Export Development Canada (EDC)’s year-end Trade Confidence Index (TCI) shows exporter confidence falling to 65.7 points after rebounding in mid-2023. The TCI sits below the historical average of 72.8.
The biannual survey, which gathers the views of more than 1,200 Canadian exporters, reveals that businesses of all sizes experienced a decline in confidence, with large businesses reporting the lowest confidence. Moreover, all Canadian regions experienced declines, with Quebec noting the lowest TCI score of 64.9 points.
“After a brief uptick in exporter confidence in our spring survey, confidence has fallen as businesses are increasingly concerned about mounting geo-political pressures and ongoing financial challenges,” says EDC Chief Economist Stuart Bergman. “Global geopolitical and economic uncertainties are negatively impacting exporters and their ability to maintain profit margins.”
More than two-thirds of respondents claim they have been negatively impacted by high inflation and half (50%) believe that its effects will persist for more than a year. Additionally, most respondents (69%) say they’re negatively impacted by the high interest rate environment.
A global economic slowdown is weighing on Canadian exporters as most respondents (76%) expect the sluggish economy to have a negative impact on their business, and 73% expect their export sales to suffer as a result.
When it comes to the challenges that Canadian exporters face, more than one-third of respondents (34%) listed rising business expenses, and 32% reported that current global economic conditions hinder their business. More than a third of respondents (42%) expressed challenges around maintaining cash flow and a third (33%) dealt with difficulties obtaining financing.
Despite the negative outlook, exporter confidence increased in the resource and extractive sectors, from mid-year 2023. In addition, the infrastructure and environment sector registered the highest level of confidence.
For the first time ever, the TCI also incorporated insights from exporters on trade financing. One-third of survey respondents reported needing financing to support their trade activities. Of those who needed financing, 34% requested it from a Canadian financial institution. However, amongst those that requested trade financing, slightly less than 50% obtained the full financing amount while 21% had their trade financing request rejected. The average trade financing needs for sample respondents was approximately C $2.8 million.
Other highlights:
- Survey respondents identified a deep global recession, followed by supply chain issues and a U.S. financial crisis as top risks to their business.
- The U.S. remains the top (current and planned) export destination, as 87% of survey respondents currently export there, followed by Western Europe (33%) and the Indo-Pacific region (21%).
- Similar to the results of the mid-year index, 28% of respondents plan to invest outside of Canada and 66% plan to export to new markets.
- Survey respondents also noted transportation infrastructure (e.g., roads, railways, ports, etc.) as their top infrastructure challenge, negatively impacting trade in the last six months.
