Canada’s economy can be divided into two parts, a senior official at the Business Development Bank of Canada said on Thursday.

There are the seven provinces, including Ontario, with manufacturing bases benefiting from the low dollar and high exports to the United States; and Alberta, Saskatchewan and Newfoundland and Labrador, whose economies depend on the price of oil.

And with Ontario in the first part, said Pierre Cleroux, who is vice-president, research, and chief economist at BDC, it is not all doom and gloom on the economic front in the province, despite the fact that the Canadian dollar is declining, the price of oil is low and the stock market is down.

"Despite all of that, the growth in Ontario is actually improving, as is the Ontario economy, but the Canadian economy not as much," Cleroux told about 85 members of the Greater Kingston Chamber of Commerce at the Holiday Inn.

Cleroux, who has been with BDC since 2012, titled his speech "Growth in Turbulent Times."

His main responsibility with BDC is to provide economic analyses and advice to the senior management team. He also helps interpret economic trends and their impact on businesses and looks after all marketing and industry research activities for BDC.

In his speech, he mentioned that the Chinese market is still growing but not at a very quick pace, Europe is coming out of recession and the United States economy is growing at a fast pace, which is good news for Ontario manufacturers and entrepreneurs.

"The fact that the dollar is low, it’s not a sign that we’re in recession or we are in trouble. Actually, in Canada our dollar is low because oil prices are low." he said. "Because we have a floating dollar, it’s a great mechanism to readjust the economy."

He also said reasons for the low dollar include the strong U.S. dollar and Canada’s interest rate policy.

Cleroux said the Ontario economy has created 80,000 new jobs in 2015, 12,000 of which are in manufacturing.

"That’s a sign the manufacturing sector is doing well."

He said when job numbers go up, retail sales rise and the housing markets improve as well.

"When more people have jobs, that stimulates the housing market."

Growth has also been solid in the automotive sector over the past two years.

"The main reason for that is exports," he said. "Ontario’s exports increased in 2014 and 2015."

He said that last year, automotive sector exports increased by 13 per cent, "which is very significant in one year."

Cleroux said automotive exports count for more than one-third of all Ontario exports. He also said exports in food and consumer goods improved by 17.8 per cent and forestry products were up 13 per cent.

"So we see a direct correlation between the performance of the U.S. economy in some sectors and our exports and our ability to sell to them. This is going to be the main driver of the Ontario economy," said Cleroux, who has bachelor of arts and a master of economics from Laval University, and a master of business administration from MIT Sloan School of Management. He has more than 25 years of experience as an economist, mainly in the public sector.

Before speaking in Kingston this week, he spoke to business people in Halifax and was told its economy benefited from the low Canadian dollar with one of its best tourism years in recent memory.

In an interview after his 30-minute speech, Cleroux said it could take a while before the price of oil and the Canadian dollar start to rise.

"It’s going to take some time. We really have an over-supply of oil, and technology has really changed the game. There’s more production coming from fracking in the U.S.," he said.

He believes crude oil prices will go back up, but not as high as the $100 a barrel in the recent past.

A further challenge for Canadian oil producers is the high cost of production, he said.

"So we have to readjust to this new reality."

But the low dollar is good news for any manufacturer wanting to export goods south of the border.

"There’s a lot going on in the U.S. economy and it’s a great time for Canadian business opportunities," he said. "The timing is perfect to looks at opportunities in the U.S. It could be in the service sector, manufacturing sector. Not only is the dollar low, but the demand is strong."

Before joining BDC, Cleroux worked for the government of Saudi Arabia as vice-president, business analysis in the National Industry Clusters Development Program.

Before that, Cleroux was the Quebec assistant deputy minister for economic development, innovation and export trade, worked for a private firm developing foreign investment and also worked for 12 years at the Canadian Federation of Independent Business.

Cleroux emphasized that while some provinces’ economies are up, the oil-producing provinces are dragging down the numbers.

"So, overall, the Canadian economy is not going to have a strong growth; it’s going to have a modest growth," Cleroux said. "On the other side, you have provinces where they produce oil and obviously right now they are struggling."

ian.macalpine@sunmedia.ca

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