ICBA ECONOMICS OP/ED: Why B.C. may already be in a recession

The following op-ed, written by ICBA Chief Economist Jock Finlayson and consulting economist Ken Peacock, first ran in Business in Vancouver on April 13, 2026.

Recent economic developments and data releases raise the possibility that British Columbia may have stumbled into a “recession”—defined as two consecutive quarters of declining economic output (inflation-adjusted GDP). To be clear, a recession is not the prevailing outlook for 2026. Virtually all forecasters expect B.C. to eke out at least a bit of economic growth this year, albeit less than in 2025. The recent B.C. budget, for example, pegged real GDP growth at 1.3 per cent, down from roughly two per cent in 2025 but still in positive territory.

However, the economic picture is changing. The external landscape is deteriorating, with the U.S. job market exhibiting little pep and the ongoing conflict in the Middle East pushing up energy prices and inflation. Closer to home, there are worrisome signs of economic distress here in B.C.

Consider the following data points.

A weak handoff for 2026

Canada’s economy ended 2025 on a sour note, with real GDP declining by 0.6 per cent (annualized) in the fourth quarter. While some of this was due to temporary factors, the broader economy remains sluggish. Statistics Canada’s flash GDP estimate for January registered marginal growth, but this doesn’t tell us how the rest of the first quarter will unfold. Recent national job numbers from the Labour Force Survey, which reported a sharp drop (~84,000) in February followed by a tepid gain (~15,000) in March, provided no comfort on that score. The stagnation of Canadian economic output since last fall has not left B.C. unscathed.

B.C. job losses

The same Labour Force Survey has delivered awful news for British Columbia: the province shed a whopping 20,000 jobs in both February and March. Consecutive monthly job losses of this magnitude—record declines apart from the pandemic shutdown—are a strong recessionary signal. A look below the hood reveals that the job decline was all in full-time positions … a bearish sign. All job losses were in the private sector (employees and self-employment), while the number of employees in the public sector continued to rise at a strong clip, up around 2.5% over the past year. Business and building services and finance, insurance and real estate are among the industries with the largest losses. With the B.C. government’s finances in disarray thanks to the Eby government’s stunning fiscal mismanagement, public sector hiring isn’t about to ride to the rescue of a stagnant provincial labour market.

Population growth

After many years of steady population gains that lifted top-line GDP growth, the demographic dynamic has reversed. B.C.’s population has been shrinking, driven by fewer new international immigrants, the departure of more temporary immigrants living in B.C. and out-migration of residents to other provinces. After climbing from 5.3 million in Q1 2022 to 5.7 million by Q4 2024, the population dipped last year. Little or no growth is expected over 2026-27. This removes an important previous source of economic expansion for British Columbia.

Housing and real estate

Homebuilding, home renovation spending, and real estate sales and intermediation, taken together, play an outsized role in the B.C. economy. The ongoing slump in real estate development and sales activity, combined with what we anticipate will be a sharp downturn in home-building in 2026-27, represents a stiff economic headwind. ICBA Economics sees housing starts in the province entering a nuclear winter, decreasing from last year’s level of roughly 44,000 to something closer to 30,000 in both 2026 and 2027.

Business and investor confidence

The Canadian Federation of Independent Business’s latest reading of business confidence finds small and mid-sized B.C. firms less optimistic than their counterparts in most other provinces. In part, this may reflect the tax hikes announced in the 2026 B.C. budget and the massive future deficits planned by the Eby government. Eroding business confidence may also be linked to mounting concerns over the status of private property in British Columbia in the wake of recent court rulings and government decisions championing the notion of “Aboriginal title.”

In summary, we believe a credible case can be made that B.C. has now entered a recession—albeit a shallow one. Even if the economy contracts in Q1 2026 on the heels of a flat or slightly negative Q4 2025, that won’t necessarily translate into negative economic growth for calendar year 2026. Nonetheless, the incoming data signal that many parts of B.C.’s economy are struggling to show any economic growth amid a challenging external environment and an increasingly unattractive domestic business climate.