South of the border, a steady stream of statistics is spelling bad news for the mighty U.S. economy. In the wake of the notorious sub-prime mortgage crisis, housing prices have hit historic lows and unemployment is increasing.

But north of the border, the scenario is distinctively different. With oil prices hitting new highs, Alberta’s oil sands industry is booming. And in prosperous mining centres like Sudbury, Ont., housing prices are rising fast. “Canada’s economy is showing tremendous resilience,” says Robert Fairholm, director of the Centre for Spatial Economics, an economic consulting and forecasting firm based in Milton, Ont. “There’s certainly no indication of a recession here.”

“We’ve never seen a situation where pretty well all 10 provinces are reporting surpluses”

– Pedro Antunes, Director, Provincial and National Forecast, Conference Board of Canada.

The numbers tell an encouraging story. Statistics Canada reported in February that Canada’s jobless rate fell to a 33-year low of 5.8 per cent in January. And Canada Mortgage and House Corp. said housing starts rebounded more than 20 per cent from December’s dip, to 222,700 units at an annualized rate. Consumer spending is also strong.

Manufacturers have been hit hard by the high Canadian dollar and weakening export demand from the U.S. But other sectors are soaring. Most resource industries are riding high, as rising demand for commodities in rapidly developing countries like China and India pushes up prices for oil, nickel, copper, iron ore, and uranium. Canadian governments are in sound shape, too. “We’ve never seen a situation where pretty well all 10 provinces are reporting surpluses,” says Pedro Antunes, director, provincial and national forecast, for the Ottawa-based Conference Board of Canada. “There’s so much momentum in what’s happening in the domestic economy that even with a slowdown in the trade sector, we think the situation is fairly good.”

A GOOD TIME TO IMPROVE PRODUCTIVITY
Canada’s continuing strength offers businesses an ideal opportunity to upgrade technology and increase competitiveness. Taking small steps to enhance communications infrastructure, in particular, can go a long way to streamlining business. Technology is rapidly evolving, and Canadian companies have a lot of catching up to do, says Walid Hejazi, an associate professor of international business at the University of Toronto’s Rotman School of Management. “The low value of the Canadian dollar eliminated the incentive for Canadian firms to be innovative,” he says. “Now they have to upgrade. They have to be more productive.”

Canada’s continuing strength offers businesses an ideal opportunity to upgrade technology and increase competitiveness.

Updated telecommunications solutions can make businesses faster and more effective, saving them money by shortening their time to market. Failing to upgrade can end up costing more over the long term. Current communications technologies help companies to better control costs. They empower employees to become more productive. Improved communications infrastructure also contributes to higher sales by enhancing the quality and frequency of customer interactions. And leading-edge technology helps to prevent potentially disastrous security breaches.

The time is right to invest. Sharp interest rate cuts by the Bank of Canada have reduced the cost of borrowing to invest in new technology. The strong Canadian dollar also makes it easier for many companies to purchase new equipment, notes Antunes. In addition, he points out, the two most recent federal budgets allowed companies to write off capital investments more quickly. And declining corporate tax rates are making strategic expenditures more affordable. Antunes says the federal government intends to reduce the corporate tax rate to 15 per cent by 2012, down from about 22 per cent in 2007. “Ultimately,” he notes, “we’re talking about productivity gains, and that’s how you can be competitive in the face of these economic challenges.”

COMPETITIVENESS IS THE BEST PROTECTION
While opinion is still divided on whether the U.S. economy is officially in recession, what is certain is that difficult times lie ahead. For now, the Canadian economy’s comparative strength continues to show encouraging signs of growth, but to ensure continued success during a slowdown south of the border, businesses will need to maximize productivity and streamline their processes in order to weather the twists and turns that lie ahead.

Businesses that take the opportunity now to improve productivity will be poised for rapid growth when the world economy stabilizes, possibly towards the end of this year. “What we’re looking at here is how we can be more competititve,” says Antunes. “Sometimes it is a stress point that forces some of these necessary changes.” Ultimately, increasing competitiveness is a win-win for individual companies and for the Canadian economy as a whole.