Canada-Florida Economic Relationship: An Encouraging Story
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The document summarizes the strong economic relationship between Canada and Florida. It notes that Canada is Florida's largest foreign investor, representing 10% of all foreign direct investment. Additionally, Canadians are Florida's largest and most loyal tourists, comprising 64% of passengers at one Florida airport. The document also outlines Canada's strong and resilient economy in recent years, with low unemployment and GDP growth leading the G8, demonstrating why Canada and Florida maintain a mutually beneficial economic partnership.
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Canada-Florida Economic Relationship: An Encouraging Story
- 1. Canada and Florida Economic Relationship: An Encouraging Story in a Difficult Time Presentation to the Global Business Alliance of the Palm Beaches September 14, 2010
- 29. 2005 vs. 2010
- 35. Canada--Largest buyer of U.S. residential real estate in the Past Three Years.
Editor's Notes
- Thank you for your kind introduction. Very grateful to the Global Business Alliance for the invitation to speak before you about the Canada – Florida economic relationship, which has proved to be strong, even in a difficult time. Hardly a day goes by without news of foreclosures, bank failures, two-digit unemployment, and the like. These news unfortunately overshadow and obscure successes and feel-good stories like the one I am about to present, which is partly why we are here. My other purpose today is to introduce you to our country so you can learn more about your number one economic partner in the world.
- In spite of being just a stone throw away from the U.S. (a 3-hour flight will set you back only $300 during peak season), many Floridians have never visited our country. Yet, we receive more tourists each year than they are Canadians in Canada. You might use our products such as the blackberry, drive a car made in Ontario, use Java on your computer, or know someone who depends on insulin or who looks forward to the promise of stem cells: these are all Canadian discoveries.
- You might also watch popular TV shows or seen blockbuster movies featuring Canadian actors like William Shatner, Leslie Nielsen, Jim Carrey, Pamela Anderson, Michael J. Fox, Mike Myers, Matthew Perry, Keanu Reeves, and others.
- If you’re a country music lover, you probably count Shania Twain among your favorite artists. Your kids surely have Alanis Morissette and Avril Lavigne in their Ipods, and I would guess that most of you have hear at least one song from Celine Dion or Brian Adams. They are all Canadian of course. .
- January, 2005 But let me take a step back and start with the beginning. Our flag is, like the Stars and Stripes, a symbol recognized the world over. The Canadian Maple Leaf plays a big role in branding Canada abroad.
- Population: 34 millones Density: 3 habitantes por km2 GDP: 10 th largest economy in the world (about three times that of Florida) Like Florida, large coastal area, very depending on international business
- Our coat of arms reflects our British and French heritage, the breadth of our country (“from sea to sea”), and the fact that like the U.S., we are a country of immigrants (slogan: “they desire a better nation”).
- January, 2005
- Ties will US very strong because of our location of course: 17 of our 20 largest cities are near the border. NBC’s Tom Brokaw, in a special documentary on the Canada-US relationship during the Vancouver Olympic Games, said that « in the history of sovereign nations, there has never been a relationship as positive and as peaceful as that between Canada and the US ». You would indeed be hard pressed to find two neighbouring countries anywhere around the world that enjoy the kind of partnership that we do. John F Kennedy said to our Parliament in 1961: “geography made us neighbors, history made us friends, necessity made us allies, and the economy made us partners”.
- Canada isn’t just apt at supplying the U.S. with energy and merchandise. We also buy from you. For every dollar worth of goods that China buys from the U.S., Canada buys four dollars of products made in USA.
- On top of the millions of jobs that depend on merchandise and services trade between Canada and the U.S, Canadian subsidiaries on U.S. soil also create jobs.
- In 2007 (the latest year available) Canada was responsible for 10% of all FDI to Florida and for 10% of FDI-related employment in the state. That year, Canada's FDI stock in Florida reached $3.36 billion (5th overall behind Japan, Germany, UK and Australia), but more importantly as it speaks to the "quality" of this FDI, Canada's wholly and majority-owned affiliates in Florida sustained 24,300 jobs (2nd overall behind the UK, and more than all Latin American countries combined)
- Diversity of Canadian companies that can be found in Florida
- The tourism sector held steady in 2009, registering a minor 0.8% dip from 2008 in spite of a 6.4% reduction in the number of Canadian visitors to the state. An estimated 22.7 million visitors came to Florida in 2010's first three months, an increase of 2.7 percent from a year earlier, according to Visit Florida, the state's quasi-public tourism agency. Preliminary estimates by the agency showed the number of domestic visitors rose 1.6 percent, while overseas visitors increased 11.3 percent and Canadian visitors rose 10.4 percent.
- Canadians represent by far the most important source of foreign visitors to Florida. More than the other top foreign markets combined. Canadians also tend to stay longer than other foreign visitors: the Canadian average is close to 17 night while others stay on average 11 nights. However, less than 1 in 3 Canadian visitor tends to stay in a hotel, unlike foreigners (over 2 in 3). What does that tell you? That Canadians either have second homes in Florida or have family and friends who do, which eventually share stories about their buying experience and builds their comfort level in acquiring their own homes.
