Economic Optimism Drops Amid Views Canada Less Competitive
Optimism about the Canadian economy is down significantly amid views the country is becoming less competitive, according to a survey of professional accountants in leadership positions by Chartered Professional Accountants of Canada (CPA Canada).
Among the findings of the Q1 2018 CPA Canada Business Monitor:
• Optimism in the opening quarter of the year dipped to 34 per cent from 48 per cent in Q4 2017, falling to its lowest level since 2016.
• More than two-thirds (67 per cent) of respondents report Canada is now a less competitive place to invest and do business in versus the United States compared to one year ago.
Top three challenges to the Canadian economy cited are U.S. trade protectionism (30 per cent), uncertainty in the Canadian economy (16 per cent) and U.S. tax reforms (7 per cent).
"Uncertainty is dominating, especially with growing protectionist trade sentiments and tax changes in the U.S.," says Joy Thomas, president and CEO, CPA Canada. "Canadian business leaders are looking for assurance from the federal government that the situation is being properly monitored to allow a course of action to be developed that will keep Canada competitive."
A majority of Canadian business leaders (84 per cent) agree a detailed analysis of U.S. tax reforms to assess the potential impact on Canada is urgently needed and 93 per cent say the results should be made public shortly after the analysis is completed.
More than eight in ten (82 per cent) report being disappointed the government did not set a date for a return to balanced budget.
Company Specific Findings:
Top three factors impacting business planning over the next year: Uncertainty surrounding the Canadian economy (32 percent), employee retention, acquisition and development (30 per cent) and lack of skilled workers (24 per cent).
Other findings include:
• Company optimism continues to hover around the 60 per cent mark.
• Over two thirds (69 per cent) of respondents are projecting revenue growth for their companies over the next 12 months and 63 per cent anticipate an increase in profits, both similar to last quarter.
• With respect to employee numbers, 44 per cent predict growth at their company. Roughly four in ten (38 per cent) anticipate no change in employee numbers while 18 per cent expect a drop.