Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Global conflicts and persistent inflation are hurting sentiment among exporters in Canada, one of the most trade-dependent advanced markets, the chief economist of the nation’s trade financing agency told MNI.
“Global economic conditions and rising business expenses really appear to have taken their toll on exporter confidence,” Stuart Bergman of Export Development Canada said on MNI’s FedSpeak podcast, speaking after the EDC’s semi-annual survey showed trade confidence has declined to one of the lowest readings since the 2008 Global Financial Crisis.
While government and central bank officials say inflation is settling out with production bottlenecks going away, the EDC report shows half of firms see rising prices as a problem lasting for at least another year, a ratio that's unchanged from the last survey.
“While inflation is coming down, that is the pace of price growth is coming down, prices today are still a lot higher than what they were two years ago. And it’s that reality that businesses are continuing to struggle with,” Bergman said. “It’s forcing them to lower their profit margins or those who can pass those higher costs on,” he said, noting that these pressures were experienced by three in four of the survey's respondents.
PINCH OF HIGHER RATES
In its survey, the EDC’s headline index fell 2.9 points to 65.7, taking it further below the historical average of 72.8, for one of the worst recent readings outside the darkest moments of the pandemic downturn.
High interest rates are also hurting seven of 10 respondents by restricting financing or cash flow, Bergman said. Even so, the Bank of Canada's differential with the Fed has held fairly steady, meaning the Canadian dollar has been relatively stable this year, he said. That's a contrast from decades past when short-term foreign-exchange volatility hurt manufacturers in particular.
Canada sends about three-quarters of its exports to the U.S.
Manufacturers and transportation companies saw the biggest drop in sentiment in this survey while natural resource companies are more upbeat as global tensions tend to push up prices, Bergman said. Overall however about three-quarters of exporters say the shaky global economy will hurt sales. (See: MNI INTERVIEW: Alberta Rides High Oil, BOC Relief-Ex Official)
“The geopolitical backdrop is the main reason driving perspectives on world economic conditions,” Bergman said.
EDC Trade Confidence Index
Source: EDC
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.