Confidence strong despite concerns about the impact of changes in world trade
TORONTO—Despite a changing global economic landscape, Canadian businesses remain confident in their international trade strategies, with half (50 percent) planning to boost levels of international trade over the next year.
While most Canadian businesses are confident, many are still concerned about the potential impact of changes in world trade. More than eight in 10 (82 percent) surveyed understand their organization would lose its competitive advantage if barriers to international trade increased, and three quarters (76 percent) agree those barriers would dramatically affect their organization’s performance.
With global trade continuing to be a valuable source of revenue for businesses the world over, American Express commissioned a study in partnership with market research agency Vitreous World, regarding the dynamics of international trade though an analysis of opportunities across six major trading markets.
At a time when the state of global economic activity and trade agreements are seemingly in flux, the research revealed almost nine in 10 (89 percent) of the Canadian financial decision makers surveyed still agree international trade is important to the success of their organization.
While many Canadian businesses expressed concern about the potential impact of changes in world trade, their level of confidence remains strong. The survey showed the vast majority (88 percent) of Canadian businesses currently trading internationally are confident in their global trade strategies.
Displaying optimism, 85 percent believe opportunities for international trade are increasing and more than half (51 percent) say their organization will be trading in more markets over the next 12 months. Of those who said at least half of their organization’s current revenue is attributed to trade, 59 percent believe it will increase even more within the year.
Based on key trade drivers, the Centre for Economics and Business Research (Cebr) partnered with American Express to identify the top markets with the most untapped trade potential for Canadian businesses. According to the analysis, the U.S. topped the list of growth markets for Canadian companies, which is not surprising considering the country’s geographic proximity, size and close cultural links.
However, the analysis revealed significant growth opportunities for trade in Europe, with France and Luxemburg coming second and third in the list of countries with untapped potential. By comparison, the survey showed only 10 percent of Canadian businesses are currently trading with Europe, perhaps indicating a need to pay greater attention to other international markets with high growth potential.
Given the uncertain future of international trade agreements, 78 percent of businesses surveyed agree that it’s becoming increasingly complex for Canadian companies to navigate global trade.
According to the survey, Canadian businesses cite exchange rate volatility (36 percent), economic changes and fluctuations (31 percent), and tariffs (24 percent) as the three biggest challenges facing their organizations’ current trade activity.
While just under three quarters (71 percent) of businesses surveyed say making payments to and being paid by overseas partners is complex, almost all (92 percent) agree new digital technologies are making trading easier.