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By Liam Verster

Economic Outlook Update

Provincial deficit projected to hit $9.4B, debt-to-GDP remains low

Dec 17, 2024 | 4:27 PM

The B.C. Government’s forecast shows the deficit is set to rise.

The province provided an update on B.C.’s second quarter economic and fiscal report Tuesday, Dec. 17, which showed the projected deficit for 2024-25 to be $9.4-billion.

That figure is $429-million more than the first quarter forecast, and was mainly attributed to lower-than-expected revenues.

However, Finance Minister, Brenda Bailey, said B.C. still had one of the lowest debt-to-GDP rations in the country at 22.3 per cent, adding the province was also holding roughly $4-billion in contingencies for 2024-25 to help manage population-driven pressures on key services such as healthcare and education.

“B.C. has been an economic leader in Canada, and ranked first among provinces in real-GDP growth in 2023 at 2.4 per cent,” Bailey said.

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“So far this year, economic activity in B.C. has moderated, with some sectors showing signs of weakness. There are some risks regarding immigration and global trade policy.”

Bailey noted that while employment had slowed in the second half of 2024, B.C.’s unemployment rate remained one of the lowest in the country at 5.7 per cent as of Nov. 31, 2024.

The Finance Minister also noted spending was down in B.C. in 2024, notably in the retail sector, and attributed the decline to high interest rates and the impacts of high prices causing a reduction in demand and purchasing power.

Bailey added U.S.-president-elect Donald Trump’s threat of a 25 per cent tariff on all Canadian goods pose a threat to the provincial economy, as B.C.’s natural gas and coal sectors already felt pressures in 2024,

Despite these challenges, the province still forecasted it’s real GDP to increase by 0.9 per cent in the 2024 fiscal year, then increase by another 1.9 per cent in 2025 as interest rates and inflation ease.

Bailey added B.C. remained the only province with a AAA rating from a credit-rating agency.

The Finance Minister will meet with the independent Economic Forecast Council to discuss B.C.’s economic outlook in the new year, and the next quarterly report will be presented alongside the budget on March 4, 2025.