Well, it’s that time of the year, again. The temperature is falling, the days are getting shorter, and the results of our year-end Trade Confidence Index (TCI) are in. Twice a year, our TCI survey goes to field to gauge how global and domestic economic conditions are impacting Canadian exporters and export-ready businesses. 

In our ongoing efforts to ensure that the TCI more accurately reflects the face of Canadian business, we continue to enhance our sample and push deeper into often overlooked segments of our exporting community, including among women entrepreneurs, micro and small businesses, and Indigenous- and Black-owned enterprises. Women-led businesses now account for 34% of respondents, while indigenous-owned businesses make up 11%.

With Canadian exporters facing unprecedented levels of global economic uncertainty, it won’t be surprising that the overall TCI dropped for a third consecutive time, to a level of 63.8. This is in stark contrast to the historic heights reached in 2021. In fact, the TCI now sits at one of the lowest levels in the index’s 23-year history, with the exception of the readings following the 2008 collapse of Lehman brothers (61) and the onset of the COVID-19 crisis (56), in 2020.

While all elements of the index dropped compared to our mid-year reading in June, the largest declines were seen in perceptions of domestic economic condition (-1.6) and reporting on domestic sales (-1.1). This hints at a gradual weakening of Canada’s domestic economy, as credit conditions tighten and global volatility takes its toll. Weaker confidence was reported across businesses of all sizes and in all regions of Canada, with medium-sized firms and Quebec-based businesses reporting the largest dips.


Declines were also widespread across sectors, except in the transport sector, where the TCI score actually increased slightly. This contrasts with the spring survey, when surging commodity prices helped support confidence in the extractives sector. But the pullback in global commodity prices over the fall, appears to have reversed that trend.

So, what’s keeping our exporters up at night?

  • Supply chain concerns continue to negatively impact most respondents, primarily medium-sized enterprises, a sentiment further corroborated by what business leaders have been telling us during our fall executive roundtable tour. That said, the expected persistence of these challenges appears to be falling.
  • Additionally, rising business costs, global economic conditions, staffing and cash flow challenges are quickly moving up the list of concerns, especially for small and micro enterprises. 

Almost three-quarters of all respondents are telling us that inflation is negatively impacting their businesses, and more than half expect these pricing pressures to last more than a year. Meanwhile, a greater share of those surveyed point to labour supply as a major constraint, consistent with anecdotal feedback that we’ve received on the road. However, hiring intentions are slowing, with only 43% expecting to increase hiring over the next year, versus 51% in our mid-year survey.

Respondents continue to feel gloomy about the general state of the global economy, with an overwhelming amount (77%) saying that a global slowdown would negatively impact their business. As fears of global recession and the double-whammy of broad-based inflation and rising interest rates build, almost half of businesses expect financing terms and conditions to worsen. Interest rate hikes are imposing significant difficulties on Canadian businesses, as increased borrowing costs weigh on investment decisions and upset plans for diversification. 

Consistent with previous TCI results, the United States continues to dominate exporters’ market share, representing 70% of foreign sales, followed by the United Kingdom (20%), Australia (16%) and Mexico (16%). However, early signs of slowing in the U.S. economy are leading to weaker sales in that market, with 21% reporting declines in U.S. orders, versus only 13% at mid-year. Exporters looking to expand internationally continue to consider the U.S. (20%), U.K. (16%), Australia (15%), Mexico (15%), and Germany (14%) as their top target markets.

The bottom line?

With momentum in the global economy losing steam, and a number of storm clouds appearing on the horizon, Canada’s export-oriented businesses appear to be bracing for the coming chill. Ongoing supply chain constraints, rising cost pressures, and the escalating war for talent will test exporter mettle in the context of a tightening credit environment. But Canadians are a resilient bunch, and appear to have what it takes to thrive through the coming winter.

This week, very special thanks to Prerna Sharma, senior economist in EDC’s Research and Analysis Department.

As always, at EDC Economics, we value your feedback. If you have ideas for topics that you would like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.

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