The new North American trade deal addresses the top concern for Canadian exporters,
but overall confidence falls amid broader trade turmoil
OTTAWA, Dec. 18, 2018 /CNW/ - The surge of optimism felt by Canadian exporters at the mid-year point of 2018 has now tempered, according to the results of EDC's most recent Trade Confidence Index (TCI) - a bi-annual survey of 1,000 Canadian exporters. After the index jumped to 76.5 in June of this year, results from the 2018 year-end survey reveal that it has now backtracked to 73.8.
While the overall result is solid, on par with the historical average, confidence modestly decreased in all five major categories of the survey: domestic sales, domestic economic conditions, export sales, world economic conditions, and international business opportunities.
"There was a lot of excitement going into the last TCI survey," said Peter Hall, Chief Economist, EDC. "Business was good and the tide of global economic growth was lifting Canadian exporters, despite the uncertainty surrounding NAFTA renegotiations at the time."
"EDC's latest survey shows that trade confidence lost this early-year lift. Even with the CUSMA deal in the works, trade turbulence elsewhere seems to have undercut the overall feel-good factor. It's unfortunate because the global economy remains strong, and this is exactly the time when Canadian companies should be out there taking advantage."
Difficult world economic conditions
Among the TCI survey's five major categories, confidence in world economic conditions fell the most, with protectionism driving that negative sentiment. The outlook in this category is at its lowest point since 2015, when companies were dealing with the oil price shock.
Still early days but CUSMA easing uncertainty
Survey respondents were more optimistic about the Canada-United States-Mexico Agreement (CUSMA). The existence of the new North American trade deal has reduced uncertainty for Canadian exporters. This has had a notable impact on investment intentions and should reactivate some delayed investments.
At mid-year, uncertainty around the deal had 57 per cent of the respondents who identified as having their investment plans affected by the North American trade talks, delaying investment. By the end of the year, that number dropped to 35 per cent. Among the same group of exporters, the percentage of companies looking to increase investment more than doubled from 18 per cent at mid-year to 41 per cent.
On the contents of the CUSMA deal, exporters were for the most part neutral in sentiment. This may be attributed, in part, to a lack of information available at the time of the survey, as negotiations were only recently concluded and the new deal hadn't entered into force.
Other highlights
Click here to read more about the 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 October 23 to November 13, 2018. This was shortly after the CUSMA agreement was announced on September 30, 2018.
About EDC
EDC helps Canadian companies go, grow, and succeed in their international business. As a financial Crown corporation, EDC provides financing, insurance, bonding, trade knowledge, and matchmaking connections to help Canadian companies sell and invest abroad. EDC can also provide financial solutions to foreign buyers to facilitate and grow purchases from Canadian companies.
For more information about how we can help your company, call us at 1-888-434-8508 or visit www.edc.ca.
SOURCE Export Development Canada
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