Saturday, October 25th6.8°C
23888
23088

Weak loonie good for exporters, but bad for everything else in economy: report

OTTAWA - A new report by the former chief economic analyst for Statistics Canada is contradicting conventional wisdom about the impact of loonie fluctuations on the economy.

Philip Cross says in an analysis for the Fraser Institute that a weak loonie is a net loss for the economy, with negative impacts that outnumber the positives.

The paper comes as the loonie was testing out new lows - under 89 cents US - and economists were calling for the currency to fall further in the months ahead.

Cross concedes that the soft currency is a benefit to manufacturers who ship much of their product to the United States, but not as much as advertised, he says.

For one thing, exporters may get higher returns for their products in the U.S., but they also pay more for imports of machinery and equipment, more than half of which come from outside the country.

A low-flying loonie does help Canada's resource industries because they export more than they import, but Cross says market demand, rather than the currency level, is the key driver in the sector.

Meanwhile, Canadians pay more for gasoline because oil is priced in U.S. dollars and higher consumer prices generally, and governments must pay more to service their debts.

In two other economic reports released Thursday, the TD Bank and the Conference Board forecast the Canadian economy will overcome the slow start from the unusually cold winter and post an improvement from last year's 2.0 per cent growth rate to 2.3 per cent this year.

They cite an expected pick-up in exports based on increased demand from the U.S. and the weak loonie as contributing factors.

The Canadian Press


Read more Business News

23015


Recent Trending




Today's Market
S&P TSX14543.82+56.99
S&P CDNX805.45-3.15
DJIA16805.41127.51
Nasdaq4483.715+30.923
S&P 5001964.58+13.76
CDN Dollar0.8901-0.0003
Gold1231.20+2.10
Oil81.02-0.73
Lumber336.40+6.80
Natural Gas3.631+0.009

 
Okanagan Companies
Pacific Safety0.105-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.15-0.02
Cantex0.07+0.015
Anavex Life Sciences0.194-0.004
Metalex Ventures0.045+0.005
Russel Metals33.39+0.23
Copper Mountain Mining2.03-0.05
Colorado Resources0.145+0.005
ReliaBrand Inc0.012-0.001
Sunrise Resources Ltd0.05-0.01
Mission Ready Services0.445+0.035

 





FEATURED Property
2095410#105 1957 Kane Road
2 bedrooms 2 baths
$262,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...


We can get on together

I was in LA this week. I witnessed such crazy and unusual circumstances as I strolled along Hollywood Blvd and Sunset Blvd. A far cry from sleepy Peachland in the Okanagan! The strange thing was, I f...


Weakening global growth worries

The Big Picture Growth worries persist Worries about weakening global growth and its potential impact on the US economic recovery roiled markets around the globe this week. Europe continues to be the ...

_








Member of BC Press Council


22707