‘Worst May be over’: exporters
EDC survey finds renewed optimism
O T TAWA • Canada’s beleaguered exporters are seeing a glimmer of hope that “the worst may be over” for the global economy, gradually opening trade gates wider in the coming months.
That renewed optimism “is broadly based, cutting across all sectors,” as conditions continue to improve, particularly in Europe and United States, according to Export Development Canada.
“Exporters are telling us that they feel the worst may be over in Europe, that U.S. customers are ordering more, and that they are more optimistic that world markets will turn a corner in the next six months,” EDC chief economist Peter Hall said Thursday.
EDC, the Ottawa-based credit agency, said its semiannual survey shows less pessimism and more hope among companies that export routes are clearing and should improve over the next six months.
Its spring trade index rose to 72.6, up from 70.7 in its fall reading. EDC said mining and oil and gas were the only sectors not to see an upturn in confidence, “which is not surprising given that prices are continuing to slide. Canada’s oil and gas sector continues to face transportation constraints that are weighing on their sales.”
“Contrary to other studies that have come in the last little while, diversification of Canadian trade isn’t dead,” Mr. Hall said in an interview.
“The ongoing pressing out into markets where Canadians haven’t been involved in before is continuing.”
According to the survey of 760 businesses — conducted in mid- to late-April — 80% reported an increase or no change in the number of U.S. customers. That is up from 75% in the fall.
“A third of all companies indicated that they had already started exporting to new markets in the last two years, and about half plan to expand into new countries over the next two years,” EDC said.
When asked what new markets they planned to export to in the next two years, Canadian companies ranked the top five as Brazil, China, Germany, the u.K. and Mexico. The u.S. was only no. 12 on the list.
The low u.S. ranking “might reflect the fact that most exporters are already in that market. Those companies that are exporting and not already dealing with the u.S. already are a pretty rare breed,” Mr. Hall said.
The importance of Canada’s lar- gest trading partner remains unchanged — the u.S. is still the main driver of this country’s economy.
“The pickup in u.S. demand has really benefited Canadian exporters,” he added.
“The forestry sector [is] definitely linked to the housing boom that seems to be going on unfettered by the bump and grind that we’ve seen in the last six months. [There was] a major storm in the u.S. northeast. There were worries about the fiscal cliff. March 31 was the sequestration date. And the housing market keeps rattling on through all of that.”
Stephen Poloz, Bank of Canada governor and former head of the edC, has said confidence in the domestic and global economy is essential for businesses before they can expand their markets.
“Companies that I talk to are feeling comfortable, are watching their orders, they’re watching their foreign customers, they’re getting into new markets, so they are growing, but they’re understandably cautious, given what they’ve been through,” Mr. Poloz told a business audience last week in Burlington, Ont.
Much has been made about the strength of the Canadian dollar and its impact on export growth, something Mr. Poloz had been expected to see as a monetary policy concern — given his many years at edC. However, since taking the helm and the Bank of Canada on June 1, he has avoided commenting directly on the dollar.
In its survey, the edC found 55% of exporters responded that they could function with the loonie at parity with the u.S. dollar.