High tide for exporters

Written by Rebecca Gardiner

Exporter confidence remained strong during the first half of 2004 with many companies increasingly optimistic about foreign sales growth, suggests a new survey from Export Development Canada (EDC).

“The economic situation now is really as good as it gets,” says EDC senior vice-president and chief economist Stephen Poloz. “Indeed, world economic growth will moderate to a more sustainable pace next year as interest rates rise to more normal levels.”

The latest Trade Confidence Index (TCI) reading is 75 out of a possible 100 points, an increase of 0.2 points from the 74.8 registered in the fall of 2003.

Although ongoing concerns about rising interest rates, high oil prices and the uncertain Canadian political climate continue to dampen confidence in the domestic and global economies, almost one third of respondents said their outlook for international trade opportunities was positive. Almost half stated that they were projecting export sales to increase.

Such optimism, however, could diminish should the loonie surge skyward. Nearly two-thirds (64%) of those surveyed view the value of the Canadian dollar as pivotal to their success in foreign markets. Similarly, 52% believe that the dollar will stabilize between US$0.73 and US$0.77, while a quarter think it will fall in the next six months. Only 22% believe that the Canadian dollar will increase during the next six months.

Exporters were also asked about their views on investing outside of Canada. While only 19% of companies said they plan to develop operations outside of Canada, the lack of interest or ability is concentrated among smaller firms. Some 37% of the larger companies polled plan to make investments outside of Canada, with a view to increasing sales, entering new markets and lowering costs.

Finally, 80% of Canadian exporters continue to identify the U.S. as their export market of choice. For the first time however, companies consider opportunities in Asia to be as rich as those in Europe.

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