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Low confidence in Canadian exporters
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Confidence levels among Canadian exporters have declined largely due to a slowing US economy and an appreciating Canadian dollar, according to the semi-annual Trade Confidence Index (TCI) survey from Export Development Canada (EDC). The overall index declined to 67.4 from 72.9 per cent in June 2007, the lowest result since EDC began reporting on trade confidence in 2000.
Canadian exporters are more pessimistic about all five of the core TCI indicators: trade opportunities, export sales, domestic sales, and both domestic and global economic conditions. Compared to
six months ago, 38 per cent of exporters said that they expect trade opportunities will worsen in the next six months, 30 per cent believed that global economic conditions will also worsen and 25 per cent said that they expect export sales will drop.
The survey shows that 92 per cent of exporters believe that the Canadian dollar plays an important role in a company's ability to compete in foreign markets. The majority of exporters price their goods and services in U.S. dollars, and for many, the rise in the Canadian dollar has cut into their profit margins. To restore their margins, 33 per cent of exporters (up 7 per cent since spring 2007) are cutting costs and 27 per cent (up 5 per cent since spring 2007) are raising the U.S. dollar prices of their exports.
The number seems high and questions the strategies man Canadian exporters have employed in the past decade. A heavy reliance on a relatively low Canadian dollar for much of 2000 has created lazy exporters. Rather than innovate to compete with American counterparts at par, Canadians have faced the luxury of a depreciated dollar. Times are changing now as the dollar increases and taxation situations have no changed during the rise to put Canadian on par with American manufacturers (and other sectors).
Regionally, Western Canada posted the most optimistic score of 70 despite declining from 74 since June of 2007, followed by Quebec at 68 (down from 73), Ontario at 66 (down from 72) and Atlantic Canada at 66 (down from 75).
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Jan 26, 2008, 4:21 PM
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