Canadian trade confidence tumbled by 19% to an all-time low, according to the biannual Trade Confidence Index published today from Export Development Canada (EDC).
The economic shock from the lockdowns imposed in response to the COVID-19 pandemic has touched virtually every industry, in every region of the country.
As a result, according to the survey, the headline index tumbled to 56.0 – five points lower than during the Great Recession – from 69.3 at the end of 2019.
“It’s not surprising that COVID is the culprit, but looking beyond the headline numbers, our survey’s details clearly show just how significant the pandemic and related containment measures have been for Canadian exporters,” said EDC Deputy Chief Economist Stephen Tapp.
Almost three-quarters of respondents said the pandemic has had a negative impact on their sales, with half of those reporting a “high negative” impact. Although some businesses (14%) said they’ve seen stronger sales on account of COVID-19, most respondents (64%) said they expect this shock, and the negative sales impacts it brings with it, to carry into 2021.
Alongside COVID-19, worries of increased protectionism, trade tensions and economic concerns also contributed to the declining confidence of the survey respondents.
More than two-thirds (69%) of respondents said they expect protectionism to increase in the year ahead – that’s almost double the number in the previous survey.
Despite the lack of confidence and the significant concerns exporters are facing, the EDC survey also found a record push for diversification.
“In this tumultuous time, it’s encouraging to see Canadian exporters increasingly diversifying their global footprints by exporting to new markets and investing outside of Canada,” Tapp said.
The share of respondents with investments outside of Canada increased to 20%, its highest level on record. Similarly, the share of respondents exporting to new markets – or planning to – also increased to a historical high, with the United States, United Kingdom, Germany and France representing the top destination markets.
Though not connected to the survey, EDC has noticed another positive trend take hold as the pandemic wears on. Some customers have successfully shifted their operations, seizing the opportunity to innovate and meet new consumer demands related to COVID-19.
EDC, meanwhile, has adjusted its focus and flexibility to reflect the current needs of Canadian businesses. We are committed to supporting Canadian businesses through this pandemic with expert knowledge and financial services.