Canadian companies that sell abroad are feeling a little less optimistic about global growth in the next six months, according to a semi-annual report by Export Development Canada (EDC).
EDC’s Trade confidence Index (TCI) measures how Canadian exporters and investors are feeling about their business opportunities. The overall score fell slightly after three consecutive increases since the spring of 2013.
“Continued instability in the Middle East, falling oil prices and market jitters have cooled the steady rise in Canadian exporter confidence over the past 6 months,” said Peter Hall, EDC, Chief Economist. “Still, exporter confidence in general remains high, and the appetite for new markets continues to grow.”
The decrease stemmed from the belief of Canadian business leaders that domestic sales would taper off, global economic growth would slow and international business opportunities would drop off from its current pace. More specifically, political instability and continued conflict in the Middle East topped the list of concerns with Canadian companies that had a negative view.
“At its core, I believe that the tempering of optimisms is slight enough to suggest that it’s more psychological than sales,” added Hall. “It’s likely feeding off the nasty headlines of late.”
But low dollar helps foreign sales
However, Canadian exporters are getting an early Christmas present in the form of a lower Canadian dollar, with 41 per cent of Canadian business leaders confirming that it would help their foreign sales.
“The dollar has softened just as the US economy is kicking into high gear,” says Hall. “Most exporters are welcoming the bonus.”
Furthermore, Canadian companies are starting to venture into new foreign markets in search of sales opportunities. ”There seems to be a new spirit of adventure among Canadian exporters. Past challenges have pushed them to look into non-traditional markets, and they are reaping the rewards,” says Hall. “Export diversification is alive and well in Canada, and it’s a great way of limiting our vulnerability to changes in particular markets.” The report noted that more than half of the companies spoken to were planning to sell to countries they had not sold to before.
Click here for more information about EDC and the Trade Confidence Index.