“The environment is evolving very rapidly, things are changing quickly,” said council chief economist and vice-president Ken Peacock.
“So we should have said buckle up and keep calm.”
In its initial forecast in January, the council had predicted economic growth of about two per cent for the year.
But with the rapid spread of COVID-19, it’s now forecasting anemic growth of 1.4 to 1.5 per cent under an optimistic scenario, and growth of under one percent or even the possibility of a recession should the spread of the virus accelerate.
“We did say in our forecast in January it’s unlikely the provincial economy will slip below two per cent because there’s lots of positive factors — lots of non-residential construction, housing market coming back, strong population growth. We said short of a major slump we won’t see anything below two per cent,” said Peacock.
“Fast forward six weeks, we have what is the equivalent of a major slump — an external shock that really is having a major economic impact right around the globe.”
The council is forecasting that air transportation, tourism and hospitality will suffer the brunt of the economic headwinds.
Peacock said a drop in visitors from China, who now represent about 15 per cent of all tourists in B.C., is a particular concern.
“If we reflect back to SARS we saw a precipitous drop in the number of visitors here, particularly from China. I think it fell by 17 per cent, the number of visitors. Keep in mind China was a much smaller market in 2003.”
The business council says shipping and transportation have already suffered marked drop-offs.
Peacock added that the province will also likely feel a hit relating to cancelled conferences or other public events.
On Friday, the B.C. Children’s Hospital Foundation said it had made the tough choice to postpone its For Children We Care fundraising gala, which was expected to draw about 600 people.
“It wasn’t due to public health risk, we actually did a risk assessment on Tuesday with Vancouver Coastal Health and were given the go-ahead,” said foundation spokesperson Surina Sproul.
“What it really came down to is that the public health concerns have increased over the last number of days and donors and volunteers were reaching out to us and expressing their concern about attending, so we really had to prioritize their peace of mind.”
The Asia-Pacific Association for International Education has already said it is postponing a March conference expected to draw about 2,500 people to Vancouver amid concerns about possible spread of the virus.
The Vancouver TED talk event scheduled for next month is also mulling its options.
Other major public events, such as Vancouver’s Rugby Sevens tournament and Vancouver Canucks games are going ahead as planned.
Canucks Sports and Entertainment says it now has 150 sanitizing stations distributed throughout Rogers Arena as a precaution, has boosted its cleaning schedule and has bought new specialty sanitizing equipment.
Peacock said there were a few bright spots in the gloomy forecast, however.
One is the half-point interest rate cut the Bank of Canada announced earlier this week, which he said will help first-time homebuyers and could give a boost to the real estate market.
The other is an expected economic rebound in 2021.
“Factories get up and running, supply chains get functioning again, export activity picks up and we see a bit of a bump in 2021, but it doesn’t make up for the economic loss in output that’s going to happen this year.”
–With files from Jordan ArmstrongView link »