A panel of experts said at a Vancouver Board of Trade forum on Thursday that a low loonie could mean slower economic growth, but it's not all bad news for Canadians.
"The retail side, the export side and some of the specific industries such as the film industry in B.C. will benefit from a softer dollar," said Craig Wright, senior vice president and chief economist with RBC Royal Bank.
The loonie declined 6.6 per cent last year and has dropped another three per cent in just the first two weeks of 2014 — the lowest value in four years.
Even though a series of unfortunate events have hit Canada over the last few weeks, including a "miserable employment report" for December and a furious winter storm that slammed the eastern provinces, Doug Porter with BMO Capital Markets said he remains "guardedly optimistic," about Canada's economic prospects.
"Part of the reason why the currency is declining is because the outlook for the U.S. economy is improving and there's just a lot more confidence in the U.S. dollar," he said.
"There's also a lot more confidence in Europe that they're putting their crisis in the rear view mirror, so investors are more willing to pour (investment) into places like Europe and the U.S., and ultimately that will be good news for Canada."
Canada's recovery since the 2008 recession has largely been driven by consumer spending and the housing market, and David Tulk with TD Securities said it's time businesses took the lead.
Tulk said a weaker loonie may give export industries the tailwind they need, but he still doesn't expect economic growth to go up by anything more than two per cent.
Panel members said much of Canada's economic prospects depend on getting Alberta's oil to market, and the sooner British Columbia can finalize projects like Enbridge's proposed $8 billion Northern Gateway pipeline, the better.
The project, if approved by the federal government, would see Alberta crude oil transported to the B.C. coast and then shipped to foreign markets.
A review panel concluded last month that the project should go ahead if 209 conditions are met.
David Watt, chief economist with HSBC Bank Canada, said Alberta's difficulty in getting oil out of the country — which includes the delayed decision on the Keystone XL pipeline to the United States — raises skepticism.
"When we think about investment in the energy sector — $400 billion over the next decade and almost half of that into Alberta for the oil sands — you begin to raise questions about if we can't get the oil out of Alberta, then there's an issue of whether investment is actually going to occur, and then our projected outlook for oil production comes into question," said David Watt,
"How Canada's going to develop over the next 15, 20 years is at risk with decisions that are going to be made possibly within the next year."
But Peter Hall, vice president and chief economist with Export Development Canada said he believes projects such as the Northern Gateway pipeline will see the light of day.
"(In) oil alone, as high as $25 billion a year is being lost as a result of the resource being shut in the country," he said.
"That, together with the means being used to transport this stuff at the moment is not selling well, is actually creating a tremendous amount of monetary incentive to do something about this."