The Province's economic growth forcast has been revised downward because of the continued slump in the U.S. housing market and the instability in U.S. financial markets. Budget 2008 had predicted growth of 2.4% but the first quarterly report has revised that to 1.7 %. The predictions for the balance of the fiscal year have now been changed from the Budget 2008 prediction of 2.8% down to 2.3%.
The First Quarterly Report also predicts revenue from forestry to be down 36% reflecting reduced stumpage rates and Crown harvest volumes due to the effects of mountain pine beetle infestation, a weak US housing market and a higher Canadian dollar.
Over the next two years, stumpage revenue is expected to increase in line with improved harvest volumes and rising prices. However, this improvement will be partly offset by falling border tax revenue as higher lumber prices result in a reduction in the export tax rate to 5 per cent by 2010 from the current 15 per cent rate.