Business - Business News

POSTED: Sunday, Jul. 12, 2009

B.C. economy at a crossroads; will Olympics bring the gold?

Our neighbors to the north are going through some interesting economic times.

The Canadian government reported last week that as the country plunged into a recession in 2008, British Columbia had the second-worst performing provincial economy, behind Ontario. According to Statistics Canada, the B.C. economy contracted by 0.3 percent in 2008 while Canada's overall economy grew by 0.5 percent. In June, B.C.'s unemployment rate was 8.1 percent, up from 7.6 percent in May.

This has some B.C. government officials concerned about the road ahead, particularly in solving the government deficit issue, which is now expected to climb higher than its original projection of $495 million. B.C.'s Finance Minister Colin Hansen told The Associated Press that he's "more pessimistic, not less pessimistic" about the government's budget.

"As an exporting economy, one that is so dependent on international trade, we certainly were not immune to the effects of the global downturn," Hansen said in The Associated Press article.

While B.C. is dependent on the U.S. and the global economy, what happens up north impacts us in Whatcom County. According to the Center for Economic and Business Research at Western Washington University, 936,876 people came through our local border crossing in May, down 7.6 percent year-over-year. Southbound border crossings have been consistently down year-over-year in 2009.

The bleak B.C. economic news is countered by the expectation that British Columbians will pull out of the recession more quickly than the rest of Canada. In seven months, the province will host the 2010 Winter Olympics, which is expected to generate a huge amount of economic activity even beyond the February event.

Plus, if the global economy bottoms out at the end of the year, B.C. exports may rebound. Jim Pettinger, president of International Market Access Inc. near Ferndale, who regularly commutes in from British Columbia, sides more on the optimistic side but realizes things could get worse if the U.S. economy has trouble recovering.

"I think people in British Columbia are relatively optimistic because it has so many things going for it right now," Pettinger said.

Along with the belief that Olympic fever is outweighing economic blues, he noted that the B.C. economy is still relatively active, particularly in construction as many long-term projects were on the books before the recession hit.

Pettinger's Ferndale business helps Canadian businesses get products and services into the U.S. and he also regularly co-hosts conferences about doing business in the U.S. The impression he's had, based on the attendees at the conferences, is that while there are fewer attending the conferences, the businesses that are participating are more established and closer to actually following through with expansion plans.

"Many of them realize that the economy is cyclical, and they want to be in a good position with the U.S. market when the economy recovers," Pettinger said.

So it seems British Columbia is at a bit of a crossroads economically. Residents have spent years getting ready for the Olympics, which may have deflected some of the blow of the economic meltdown, but they were still hit. Will the Olympics be a springboard out of its recession? We won't have long to find out.