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Canadian tourism is thriving with a lower loonie. Trade is not

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Canadians are seeing mixed benefits from a lower loonie.

The dollar closed at around $0.76 against the U.S. dollar on Tuesday.

That’s better than where it was a year ago, but still down from a five-year high of $1.03 in September 2012.

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A lower dollar has yet to translate to stronger merchandise trade. Real exports hardly grew last year, National Bank noted in a Tuesday commentary.

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But its benefits are readily apparent in Canada’s tourism industry, which is reaching its greatest heights since 2009.

Data released by Statistics Canada on Tuesday showed that 30,142,291 non-resident travellers came to Canada last year, up almost 10 per cent from the year before.

The growth was driven by an 8.3 per cent increase in travellers from the U.S. and a 13.6 per cent jump in travellers from overseas.

The 6.2 million overseas visitors represented a record for Canada, and the strongest annual gain since 2004.

Meanwhile, Canadian travel to the United States declined for a third straight year, dropping by 7.7 per cent from 2015.

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Such a trend “reflect[s] the decline in the Canadian dollar over this period,” Statistics Canada said.
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Nevertheless, the U.S. remains Canadians’ top international destination, making up three-quarters of trips to other countries.

The trends also mean that Canada now has its smallest travel deficit since 2009 — a measure of outbound travels by non-resident travellers versus outbound travels by Canadians.

The trends parallel each other, according to this chart from National Bank:

Canadian tourism is thriving with a lower loonie. Trade is not - image

“Last year’s tourism boom was felt in all of the four large provinces, each seeing higher inbound travels and lower outbound travels compared to the prior year,” said National Bank economist Krishen Rangasamy.

So trade may be slow to respond to a lower dollar. But clearly it has more people interested in visiting Canada from around the world.

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