September 18 - In the News This Week: Five Business and Economic Stories Affecting BC

September 19, 2015
Cheryl Muir

BCBC recaps the weekly business and economic news stories from the week ending September 18 relevant to British Columbia's economy.

1. Stock market tumbles following decision by US Federal Reserve to leave its overnight lending rate unchanged

Continued worries about slowing growth in Asia and its impact on the North American economy materialized with the largest single day percentage loss for US stocks in two weeks occurring the day following the Federal Reserve’s decision.

For a look at today’s drop in the US Markets, read the latest from the Wall Street Journal. In Canada, the Financial Post is asking what the US Fed Reserve knows that the rest of us don’t about the outlook for the global economy.

2. CHART: Measuring emerging market vulnerability

Perhaps foreshadowing Thursday’s decision by the US fed, on Wednesday The Economist released an update to their “capital freeze index,” which measures the risk in emerging markets of a sudden freeze in capital flows. All of the BRIC countries are included on the list with Russia and Brazil among the top ten. The top of the list is populated with large oil producing countries like Venezuela, Algeria and Russia and countries with credit challenges such as Turkey.

3. Quarterly reports

This week both the federal and provincial governments released their quarterly budget updates – each confirming modest surpluses. The provincial government’s surplus is credited to higher than projected income taxes and property transfer taxes remitted by BC taxpayers and do not yet fully reflect the summer’s forest fire bill. Read the Ministry of Finance release here.

On Global BC this week, Business in Vancouver discussed the impact of lower oil and gas revenues due to a slowdown in those sectors and their impact on provincial finances.

The Federal Department of Finance reported a $10B increase in revenues in the past quarter and a $3.6B increase in expenses which have resulted in a budgetary surplus, despite a forecasted deficit of $2.0B. Read the Department of Finance release here.

4. Canadian dollar keeps sliding

With oil prices dropping an additional $2.22/barrel today, the Canadian dollar closed a quarter of a cent lower than Thursday. Economists are bracing for the dollar’s reaction to next week’s Canadian economic news which will include retail and wholesale sales for July as well as expected remarks on Monday by Bank of Canada Governor Stephen Poloz . Read the Globe and Mail report on the Canadian dollar here.

In case you missed it – the Business Council last week released our assessment of the winners and losers from a slumping Canadian dollar.

5. NDP releases fiscal plan

In advance of last night’s Globe and Mail Leaders’ debate, the NDP released its fiscal plan, A balanced fiscal plan with Thomas Mulcair. This document provides the fiscal framework for the NDP’s election platform and focuses on plans to increase Corporate Income Tax from 15% to 17% which would increase the average combined federal-provincial rate of corporate taxes paid across the country from 26.3% to 28.3%.

Jennifer Robson with the Canadian Institute for Research on Public Policy and Professor of Public Policy proposes some pointed questions for the NDP as it relates to their fiscal plan.

In the coming weeks, the Business Council will release an outline of recommended priorities for the next Federal government from the perspective of British Columbia’s business community.

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