Record numbers plan to explore new markets and invest outside Canada
After hitting an all-time low this past spring, trade confidence among Canadian exporters bounced back across all sectors, all business sizes and in every region across the country, according to the latest Trade Confidence Index from Export Development Canada (EDC).
“It’s a relief to see such a broad-based rebound, especially as Canadian trade data continues to exceed expectations,” said EDC Deputy Chief Economist Stephen Tapp. “But with the second wave of COVID-19 raging in many parts of the country, our economy isn’t out of the woods yet.”
As some lockdown measures imposed in response to the COVID-19 pandemic started to lift, the headline index increased 21% to 67.5, up from 56.0 in the mid-year release. Still, the overall index remains 3% below its pre-pandemic level.
And although the latest survey found fewer respondents indicated a negative impact on their businesses compared to the last survey (to 65% from 71%), most respondents – almost 80% – said they continue producing below pre-pandemic levels.
Among those who said the pandemic is negatively influencing their business, 28% said their sales decreased by half or more since January.
On the other side of the spectrum, a growing percentage of respondents, 23%, said COVID-19 has had a positive effect on sales, up from 14% in the mid-year survey results. Among those, 44% said sales have increased up to 10% since January, and 25% said sales increased between 11% and 15%.
“This finding likely reflects two factors,” Tapp said. “First, is the highly unequal nature of the pandemic across sectors, creating a so-called K-shaped recovery. And second, more firms are pivoting their production to take advantage of new pandemic demand trends.”
Survey respondents also indicated they’re experiencing several challenges to doing international business, including connecting with customers (34% of respondents); connecting with potential suppliers, partners or distributers (26%); identifying potential suppliers, partners or distributors (26%); and maintaining cash flow (25%).
Looking forward, two-thirds, or 67%, of respondents said they expect a slow and choppy recovery, with the global recession lasting more than one year. Despite that outlook, a record number indicated plans to export to new markets and to invest outside of Canada – 74% and 28% respectively.
Further highlights
- One-third of respondents said trade protectionism – tariffs, duties or “buy local” sentiments, for example – is affecting their business strategies.
- One-third of respondents said Canada-China trade tensions are negatively impacting their business.
- Trade confidence improved across the country by 11.5 points to reach 67.5. Quebec saw the most change, increasing 16 points, while the Atlantic provinces saw the least, going up only 4 points, and Ontario came out as the most optimistic, with 69.3 points overall.
- While all sizes of business indicated increased confidence, large firms had the biggest rebound in confidence since the mid-year survey, increasing to 69.1 from 52.7. Medium-sized businesses increased to 67.2 from 51.5, and small businesses increased to 67.5 from 58.3.
About EDC’s Trade Confidence Index
This survey includes responses from 557 Canadian exporters. The Trade Confidence Index is conducted twice a year, providing insights otherwise unavailable through traditional trade statistics. The results are a pulse check of Canadian exporters’ level of confidence and their expectations of international trade opportunities. Respondents to this online survey are a broadly representative mix of small, medium and large-sized companies across the country. The online survey was conducted from October 7 to November 6, 2020.
