Amid heightened trade policy uncertainty, more Canadian companies say their sales are up, they’re exporting to new countries, and investing abroad
Canadian exporters are more optimistic about the near-term outlook, despite elevated global trade policy uncertainty, according to Export Development Canada's (EDC) Mid-Year Trade Confidence Index (TCI). The bi-annual survey of 1,000 Canadian exporters finds overall trade confidence increased (up three index points, from 73.5 to 76.5), with gains for all firm sizes, sectors, and regions of the country. Better expectations for international and domestic sales drove the improved outlook.
- More Canadian companies indicate their export sales will increase over the next six months (73%, a major jump from 56% in the previous survey).
- More businesses say sales to the U.S. increased over the past six months (46%, up from 36%).
- Half of the respondents expect to increase hiring (but they face growing challenges in accessing skilled labour).
"Canadian exporters are pumped about higher global growth and are busy filling orders," said Peter Hall, Chief Economist, EDC. “This is consistent with the growth we’re seeing in Canadian exports this year. The business is there, and exporters are not letting politics trump production – at least, for now.”
Canadian exporters are diversifying international operations
- There was a significant increase in the proportion of Canadian exporters who started exporting to new countries (44% up from 31%) and those who plan to do so (64% up from 49%).
- There was also a significant increase in the proportion of Canadian exporters who have investments outside of Canada (17% up from 11%), or those who plan to do so (22% up from 12%).
After a recently-signed trade deal (Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP), Canadian exporters are paying more attention to the Asia Pacific.
The NAFTA effect
Despite overall confidence, there is still a growing proportion of Canadian exporters who say NAFTA talks have had a negative impact on their Canadian operations (28%, up from 23% in the previous survey). The highest NAFTA concerns were reported in the transportation sector, for large firms, and those located in Ontario and Western Canada. NAFTA renegotiation is also having a noticeable, negative impact on investment plans for Canadian exporters, which appears to reflect an “investment hesitation” by some firms, as 6% of companies said they are responding by delaying their investments.
"Current sales may be riding high, but trade uncertainty is having an impact,” said Hall. “Nearly one in five exporters say that NAFTA talks have negatively affected their investment plans. This reluctance to invest could severely restrain Canada’s export capacity in the years ahead."
The impact of rising interest rates
Rising interest rates are having a negative impact on the sales of a larger share of exporters (30%, up from 21% in the previous survey), though many say they are not yet taking action to adapt. Click here to read more about the Mid-Year 2018 TCI Report.
About EDC’s Trade Confidence Index
EDC surveys 1,000 Canadian exporters twice a year for the Trade Confidence Index. The results are a pulse check of Canadian exporters’ level of confidence and their expectations of international trade opportunities over the next six months. Respondents are a mix of small (70%) and medium- to large-sized companies (30%) across the country. This survey was conducted from April 18 to May 11, 2018, a period prior to some of the recent escalation in global trade disputes.
Export Development Canada (EDC) is a financial Crown corporation dedicated to helping Canadian companies of all sizes succeed on the world stage. As international risk experts, we equip Canadian companies with the tools they need – the trade knowledge, financing solutions, equity, insurance, and connections – to take on the world with confidence. Underlying all our support is a commitment to sustainable and responsible business.
For more information and to learn how we can help your company, call us at 1-888-434-8508 or visit www.edc.ca.