B.C. best placed to miss U.S. economic downturn, says bank

B.C. best placed to miss U.S. economic downturn, says bank
The Canadian Press

Canada's western-most province is better positioned than any other to withstand the economic free-fall in the United States, according to the Royal Bank's provincial economic outlook, released Thursday.

The bank's analysts say the province's Olympic boom should drive economic growth of 2.3 per cent this year and 2.9 per cent in 2009.

Relative to other provinces, B.C. has the lowest exposure to U.S. demand and the highest exposure to sales from Asian markets, but RBC chief economist Craig Wright cautioned that while firm links to Asian markets offer some protection from the U.S. downturn, they won't provide immunity.

The slump in B.C.'s forestry sector is a major concern because lumber prices are down 40 per cent compared to two years ago, the U.S. housing market remains dormant and the high Canadian dollar ties the hands of local producers, he said.

However, RBC also predicts an end to the at-par loonie by the end of this year. Bank economists believe the dollar will fall to 90 cents U.S. by the end of this year and will drop to 87 cents by the end of 2009.