CANADA: ECONOMIC BACKGROUNDER

(27 Oct 1995) English/Nat As Canada awaits the referendum that could split the country in two, it's economy is suffering a case of the jitters. The Canadian dollar is struggling to halt a slide as polls indicate the vote could go the way of the separatists. Analysts are predicting a sharp currency devaluation if Quebec votes to leave Canada. Ever since polls suggested the "Yes" side might win Monday's Quebec referendum, the Canadian economy has shown signs of stress. The Canadian dollar fell almost one U-S cent to 73 cents at the beginning of the week, when it dawned on the analysts that Quebec may split from Canada. SOUNDBITE: I'm worried about the Canadian dollar in case of the "Yes" vote because nobody knows who's going to be responsible for the debts of Canada. And obviously the international community to whom we owe three hundred billion dollars is going to be a little bit upset by this, not knowing who's going to pay them. And so I think you can expect if the vote is "Yes", the dollar will plummet, so why own it? And therefore since the dollar hasn't gone up this year really, compared with the beginning of the year, why not put all your money into U-S funds or U-S quality stocks. Then at least you don't worry about it. SUPER CAPTION: Steven Jarislowsky, Chairman Jarislowsky- Fraser Investment Council. Toronto's stock exchange has been eyeing the capital flight nervously. If traders stay in Canadian dollars they could win or lose a fortune. The long term effects on the economy, should the country split, are difficult to predict. Some analysts forecast mayhem. SOUNDBITE: We've got good industry. people like to do business, people want to do business. Good access to big markets in the United States. But do you put all that at risk, because we have that now, by shooting yourself in the foot and putting yourself possibly outside NAFTA. disrupting your trade relations, disrupting your financial relations. It's a big risk. SUPER CAPTION: William Watson, Assoc. Professor of Economics, McGill University Montreal The prospect of harm to the economy may weigh heavily on the voting conscience of the electorate, many of whom say they've yet to decide. That crucial 14 percent will decide the outcome of the referendum. Find out more about AP Archive: http://www.aparchive.com/HowWeWork Twitter: https://twitter.com/AP_Archive Facebook: https://www.facebook.com/APArchives ​​ Instagram: https://www.instagram.com/APNews/ You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/1d746ed888dd08ca53ae2a7e38a3ba45