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No 'sunshine and lollipops' in BC's economic future

The outlook for BC’s economy is far from “sunshine and lollipops,” according to a new report that predicts a significant decrease in growth over the next year.

“The economy will slow down markedly from where it has been,” said Brett Gartner, an economist with the Canada West Foundation and author of the study. “With the spread of the financial crisis around the world, it’s impossible for it to not have an impact on Canada and B.C.”

Over the last six years, B.C.’s economy has averaged a healthy 3.4 per cent growth rate. But due to the current financial turmoil down south, that number is set to shrink to 1.5 per cent in 2008 and 1.3 per cent next year, predicts the report, which Canada West released today.

“[The] forecast for B.C. is not sunshine and lollipops – far from it,” the report states.

The study pointed to B.C.’s closely connected forestry and export sectors as the hardest hit in the province.

“The state of B.C.’s forestry sector has gone from bad to worse and the outlook in the near term is not bright,” it states.

Canada's strong currency, the collapse of the U.S. housing market and Mountain Pine Beetle were all listed as factors in the sector’s decline, which is the main source of B.C.’s exports. From January to July 2008, the report noted, softwood lumber exports to the U.S. decreased by 39.7 per cent compared to last year’s numbers.

And Gartner predicted things will only get worse.

“With the way the American economy is going, there’s seemingly no turnaround in the short term at all,” he said. Asked what the provincial government should be doing to insulate B.C. from the effects of the U.S. financial crisis, Gartner offered few hopes.

“In the short term there’s little that politicians can do,” he said. Though B.C.’s export-oriented economy has benefitted from global integration, that’s also made it more vulnerable to fluctuating world markets, he added.

But the report wasn’t all doom and gloom.

Despite the predicted slowdown, B.C.’s economy will still likely outperform Central Canada. And the province’s employment rate is above the national average. The report also noted a positive performance for B.C.’s mining sector.

Gartner said given the current financial crisis, economic realities could shift for better or worse at any time. But at the moment, he remained pessimistic.

“Be prepared for much, much slower economic growth,” he said.

Geoff Dembicki is a staff reporter for The Hook.

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