The B.C. government is grappling with an “uncertain” economic forecast following preliminary assessments of the damage from last week’s torrential rain and flooding.
On Monday, Finance Minister Selina Robinson presented the province’s second quarter fiscal update, noting the government has strong financial footing, but that the full cost of the storm won’t be known for years.
Analysts have summarized the B.C. atmospheric river as likely the most expensive weather event in Canada’s history.
“There is no doubt this is going to be incredibly expensive,” Robinson told reporters.
“This is an unfolding event and we are monitoring closely. Work is being done to assess the impact of this. We have work to be done over the weeks and months ahead to understand the impact of this.”
The costs will include reconstruction of major roads including the Coquihalla Highway, support for the hard-hit agriculture sector, and overall support to cover costs in evacuated communities like Merritt and Princeton.
Up until last week’s storm, the province was tracking towards the fastest post-COVID economic recovery in the country.
Based on data until the end of September, B.C.’s deficit is projected at $1.7 billion, a massive improvement over the $9.7 billion estimated at Budget 2021 in April 2021.
The economic bounce-back is largely attributed to higher-than-expected revenue from personal and corporate income taxes, increased activity in the retail and housing sectors, and stronger-than-expected resource revenue.
The impacts of flooding and extreme weather are not the only question marks. Higher inflation, increased strain on supply chains and other pandemic consequences will also continue to affect economic recovery.
The unknown timeline for repairing major roads could lead to an impact on travel into 2022, Robinson said. The requirement of a molecular COVID-19 test, such as a PCR test, for international visitors coming into Canada will also have repercussions.
The government has built in $3.25 billion in pandemic and recovery contingencies, while the forecast allowance is unchanged at $1 billion.
Robinson said the province will be releasing an updated economic recovery plan in the new year.