Lower oil prices are trimming the gross domestic product (GDP) growth forecast for British Columbia, according to the independent B.C. Economic Forecast Council.
In its annual pre-budget update, the council is forecasting 2.6% real GDP growth for B.C. in 2015, down from the 2.7% forecast in December. It has also lowered its forecasts for inflation, as low gasoline prices helped slow the national inflation rate to 1.5% in December from 2.0% in November.
The council predicts B.C.’s real GDP growth will increase to 2.8% in 2016, which represents a 0.1 percentage point increase from its December estimates. The outlook for 2017-19 remains unchanged at 2.5%.
“Overall, the domestic and international market situation remains fluid, and the effect of significantly lower oil prices on the B.C. economy is uncertain,” it says. “While the reduction in crude prices is generally not expected to have a significant negative effect on the province, it has increased uncertainty as low oil prices are accompanied with downward pressure on other commodity prices, including natural gas.”