- At the Palm Beach International Airport, 64% of all international passengers in the last twelve months came from Canada with Air Canada, and more are expected to come with Direct Air’s new flights from Palm Beach to Niagara Falls, NY, which is conveniently located across the border with Canada, so many bargain hunters are likely to cross the border to hop on these potentially cheaper flights.
- The strength of our currency explains in part why Canadians are travelling to Florida with gusto (in addition to the weather of course), and why they are buying property here. Did you know that in 2009, the Canadian dollar edged up 14% against the US dollar, 11% vs the euro, 16% vs the yen, and 4% vs the pound?
- Why is our currency so strong? Because our economy is strong. Let me give you some examples of that:
- Because we had over 10 consecutive years of budget surplus, between 1996 to 2007 in fact, we entered the global economic crisis in much better position than other countries. We had a minimal deficit in 2008 and will have a modest one in 2009, which will be due in part to government injecting money to provide a stimulus to the economy, which will go to roads, infrastructure, the auto industry, green tech, and is somewhat similar to that of the U.S. with one big exception: no bank bailout.
- This solid fiscal footing meant that when the recession hit, Canada was less affected.
- Currently, our unemployment rate is about 8%, and over three quarter of the jobs that were lost in Canada during the recession have been re-gained.
- Our economic growth is the fastest in the G8.
- Not often that a right-wing think tank praises Canada. But the annual index of economic freedom produced by the Heritage Foundation in conjunction with the Wall Street Journal showed that in 2010, our economy was the freest in the Hemisphere.
- Forbes magazine reported earlier this year that Canada is the 4 th best country for business in the world, ahead of the U.S.
- What a difference five years can make! In 2005, the real estate bubble allowed people to use their homes to accumulate wealth and to spend. Today many Americans have either lost their homes to foreclosures or have negative equity (ie they owe more on their mortgage loans than their home is worth). TIME magazine recently ran a controversial cover story about the wisdom of owning a home. What I took from it are two elements that are relevant to my presentation; namely, the role of tax policy and cultural identity, as both differ in Canada vs the U.S.
- The real estate market in much of the United States continues to struggle and the situation is very different up North. As you can see in the graphic from a recent study by a Canadian think tank, unlike the U.S., Canada doesn’t have huge inventories of unsold properties or foreclosures dragging down the market. In fact, housing prices in Canada have did well in comparison to the U.S. throughout the recession. Canada did feel the effects of the crisis, and housing prices did tumble - about 15 percent between 2008 and early 2009. But for the most part, prices in Canada rebounded quickly, and in some places like Vancouver, which is known for its quality of life (which was on broad display during the Winter Olympics earlier this year), the value of homes continued to appreciate, though at a slower pace.
- Why the difference? The mortgage framework in Canada is different from the U.S. Canada did not have an explosion of subprime lending because on the lending side, the derivatives market in Canada is more closely scrutinized and limited in scope than in the U.S., where financial instruments allow for more “creativity” and enabled speculators to swap high risk mortgage debts in the hope of obtaining high returns. In other words, banks hold on to those loans rather than sell them to investors. Also, Canadians generally put more money down than their U.S. peers, and one reason is that buyers who put 20 percent or less down have to get mortgage insurance, and the government sets the criteria for borrowers. That means that you're going to have another set of eyes look at how you're going to qualify for that mortgage. And, of course, those mortgage insurance companies have a vested interest in making sure that that mortgage is going to be paid and doesn’t go into arrears. The result: fewer bad loans
- Canada doesn’t offer tax deductions for mortgage interest payments to encourage home ownership. Yet, our home ownership rate is slightly higher than in the U.S.
- You would have seen the recent article in the Palm Beach Post about the fact that 22 percent of all foreign clients nationally choosing property in the Sunshine State far ahead of California which comes second with a mere 12%. It was quite the opposite just four years ago.
- Still according to the National Realtors Organization, Canadians are responsible for just under one in four closings with international buyers across the U.S. Far ahead of any other country. This has been correlated with the recession in the US. As you can see, our numbers jumped up in 2008 and have held steady since.
- This was the picture in 2010 so far.
- Although we don’t have detailed statistics on the matter, we would surmise that the average Canadian buyer purchases homes under $200K. So don’t expect to make instant fortunes with Canadian buyers, and take strength in their numbers….
- Unless of course you are lucky or well-connected enough to land Canadian clients like Celine Dion who owns a property worth close to $17 million dollar on Jupiter Island.
- Estimate: $40 billion Canadians are reliable: over half of Canadians pay for their Florida real estate purchases in cash. In terms of location, the shorelines still attract the most Canadians. South Florida still draws the most buyers , with 24% purchasing homes in the Miami-Ft. Lauderdale metro area in 2006 (data includes Palm Beach) – interested to know how active here, if you have a Canadian neighbor although in most cases you might not even know they’re Canadian.
- In conclusion, thank you for your partnership and friendship with Canada, and to you in the audience for your continued interest in Canada and for the valued economic benefits that we can create together.