Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
1 The World Economy and BC presented to Mortgage Investment Association of BC June 21, 2011 by Bernie Magnan Assistant Managing Director and Chief Economist 2 Background • Factors considered in Economic Forecast – Previously looked at United States and Canadian Economies – Some attention paid to Japan and Europe – Now need to consider other major world economies – especially European Union, BRIC countries (Brazil, Russia, India and China) – Canadian Domestic Factors – Provincial Factors 3 Background (cont.) • United States Still Biggest Economy - > $14 Trillion GDP • Japan, Germany, South Korea, other Euro nations still impact world economy • Increased interconnectivity of World Economies • Sovereign Debt • Consumer Confidence • Residential and Commercial construction • Commodity Prices 4 Background (cont.) • Major Recession Factors – Unregulated Lending in US Market – Especially Housing (Sub Prime, 100% Loans, ‘NINJA’ Loans, Extended Credit) – Creation of Little Understood Structured Financial Products – Lack of Financial Regulation – Overbuilt US residential housing mkt (on spec) – Sovereign debt/social support (especially in EU) – US Budget and Current Account Deficits – Repackaging of High-Risk Products – Hedge and Derivative Calls 5 Real GDP (Projected Average Percentage Change) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% 2009 US China Canada India 2010 2011 pro 2012 Fcst Mexico Euro Area Source – Economic and Financial indicators – The Economist Japan Britain 6 Commodity Prices (2008/2009) 7 Commodity Prices (2010-11) 8 Canadian Economy 9 Canadian Economy Positive Factors • • • • • • • 11 Years of Budget Surpluses Budget Debt down by $90 Billion (to $458 Billion) Debt-to-GDP Lowest Among G7 Countries Strong Financial System Stable Housing Market Positive Immigration Stimulus Spending ($60 Billion Over 2.5 Years) G7 COMPARATIVE NET DEBT-TO-GDP RATIOS CANADA’S TURNAROUND - 2ND WORST TO BEST 1995 2008 Net Debt-to-GDP Ratio 170% 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% Canada U.S. Source: Department of Finance U.K. France Germany Japan Italy 6 10 G7 COMPARATIVE NET DEBT-TO-GDP RATIOS CANADA’S TURNAROUND (cont.) 12 Canadian Economy (cont.) Negative Factors • Aging Demographic • Labour and Skills Shortages • Lack of Investment in Productivity and Innovation • Canadian Dollar at Par With US $ • $101 Billion Deficit Increase Over Two Years 13 Canadian Economic Issues • Impact of World Financial Liquidity • Border Access – Movement of Business Professionals – New Border Transportation Charges – Truck and Rail – Increased Security Requirements • Balance of Payments • Impact of US Economic Recovery • Commodity Pricing • Federal Budget 14 British Columbia Economy 15 Taxpayer Supported Debt as Per Cent of GDP and Per Capita Per Cent GDP 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 20.6 19.1 21.3 20.6 17.5 17.8 16.2 18.2 13.3 16.1 14.4 14.0 16 British Columbia Economy Positive Factors • • • • • • • Low Cost of Electrical Energy 2010 Olympics Skilled Workforce Gateway to Pacific Rim Population In-migration Natural Gas Play Commodity Prices 17 British Columbia Economy (cont.) Industry Outlooks • Forestry • Mining • Energy • Transportation and Warehousing • Finance and Real Estate • Health Care • Tourism 18 British Columbia Economy (cont.) Statistics • Population Growth – 1.6% • Employment – Flat to Small Growth • Canadian Dollar Volatility - Par • Gas prices - Volatile • Lumber Prices - Variable • Inflation – 2.7% • Unemployment - 7.6% • Bank Rate – 1.0% (end of year) 19 Forecast • Canada • British Columbia + 2.9% + 2.4% Vancouver Region Impacts • • • • ‘Downtown’ British Columbia Commodity Prices and World Demand In-migration Regional Growth Strategy – Land Availability – Demand/Densification – Industrial/Commercial Land Requirements – Transportation Questions ???