OTTAWA, Jan. 15 /CNW Telbec/ - International and domestic economic
conditions continue to weigh on the confidence of Canadian exporters, which
fell by a record 5 percentage points to a third consecutive all-time low over
the past 18 months, according to the semi-annual Trade Confidence Index (TCI)
survey from Export Development Canada (EDC).
'The world economy is collapsing around Canadian exporters. Growth has
come to an abrupt halt in the world's largest economies, and financial market
turbulence is not helping matters,' said Peter Hall, Vice-President of
Economics and Chief Economist, EDC. 'Amidst this economic backdrop, the shock
of last fall's seismic financial and economic shifts has turned into abject
pessimism about the near-term future.'
The overall index tumbled to 61.0 from 66.1 in the past 6 months, the
lowest result on record since EDC began reporting semi-annually on trade
confidence in 2000. The survey examines the attitudes of Canadian exporters
through five index elements: trade opportunities, export sales, domestic
sales, and both domestic and global economic conditions. All five elements
contributed to the recent drop in the Index.
The share of respondents indicating that the global economy would get
worse surged to 64 per cent from 51 per cent in the spring of 2008, and 30 per
cent in the fall of 2007. At the same time, concerns about the domestic
economy hit a new high, with 57 per cent of respondents expecting domestic
conditions to worsen, a 15 per cent leap in just 6 months.
When it comes to trade opportunities, Canadian exporters are more
polarized than ever before. While respondents who believed that international
trade opportunities will worsen grew from 23 per cent to 38 per cent, compared
to 6 months ago, the number of respondents who believed they would improve
also grew to 33 per cent from 28 per cent in the same period. These results
may suggest that the growing number of Canadian exporters that have expanded
into non-traditional markets in the past two years think that those
opportunities will help to shore up near-term activity.
The percentage of exporters expecting their international sales to remain
the same or worsen jumped to 62 per cent in the fall, the highest level ever.
And in a departure from the norm, the share of exporters identifying the U.S.
as their top riskiest market rose dramatically in the last three surveys,
reaching 33 per cent in the fall of 2008 (compared to 25 per cent in the
spring). Interestingly, this survey saw the US overtake Asia as the perceived
riskiest market for the first time.
The resources sector has been hit hard by the U.S. housing market slump
and plunging commodity prices. Confidence was already low in this sector
because of the protracted decline in U.S. residential and commercial
construction, one reason that the sector registered the smallest
period-to-period decline among all industry groupings.
The transportation, information and communications technology (ICT) and
extractive sectors experienced the largest drops in exporter confidence from
the spring survey. Factors contributing to waning confidence include a 16-year
low in auto sales, declining oil and metals prices and a drop in corporate
Forty per cent of exporters believe that the dollar will increase over
the next 6 months. A majority of Canadian exporters report that the value of
the Canadian dollar is a key factor when competing in, or considering entry
into, foreign markets. Fortunately for exporters, the Canadian dollar has more
recently returned to the mid-80 cent level from its extraordinary highs only 6
Hiring intentions, another indictor of trade confidence, also reached an
all-time low. Less than one-quarter of Canadian exporters plan to hire over
the next six months. On a positive note, the majority of exporters plan to
maintain their current level of employment, which could mean no major lay-offs
are anticipated in the near-term.
Regionally, Western Canada posted the most optimistic score of 63 despite
declining from 68 since the spring of 2008, again followed closely by Quebec
at 62 (down from 67), Ontario at 60 (down from 65) and Atlantic Canada at 58
(down from 63).
Opinion Search Inc. conducted the survey in April and May of 2008. A
total of 1002 Canadian businesses participated, and the TCI was calculated on
a total of 854 respondents. The survey results are considered accurate to +/-
3.1 per cent, 19 times out of 20.
For more information about EDC and the Trade Confidence Index, visit
EDC is Canada's export credit agency, offering innovative commercial
solutions to help Canadian exporters and investors expand their international
business. EDC's knowledge and partnerships are used by 7,000 Canadian
companies and their global customers in up to 200 markets worldwide each year.
EDC is financially self-sustaining, is a recognized leader in financial
reporting and economic analysis, and has been named one of Canada's Top 100
Employers for eight consecutive years.
For further information:
For further information: Media contact: Phil Taylor, Export Development
Canada, (613) 598-2904, Blackberry: firstname.lastname@example.org