While it is bullish on B.C.’s economy next year, the Conference Board of Canada suggests the provincial economy will contract by 3.8 per cent this year due in part to the province’s reliance on tourism and trade with Asia.
In a report released Wednesday, the board notes no province will be spared the effects of the COVID-19 pandemic and all will be plunged into recession.
In B.C., the second half of 2020 is expected to mark the start of an economic rebound, while 2021 is expected to yield a seven per cent increase in gross domestic product.
For now, the board points out the economy is vulnerable because of its dependence on tourism and ties with the Asia-Pacific region.
Tourism, a major economic driver in this province, has been decimated with the U.S. border closed to pleasure travel and the number of overseas visitors slowing to a trickle, the report says.
B.C. has suffered on the trade front as its exports are closely linked to commodities for which prices have collapsed due to plummeting global trade volumes.
The province’s close ties to China have also hurt the province’s outlook. China’s economic growth is expected to slip, taking demand for resources with it.
The report suggests consumer spending will continue to be weak until the second half of the year, as social distancing and stay-at-home measures continue to restrain demand.
Once restrictions ease in the second half of this year, consumer demand will likely begin to recover, setting the stage for a solid rebound in activity in 2021, the report says.
Nationally, the board said Canada is in the midst of its worst economic downturn in decades, with GDP expected to drop by 4.3 per cent this year.
