The loonie’s swoon is prompting more B.C. residents to rethink plans to vacation in the U.S., according to a new poll.
The Insights West online survey found 57 per cent of B.C. respondents said they’re more likely to vacation in this province and 53 per cent said they’ll make fewer trips to the U.S. than usual.
Seventeen per cent said they have already cancelled a planned trip to the U.S.
The loonie sank this week below 77 cents U.S., a new low for the year following a 10-cent plunge last winter as oil prices fell.
Nearly two-thirds of those surveyed said the declining Canadian dollar has either a significant or medium effect on their travel plans
SFU business professor Lindsay Meredith said he’s not surprised by the trend of Canadians staying home and said he expects more Americans will come north as they realize their greenback goes farther here.
“Tourism is the big winner out of this, no question about it,” Meredith said. “The big losers are the Canadian consumers.”
The dollar dove after the Bank of Canada cut its interest rate in response to sagging economic growth, which also prompted a recalculation that the federal government is actually heading for a $1-billion deficit this year, rather than a budget surplus.
Meredith suggested the weaker dollar may aid federal government re-election hopes by propping up eastern Canadian export industries, but will be counterproductive to the economy elsewhere, because average families will have less money to spend as prices of U.S. goods climb.
“It adds more gas to the fire because the imports are much more expensive, so you’ve just shorted the Canadian pay cheque again,” he said.
It will become a “double whammy” when the U.S. federal reserve increases its interest rates, widening the spread against the cost of borrowing in Canada, and giving currency markets another reason to dump the loonie for the greenback.
“That will mean more devastation for the loonie,” Meredith said. “My prediction is we’ll go to 70 cents.”