While weakness in B.C.'s economy has spread and accelerated in recent months, the province has likely seen the worst of the recession, according to the Royal Bank's provincial forecast.
B.C.'s real first-quarter GDP dropped 1.9%. Declines spread beyond the depressed forestry sector into mining, construction and manufacturing. Transportation and the retail sector have also declined amidst a fragile housing market.
RBC forecasts that B.C. housing starts will drop by 57% in 2009 to a total of 14,700 units, the lowest tally since 2000.
However, the report anticipates that the 15% jump in public infrastructure spending this year will likely help offset the broad weakness in the economy and set the stage for a return to overall growth in 2010.
The report expects a general economic recovery in the second half of 2009 with an expected rebound in global commodity prices and higher tourism activity from the 2010 Winter Olympic and Paralympic Games. It forecasts B.C.'s GDP to decline 1.9% this year, but rebound 2.9% in 2010.
Across Canada, RBC expects that Saskatchewan, Manitoba and Nova Scotia will be the only provinces to see economic growth in 2009, with Ontario, Newfoundland and Labrador bearing the brunt of the economic recession. The report suggests Canada's GDP will decline 2.4% this year, but rebound 2.5% next year.