Zero. That’s the number of miles I have flown since mid-March. And for someone who crisscrosses the country multiple times in a year, not to mention several international visits, that’s a big shock. While I’m still making as many appearances, for the time being, they’re virtual. And at these events, we’re hearing firsthand of much greater shocks that have rocked Canadian firms. Given the conditions, we accelerated Export Development Canada’s cross-Canada Executive Roundtable program this year, and we heard a lot about what’s keeping our key customers up at night. What are they saying?
Top of the list is no surprise: customers were all really keen to know our thoughts on how the economy is going to come out of the COVID-19 disruption. The key concern was centred on the second wave infections and whether we were headed for another dip in activity. Our base case forecast calls for slower fourth-quarter growth, but recent intensification of European second-round lockdowns has led to expectations of a mild contraction to close out this year.
The advice we’re giving on this front is that we’re all at the mercy of the pandemic; COVID-19 data are the indicator that’s giving us a heads-up on where the leading economic indicators will go. The way forward will for the moment be dictated by infection numbers. The point? Keep a close eye on the pandemic data; use it to develop your customized country-specific COVID-19 indicator.
The second most frequent issue raised was also related to the pandemic. Business leaders—lots of them—talked about the difficulties that cross-border people movements were presenting to them. The ongoing restrictions continue to get in the way of providing and receiving people-related business activities. Things such as machinery installations, software changes and other support, putting together and then managing mergers and acquisitions, trade arrangements, and simply managing offshore facilities. What they were saying is that for particular business activities, having key people on-site is critical.
Problems on this front were manifold. In not a few cases, it’s specific country restrictions on movements. Where countries have developed “essential service” protocols to create exceptions, it then comes down to individual appetite. Those specialists themselves are in many cases unwilling to deal with the risks of getting onto an airplane, going to another country with different COVID-19 protocols, or going through multiple quarantine requirements. For many, it’s simply too risky and inconvenient.
Many of the other issues raised had COVID-19 overtones. The pandemic pummelled energy prices; there was a lot of concern right across the country as to what the future of the traditional oil and gas sector would be like in the wake of the pandemic.
Knowing that the pandemic is having a very different effect on an industry-by-industry basis, the fourth most-oft raised issue was for the sectoral outlook. I was able to share our K-shaped outlook at the industry level: some soaring, some in the basement, and an almost-infinite number of outcomes in between.
The next issue on the list was the foreign exchange forecast. Many wondered that there was not more movement and volatility. This has indeed been a surprise to us as well, as has one of the factors that has suppressed bilateral currency movements: the huge, almost universal, increase in public debt. It’s a key factor in determining currency risk, and at the moment it’s all over the map. The response? Currencies seem to be in a sort of stasis, a holding pattern that’s expected to persist.
Other concerns included China trade issues and the construction outlook in the United States and Canada. Quite a few questions came in seeking our opinions on interest rates and inflation, in the context of the extraordinary monetary policy (or “printing money” in the minds of most). U.S.-Canada trade issues were also mentioned often, but weren’t in the top-tier of the issue list attendees walked in with. However, in the post-presentation Q&A, this was a very hot issue.
There were lots of other discussion points that came up, and we’d be happy to share them. These ones are helpful as they are mid-crisis observations that aid in devising solutions, but also provide comfort that nobody is alone in this; every industry is affected in one way or another, and there is further scope to pull together to get us through this as quickly and smoothly as possible.
The bottom line?
It may be a while before we’re all getting into planes and interacting in person again, but it doesn’t mean we can’t discuss difficulties and develop solutions. Let’s keep talking, and acting on those conversations until we get through this thing!
