Your next big thing: Growth market - The riches in recession

Written by Tony Martin

The U.S. economy is slowing sharply, and there’s a fast-rising chance that Canada’s soon will, too. There’s even talk of a recession, during which the best opportunities will be in countercyclical sectors: those that thrive while others suffer.

For example, in an economic slowdown, pricey cars, along with everything from luxury household goods to industrial equipment, would be put on the market as their owners realized how overextended they were. And that means two kinds of opportunities, says Leo Donlevy, area chair of entrepreneurship and innovation at the University of Calgary’s Haskayne School of Business.

The first is for those who can bring together said items with their prospective new owners. The second lies in the chance to pick up second-hand expensive equiment needed for a startup, at pennies on the dollar. “It can be a good time to launch a capital-intensive business,” says Donlevy. For instance, niche manufacturers that use state-of-the-art technology and have customers outside of North America are likely immune from any drop-off in economic activity here in Canada. This is especially true if you’re selling to the developing world, says Donlevy, pointing to telecommunications as a great example: “Whatever happens here at home, it’s likely that China, India and Southeast Asia will continue to see their economies growing by double digits.”

While those in the consulting industry often lose their contracts in tough times, those who specialize in reducing costs may see an upswing. Similarly, in the consumer market, we’ll see rising demand for certain financial services, such as payday loans and mortgage brokers who can help the overextended renegotiate their terms.

And regardless of how hard the economy contracts, it likely won’t overpower demographically driven demand, particularly for health- and personal-care products and services, says Pascal Gauthier, a Toronto-based economist with TD Bank Financial Group: “Insurers, real estate and financial services will also benefit from the demographic shift.”

Finally, the state of Canada’s crumbling infrastructure has become so critical that deferring restoration may not be feasible even in a recession, notes Gauthier. And in B.C. and Alberta, the construction sector will likely remain strong due to the need for new construction as the inflow of people continues.

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