Exporters expect strong dollar to hinder sales growth
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Exporter confidence rose slightly during the last six months, but many remain cautious about sales growth this year...
Exporter confidence rose slightly during the last six months, but many remain cautious about sales growth this year, according to the latest survey by Export Development Canada (EDC).
"We’ve been forecasting that 2004 would be a year of synchronized growth for the global economy," says EDC vice-president and chief economist Stephen Poloz. "Exporter sentiment is more bullish than six months ago because of positive economic news, but the survey also shows Canadians are concerned about the potential implications of a rising dollar on their sales volumes."
EDC’s Trade Confidence Index (TCI) is based on a random sample of 1000 Canadian companies, representing a cross-section of industry, regions and size of business. The latest reading is 74.8 out of a possible 100 points, an increase of 1.5 points from the 73.3 registered in the spring of 2003. It is a composite score based on five questions asked twice a year.
While confidence in the domestic and global economies rose, this improvement has not so far translated into expectations of stronger export sales, which remain about the same as six months ago. Overwhelmingly, exporters cited concern over the rising Canadian dollar as one of the primary reasons for their caution.
Indeed, 90 per cent of exporting companies view the value of the dollar as pivotal to their success in foreign markets.
Companies in nearly all industry sectors expressed greater trade confidence, with base and semi manufactured goods, information technology and transportation posting the most impressive gains, while the ban on Canadian beef and sluggish demand for consumer goods kept confidence levels unchanged by companies in the agri-food and consumer goods sectors.
In Ontario and Quebec, where the rising dollar is felt more acutely because of the size of the manufacturing sector, trade confidence remained unchanged during the last six months.
EDC Economics expects the global economy to expand by four per cent in 2004 compared with 3.3 per cent in 2003. Growth is expected to be balanced around the world: 4.5 per cent in the U.S., 3.6 per cent in Canada, six per cent in Asia, 4.5 per cent in Central & Eastern Europe and Russia, two per cent in Western Europe and 1.2 per cent in Japan.
Opinion Search Inc. conducted the survey in November. A total of 1, 000 respondents participated. The survey results are considered accurate to +/-3%, 19 times out of 20.
The full report can be accessed through EDC’s website at : http://www.edc.ca/docs/ereports/tradeConfidence/index_e.htm