate, with the Index advancing by a comparatively tame 0.2% from the previous quarter.
Industrial Relations Bulletin
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Class Action Litigation - A New Tool for Union Organizing?
Human Capital Law and Policy v2 n3
On March 5, 2012, the BC Supreme Court certified a class action, brought on behalf of temporary foreign workers recruited to work in a Denny’s Restaurant franchise in Vancouver: Dominguez v. Northland Properties Corp (COB Denny’s Restaurants). The lawsuit alleged that recruiting companies engaged by the Denny’s franchisee charged agency fees contrary to the Employment Standards Act, and claimed damages, aggravated damages and punitive damages against the franchisee for breach of contract in failing to pay overtime and provide 40 hours of work per week as promised, as well as breach of fiduciary duty, a duty of good faith and fair dealing, and unjust enrichment.
The Impact of Canadian Environmental Regulatory and Approval Regimes on Business Competitiveness
Environment and Energy Bulletin v4 n3
The global economic environment remains challenging, as Canadian firms and industries address the need to be competitive and maintain jobs and investment in the country. For Canada, one positive trend is the rise of Asia in the global economy. Today, Asia as a whole accounts for more than 35% of global output, and the figure is expected to approach one-half by 2025. Some analysts believe that sustained growth in China and other emerging economies in Asia (and elsewhere) will fuel a prolonged “up-cycle” for many internationally traded commodities, as rapidly expanding middle class populations in these nations enjoy steadily rising incomes and businesses and governments there invest to build infrastructure, factories, and other fixed assets.
Up and Away: The Growth of Municipal Spending in Metro Vancouver
Policy Perspectives v19 n2
As governments around the country struggle to address deficits and manage growing debt loads in the face of often difficult economic circumstances, local government spending is also coming under scrutiny. In British Columbia, the Canadian Federation of Independent Business (CFIB) has played an important role by shining a periodic spotlight on fiscal developments at the municipal level across BC. This paper builds on work done by CFIB by taking a closer look at municipal spending in the Metro Vancouver context.
2012 Federal Budget: Some Key Issues for Employers
Human Capital Law and Policy v2 n2
The 2012 federal budget tabled by Finance Minister Jim Flaherty on March 29 included a number of measures of interest to Canadian employers. In this issue of Human Capital Law and Policy, we note the key features of the budget from an employer perspective and comment briefly on the implications of the policy directions signaled by the government.
British Columbia Perspectives on a National Energy Strategy (NES)
Environment and Energy Bulletin v4 n2
There was a time when the words “National Energy Plan” would have caused blood pressure to spike across much of Western Canada, which would then have been followed by colorful descriptions of the federal government. This may no longer be the case - and certainly not if many of the West’s leading think tanks, energy companies and provincial leaders have their way.
Manufacturing: An Overlooked but Important Industry in the Lower Mainland
Policy Perspectives v19 n1
Manufacturing is a significant but underemphasized part of the Lower Mainland’s diverse economy. Because the region does not have a single high-profile manufacturing company (such as Boeing in the Seattle area) or a dominant industry cluster, manufacturing is often overlooked. However, the sector deserves attention because it occupies a sizable place in the region’s economy and is a key source of exports to other markets.
Economic Index Suggests 2012 Off To A Slow Start
BC Economic Index v11 n1
In the first three months of the year, the Business Council’s BC Economic Index registered a slight 0.2% quarterly contraction. This is a small decline reflecting the fact that, in the wake of the global financial crisis and recession, overall economic conditions remain somewhat uncertain and growth in the province remains choppy. The Q1 dip follows a strong advance in the Index in the fourth quarter of 2011, which in turn came after almost no increase in the Q32011.
2012 Federal Budget: Fiscal Restraint with New Policy Directions
Reflecting the precarious nature of the economic recovery, Finance Minister Jim Flaherty delivered a budget with few new tax measures, a moderate amount of spending restraint, and a plan to return to fiscal balance over the medium term. From our perspective it is a prudent budget that trims spending sufficiently to balance the books by mid-decade, while not tapping on the fiscal brakes too hard. While the federal workforce will be reduced, overall the level of restraint is such that critics will be hard pressed to claim that it will undermine the economic recovery.
Resource Industries Drive Investment Spending Higher in BC
The release of Statistics Canada’s annual Public and Private Investment survey provides information on recent business capital spending and affords a useful glimpse into where and how much BC businesses are planning to invest in the coming year. The latest survey predicts a healthy increase in capital spending in 2012, and confirms that business investment will be a significant economic driver in the province. It also underscores the important role that resource industries and related infrastructure development are playing in the growth of BC’s economy.
2012 BC Budget: Fiscal Caution Amid Economic Turbulence
Against an unsettled external economic backdrop, this week’s provincial budget saw Finance Minister Kevin Falcon reaffirm the government’s commitment to balance the operating budget by fiscal 2013-2014. Meeting this objective – which is mandated by current law – will require downshifting spending growth to about half the pace set during the years preceding the 2008-09 recession. While it featured a few new measures, the dominant theme of Budget 2012 is spending discipline while seeking to maintain core government services. To help address funding pressures across the provincial public sector, resources continue to be reallocated to higher priority areas such as health and education, and efforts to find efficiencies within existing budgets are accelerated.