Wednesday 26 June 2013
Calgary floods to charge financial system billions
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Calgary
floods to charge financial system billions
Although the accurate economic
damage caused by the flooding is hard to measure, economists say it will be
widespread and long-lasting.
One estimate from BMO Capital
Markets is that Canada's GDP will be reduced by $2 billion as a direct result
of the floods.
Tom MacKinnon, an analyst with
BMO Capital Markets, estimate that direct losses from the flooding will be
between $3 billion and $5 billion. That is at least 10 times higher than the
losses incurred during the floods of 2005.
In Calgary, the floods will cut
into retail sales, tourism and
industries that service the energy industry.
Todd Hirsch, chief economist at
Alberta Treasury Branch, says the large oil and gas companies headquartered in
Calgary are coping.
“Production itself is not being
disrupted. No oil and gas comes through downtown Calgary. It would be far more
disruptive for these companies financially if it was a refinery or maybe one of
their mining operation went down in the flood,” said Hirsch.
However, three pipelines in the
province have been damaged and rail shipment were disrupted for several days.
Hirsch says that he expects fiscal
activity in Calgary to slow in the short term, but that will be somewhat offset
by a boost in spending to rebuild the city’s infrastructure.
On Monday, Alberta Premier
Alison Redford said it would take 10 years to rebuild the flood-damaged areas
of the city and the province. She pledged an immediate $1 billion in aid toward
emergency relief and renovation.
Small businesses hit hard
Smaller firms that lack the
resources of the big players are expected to have a tougher time.
Chris Tulloch, a Calgary
business advisor, says small and medium-size businesses will need help to
survive.
“Ninety per cent of companies
that have a major disaster that don’t have a contingency plan in place fail
within three years,” says Tulloch.
In downtown Calgary, where the
power has been out since Friday, small business owners are losing thousands of
dollars, and their workers are losing their jobs.
Chinatown is one of the most
flood-affected areas of the city. Local business owner Sang Yun told CBC he lost
$20,000 worth of food and has had to lay off five employees.
The federal government is
promising help. Calgary Southeast MP Jason Kenney, also the federal minister of
citizenship and immigration, says the government will speed up the process of
getting joblessness cover benefits to people who lose their jobs since of the
flooding.
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