Looming Global recession to have an impact on the North and Northwest

With the economic clouds gathering around the world, a UNBC economist is sending out the warning that the times could be tough for Northern and Northwestern BC as the global economy begins to slow down.

Due to the reliance of the northern economy on the commodities and transportation, Paul Bowles suggests that Northern BC will feel the economic pinch much more than our southern partners in the province.

His interpretation of the coming trends provides for an outlook that sees slower trade between America and Asia, a slowdown that could have a strong impact on the Port of Prince Rupert, providing more competitive pressures on the Northwest port than on many of its competitors.

He outlined his economic forecast in Thursday’s Daily News

Economic crisis to hit North: expert
Market meltdown likely to have a big impact in area, claims professor
By George T. Baker
The Daily News
Thursday, October 30, 2008
Page one

An economics expert from the University of Northern British Columbia thinks that the current global economic crisis is going to impact northerners even harder than it will hit southerners.

Economics professor Paul Bowles said Wednesday that softening of the U.S. and Asian economic sectors could wreak havoc on the northern economy due to its heavy reliance on raw commodities.

And the news does not get better for the Port of Prince Rupert expansion.

"In the short-term, the possibilities in increasing trade with Asia looks likely to be less now given the general slowing of world trade and as a recession comes to the U.S.," said Bowles.

One of the port’s current major market advantages – the relieving of congestion from ports down the Pacific coast – might now be lessened because of slower trade with Asia, said Bowles.

“There is going to be more competitive pressures on Prince Rupert than the other ports who are going to see their business slow down,” said Bowles.

Bowles said in the short-term it will be more difficult for a new port to break into the market because there is no obvious thing the port can do to mitigate the slowdown of business. But in the long-term the projections for port growth would still be on track.

Bowles added that as a whole, B. C. would come out of this economic crisis better off than most Canadian provinces because of its lower reliance on exporting to the U. S.

Poor mortgage loans in the U. S. during the past decade is blamed as a key reason for the current financial climate. And the downturn on the U. S. Housing market is having a direct effect on the B. C. Forest sector.

The North will be greater affected because it depends more on international resource export trade than other parts of the province and these exports are generally the ones affected first when a global economic downturn comes,” said Bowles.

PricewaterhouseCoopers reported earlier this month that the nine big public companies lost $487 million U. S. during the first six months of the year, compared with a loss of $73 million a year earlier.