Directors increasingly worried about outlook: survey

TORONTO Canadian directors see “trouble ahead” for the economy, a sharp contrast to the mood just a year ago, according to a survey released by the Institute of Corporate Directors on Wednesday.

The survey, which tallied results from just over 600 responses from directors, revealed that only 28 per cent believe the Canadian economy will improve over the next two to five years, compared to 52 per cent who thought so last fall.

Rahul Bhardwaj, chief executive of the ICD, said that directors are responding to “hyper-uncertainty” brought on by domestic issues and stability concerns such as lingering Brexit worries and ripples from the U.S. government’s trade stance.

“All of these were in play at a very challenging time in Canada,” he said, noting concerns about competitiveness are coupled with economic challenges in this country. These include the decline of manufacturing in Ontario, illustrated by this week’s announcement that General Motors would not longer be making cars at its Oshawa, Ont., plant after 2019, and the impact of low oil prices in Western Canada.

The number of directors who think the economy will improve “dropped more than we would have expected them to,” Bhardwaj said, adding that there was a “sense of buoyancy” among directors in the organization’s spring survey.

The new United States-mexico-canada Agreement brought a somewhat improved outlook for the Canadian economy from those who answered the survey questions after the USMCA deal was announced at the end of September, noted the ICD report, which tallied surveys completed between Sept. 15 and Oct. 19.

However, directors were wary about the future of the global economy. Only 29 per cent said they believed the global economy would improve in the next two to five years, compared to 43 per cent who believed a year earlier that it would get better.

In addition, the latest ICD survey revealed that the #Metoo movement, which inspired a growing list of accusations of abuse of power in corporate, entertainment, and political circles, appears to have raised risk concerns in Canadian boardrooms.

Six out of 10 directors surveyed by Environics for the ICD, agreed that the risks to their firm from workplace harassment have increased significantly, up from 43 per cent who thought so just six months ago.