Most Canadian exporters are optimistic about the global economy and plan to expand into new markets in the next two years, an Export Development Canada (EDC) survey reveals.

EDC’s Trade Confidence Index went up from 67 in the fall of 2011 to 75.9 in the spring of 2012, showing evidence of exporters’ faith in a return to growth.

Over 60% of Canadian exporters believe that their sales will grow over the next two quarters, and 56% expressed plans to enter new markets within two years, showing renewed optimism after only a third of them expanded into previously untapped markets in the past two years.

Peter Hall, chief economist at EDC, says: “More than a third of exporters reported increasing US orders, a trend that is expected to continue through 2012. Interestingly, with all the challenges Europe is facing, exporters are seeing more growth in the UK, Germany and France – and they expect it to continue.

“We are seeing stronger market diversification in Canada’s trade numbers, but what we’re hearing from exporters suggests that it’s a trend that’s about to pick up steam.”

He adds that if the trend gains momentum and sales to emerging markets grow 3% each year, these markets could account for 50% of Canada’s total merchandise trade by 2025, pushing the country’s export growth to 3.5 times the current pace.
The Trade Confidence Index also shows that only 2 in 10 Canadian exporters believed the global economy would worsen in the spring of 2012, compared to 6 in 10 for the fall of 2011.

Hall adds: “Exporters seem to be telling us that they believe the worst is behind us, despite lingering risks in Europe.

“Optimism among Canadian exporters is consistent with the budding recovery that we see in global trade. Behind the considerable planet-wide public-sector cutbacks is a faster-growing private sector that is pulling along the world economy to true recovery.”

The survey reveals that exporters have now factored the impact of the Canadian dollar’s parity with the US dollar into their operations. Although over 75% of them believe that the impact of a higher Canadian dollar is medium to high, 97% feel reasonably or very prepared to operate in that environment.

However, Hall believes the Canadian dollar could fall just below parity on the back of weakening commodity prices as global economies improve, helping Canadian exporters cash in on the world’s recovery.