The Canadian dollar has remained strong versus the U.S. greenback for much of the past five years as global investors sought safe markets to park their cash in the wake of the global financial crisis.
But with the world’s largest economy poised for a breakout year, Canada’s relative investment allure has diminished. That drop has been reflected in the steady descent of the loonie in the past year, and the decline is expected to continue in 2014. Forecasters from four of the Big Five banks expect the loonie to depreciate this year. TD Economics had the lowest forecast of the loonie by year’s end atUS$0.90, a level which was reached last week.
If the general forecast is accurate and the dollar stays low, B.C.’s tourism sector is poised to benefit. After it struggled to attract Americans and other visitors since the 2010 Winter Olympic and Paralympic Games, B.C. has seen an increase in tourism in the past year. That increase has coincided with the decline of the dollar from above par a year ago.
According to a Central 1 Credit Union report, the province is expected to post a 4% overall rise in the number of visitors in 2013, the strongest gains in international visitors in the country.
According to Statistics Canada, Alberta was the second-strongest market with the number of international visitors rising 2.3% for the first 10 months of 2013. Of the remaining provinces, only Saskatchewan and Quebec recorded gains of above 1%. The number of tourists remained flat in Ontario and fell in Atlantic Canada.
B.C.’s position as Canada’s gateway to Asia should bolster the tourism sector’s prospects, as the increasing number of flights to YVR by Chinese airlines can attest. According to TourismBC, China has continued its ascent as a major market for B.C., becoming the fourth largest source of visitors in 2011, from fifth in 2010. It has surpassed other key markets, including Japan, South Korea, Hong Kong and India.
And there is room to grow. According to the Canadian Tourism Commission, there is “considerable opportunity” to attract more Chinese visitors by tapping those interested in visiting the U.S. About two-thirds of the Chinese tourists visiting Canada have combined their trip with a visit south of the border. •
