Soaring loonie trims Canadian economy

Gary Park

Sales of Alberta oil and natural gas in the United States could be worth more than C$45 billion this year.

But the net return to the Alberta government treasury could be C$800 million less than it would have been two years ago.

It’s all because the Canadian dollar (known as the loonie because of the bird depicted on one side of the $1 coin) has taken flight at the same time the U.S. greenback has gone into a precipitous dive.

Regardless of a recent strengthening in the U.S. currency, the more robust Canadian dollar — once disparagingly referred to as the Northern Peso — is likely to shrink Alberta’s budget surplus for 2003-04 to C$4.1 billion from what would have been close to C$5 billion two years earlier.

For every cent the loonie gains, Alberta’s finances take a C$118 million hit because of the impact on resource exports, said a spokesman for Alberta Finance.

However, a spokesman for Premier Ralph Klein said the province can do nothing but take the currency shifts into account in making budget projections. The rise in the loonie is also taking a bite out of Canada’s job market.

With Canada’s manufactured exports now more expensive in the United States, the sector has lost 52,000 jobs since July, with more than 25,000 full-time jobs cut across the entire economy in November, pushing national unemployment to 7.1 percent.