Strong dollar should not deter entrepreneurs from export markets in emerging economies
TORONTO, March 25 /CNW/ - Canadian business owners need to ramp up their capital expenditures using the strong Canadian dollar, despite the uncertain U.S. economy, and seize a tremendous opportunity to export to foreign markets for future growth, according to a new report from Dr. Sherry Cooper, Chief Economist, BMO Capital Markets entitled Canada's Disturbing Productivity Performance.
Dr. Cooper's comments reflected those made by BMO CEO Bill Downe at the company's recent Annual Meeting. "If ever there was a time that we - and I am speaking about both BMO and our customers - should feel compelled to expand our markets and to invest in productivity, it is now," remarked Mr. Downe.
"In the wake of the global credit crisis, business has learned the dangers of too much reliance on a single customer, sector or industry," said Dr. Cooper. "Canadian exporters had almost all of their eggs in the U.S. basket and were hit hard by the collapse in American demand. While the rest of the world also moved into recession, the rebound will be much more dramatic in emerging-market nations. Our businesses need to take this opportunity to invest in productivity enhancements, new processes, and training, along with providing added value to products through innovation. Combining such efforts with the establishment of better trade relations with the behemoths of the future - China, India, and Brazil - is a sure recipe for success."
Dr. Cooper also noted that businesses have an unique opportunity to invest in their operations through imports, given the high Canadian dollar and the unexpected decision from the federal budget of the elimination of import tariffs on industrial inputs and machinery used by manufacturers to make goods.
"With export opportunities to emerging nations and the unprecedented ability to invest through imports, the timing couldn't be better for Canadian medium sized companies to take on the world," she concluded.
"The good news is that businesses in Canada have healthy balance sheets," said Gail Cocker, Senior Vice-President, Commercial Banking, BMO Bank of Montreal. "But now they need to grasp opportunities for growth, and the prospects for firms exporting to emerging markets are strong."
Ms. Cocker also noted exporting can be a powerful way for businesses to mitigate risk. "In the same way that diversifying an investment portfolio can guard against market volatility, a company that diversifies its sales geographically can achieve the same benefit. With a number of emerging markets where Canadian firms can do business, the opportunities to make exports part of a comprehensive and diversified business strategy are growing."
The full report is available at www.bmocm.com/economics.
SOURCE BMO BANK OF MONTREAL
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