Dismal dollar: Is a weak loonie all bad news for the economy?

The loonie hit its lowest level in more than 12 years this week, briefly trading below 71 cents US, but one Canadian economist says the weak dollar isn't all bad news.

See Full Article

While Canadian consumers will notice prices going up in grocery stores, malls and when shopping online, Craig Alexander, vice-president of economic analysis for the C.D. Howe Institute, says the weak dollar is good news for exporters and will help soften the blow from plunging oil prices.

"A weak Canadian dollar is actually good for the Canadian economy," Alexander told CTV's Canada AM on Friday.

Alexander said there's "a lot of pain" in Canada's commodities sector, especially in Alberta with plunging oil prices. But he said the weak loonie will act "as a shock absorber" in those industries.

"They sell their products in U.S. dollars, so when they convert it back into Canadian dollars, a weaker loonie helps soften the blow from weaker oil prices," Alexander said. "…It means that you end up with fewer job layoffs and job losses."

Meanwhile, a weak loonie makes Canadian exporters more competitive, especially for those selling their products in the U.S.

Alexander said this can lead to job growth and higher wages.

This seems to be the case for Carleton Place, Ont.-based bat maker Sam Bat, which sells the majority of their products south of the border.

The company's president Arlene Anderson told CTV Ottawa on Thursday that sales are up 35 to 40 per cent.

"That's a major advantage to us," she said.

In a speech in Ottawa on Thursday, Bank of Canada governor Stephen Poloz said non-resource sectors have seen rising employment and investment.

Weak dollar part of ‘natural process’

Alexander said the weak Canadian dollar is part of a “natural process.”

“It allows our economy to adjust to lower commodity prices, and help it perform in a tough economy," he said.

However, Alexander acknowledges that there's a "negative tone" associated with a weak dollar, and a low loonie is bad news for importers.

Ultimately, he said the higher costs of imports, including for fresh fruits and vegetables and clothing, will be passed on to consumers.

"Canadians will be frustrated that when they buy things online, that are often priced in U.S. dollars, that they're going to be paying more," Alexander said.

He continued, "There's no question that for imported goods or for spending abroad, a weak Canadian dollar does have negatives to the economy."


Latest Economic News

  • Instagram feature letting users tap photos to buy products coming to Canada

    Economic CTV News
    TORONTO - Instagram is expanding its shopping feature to Canada. The social media giant will allow businesses to tag products in their posts, which users can tap to purchase or learn more about. The feature will also let businesses add a "Shop" tab to their profiles and collect data on how many people are tapping to see or buy their products via Instagram. Source
  • On the menu for McDonald's: Cut greenhouse gas emissions

    Economic CTV News
    NEW YORK -- The company behind the golden arches wants to get greener. McDonald's on Tuesday announced a number of steps it will take to cut the greenhouse gases it emits into the air, including tweaking the way the beef in its Big Macs and Quarter Pounders is produced. Source
  • China's premier appeals to U.S. to 'act rationally' over trade

    Economic CTV News
    BEIJING -- Chinese Premier Li Keqiang appealed to Washington on Tuesday to "act rationally" and avoid disrupting trade over steel, technology and other disputes. He promised Beijing will "open even wider" to imports and investment. Source
  • Trump Organization partner in India accused of bilking investors

    Economic CTV News
    NEW DELHI - An Indian company that is partnering with the Trump Organization on an office tower project has been accused of running an elaborate real estate swindle that cheated investors out of nearly $150 million, according to complaints filed with Indian authorities. Source
  • Global shares mixed ahead of Federal Reserve meeting

    Economic CTV News
    TOKYO -- Global shares were mixed Tuesday as some indexes recouped earlier losses set off by an overnight decline on Wall Street. Investors are awaiting the first Federal Reserve meeting under the new chairman, Jerome Powell, and anticipating the first rate increase of the year. Source
  • Global shares mixed as investors watch Facebook, Fed

    Economic CTV News
    TOKYO -- Global shares were mixed Tuesday as indexes stabilized after jitters over Facebook and other technology companies led to losses on Wall Street. Investors are also awaiting the first Federal Reserve meeting under the new chairman, Jerome Powell, and anticipating the first rate increase of the year. Source
  • Expected U.S. rate rise will matter to Canadians with big debt: Don Pittis

    Economic CBC News
    A rise in U.S. interest rates tomorrow is so confidently expected by nearly everyone that a failure to hike rates would shock world markets. In his first official press conference since taking over for Janet Yellen, Federal Reserve chair Jerome Powell is expected to set the direction for interest rate increases this year and into the more distant future. Source
  • Q & A: Russian trolls may be a factor in heated Canadian pipeline debate

    Economic CBC News
    Russian trolls could be a factor in the acrimonious pipeline debates occurring in Canada and the United States, says an expert on ethical hacking and network security. "It could influence it greatly," said John Zabiuk of Edmonton's Northern Alberta Institute of TechnologyNotorious Russian online troll farm also took swipes at Canadian targets"Already there is a wide rift of the knowledge that people have with regard to these projects," he said. Source
  • Scandal-hit Weinstein Co. files for bankruptcy protection

    Economic CTV News
    NEW YORK -- The Weinstein Co. filed for bankruptcy protection on Monday with a buyout offer in hand from a private equity firm, the latest twist in its efforts to survive the sexual misconduct scandal that brought down co-founder Harvey Weinstein, shook Hollywood and triggered a movement that spread out to convulse other industries. Source
  • Court filings say multiple offers for Toys 'R' Us Canadian stores

    Economic CTV News
    U.S. court filings show that debtors for Toys "R" Us have received multiple non-binding offers for the Canadian division of the troubled retailer. The bankruptcy documents say debtors had reached out to more than 20 interested parties in a bid to sell off the 82 stores in Canada as the toy retailer looks to wind down operations. Source