EDC report says new market optimism among Canadian exporters is rising.
OTTAWA: Canadian exporters haven’t given up on the year yet.
Export Development Canada’s spring report on trade confidence finds exporting firms in Canada searching out new markets and generally more upbeat about prospects than they were in the fall.
The emphasis on finding new markets—something they’ve been urged to do by the Bank of Canada and the federal government—may be the take-away message of the report.
That’s because confidence has generally waxed and waned with the headlines. Since the survey of 811 exporters by the EDC occurred in April—when the global landscape appeared more stable—the results would likely show more pessimism if firms were asked today, said Peter Hall, the Crown agency’s chief economist.
According to the latest expectations from the Bank of Canada released earlier this week, “recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.”
April’s index from the survey hardly supports that view, however.
It rose to 75.9, returning to basically the same level it was last year at this time before the plunge in confidence during the fall survey, when the global situation appeared dire.
“Firms that really thought things were falling off the table last autumn, came back to the camp of a steady as she goes economy,” said Hall. “The index is consistent with either normal economic conditions or something slightly more than that.”
An encouraging result from the survey of exporting firms is the finding that 35 per cent said they had entered new markets over the past two years, and another 21% said they were planning to export to new foreign markets over the next two years.
It is the first time the EDC has asked the question, but Hall said the results confirm the steady growth in Canadian exports to emerging markets since 2003, and point to continued expansion going forward.
The steady climb in the value of the dollar since 2003 has forced Canadian firms to look beyond the United States for new markets, he said, and the trend appears to be continuing.
“That would indicate to us there’s a lot of interest among those who are doing business in other countries, and we’re getting a sense that those not engaged in exports to other countries are interested in that as well,” he said.
“I really do see a lot of growth potential looking forward.”
The Bank of Canada and federal government has been urging Canadian firms to expand their horizons beyond the US, particularly to emerging markets, because growth south of the border and in Europe is likely to be muted for years to come.
Exports to emerging markets remain a small percentage of total trade—about 12%—but that’s three times what they were a decade ago.
On another issue, the Canadian firms still say the loonie is a detriment to their businesses, but the vast majority also said they are prepared or moderately prepared to function in a strong-dollar environment.
The Canadian dollar traded at 97.66 cents US early Friday, down six-tenths of a cent from the previous close.