Optimism about the national economy remains on a downward trend, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).
In the opening quarter of 2019, only 22 per cent of the professional accountants in leadership positions surveyed for the CPA Canada Business Monitor were expressing optimism about the Canadian economy over the next 12 months. The number has dipped from 26 per cent in the final quarter of 2018 and is down sharply from 34 per cent roughly a year ago. In fact, the last time optimism stood at 21 per cent was in Q3 2016.
The number of respondents who are pessimistic about the economy's prospects sits at 31 per cent (versus 35 per cent in Q4 2018), with 47 per cent taking a "wait and see" neutral position, up from 39 per cent in the last quarter.
The top three challenges to the Canadian economy cited by survey participants are:
• uncertainty surrounding the Canadian economy (22 per cent, up sharply from 15 per cent in Q4 2018);
• protectionist trade sentiment in U.S. (17 per cent); and
• the state of the U.S. economy (9 per cent).
"The growing pessimism among Canada's business leaders reflects the weakening near-term outlook for the Canadian economy," says Joy Thomas, president and CEO, CPA Canada. "Economic growth has slowed significantly over the course of the last year and uncertainty in the global political landscape clearly continues to weigh on sentiment."
In contrast, almost half (49 per cent) of those surveyed are optimistic about the prospects for their business over the next 12 months, with 62 per cent predicting increased revenues, 55 per cent foreseeing increase profits and 42 per cent expecting to increase the number of their employees (up from 39 per cent in Q4 2018).
Business Viewpoints on issues for the federal government to address
Missing from the latest federal budget was a timeline to return Canada to a balanced budget, something that 80 per cent of respondents would have liked to see. Of those who felt it should be a priority, 74 per cent stated it would signal that the government has a fiscal plan, and 53 per cent reported that a detailed plan for a return to fiscal balance would help create business confidence.
The country's tax system is another area that the business leaders believe warrants attention. Almost seven in ten (68 per cent) think political parties should commit to a comprehensive review of the country's tax system as part of their federal election platforms.
Thomas says: "The evidence is clear that such a review would benefit many Canadians because it would lay the ground work for the development of a tax system that simpler, fairer, more efficient and internationally competitive."
CPA Canada views tax policy an essential lever to achieve key economic and social objectives. It has long called for a comprehensive review of the tax system, something that has not occurred for several decades.