Domestic Strength Boosts Trade Confidence

(Export Development Canada – Peter G. Hall)

Trade confidence is up? It hardly seems possible. Earlier this year, maybe, when a bevy of strong economic reports set the world abuzz with recovery-talk. But now, with heightened concern about Southern Europe’s public finances, worries about China’s performance, new cracks appearing in US demand, tumbling commodity prices and a stubbornly strong Canadian dollar? In this context, a rise in Canadian trade confidence seems out of place. Why the increase?

Recent moves in EDCs Trade Confidence Index (TCI) have been nothing if not dramatic. A sharp tumble that began in the fall of 2007 sent the TCI downward to a reading of 61 a year later, its lowest level ever. The move foreshadowed the drubbing that was in store for exporters in 2009. But then a sturdy rebound lifted the TCI up to 77.4 by the fall of 2009, one of the highest readings on record.

From that position of strength, the TCI climbed even further in the Spring 2010 survey. Conducted in late April and early May, the survey pushed the TCI up to 78.8, its best result since the spring of 2002. Given the concurrent onset of global turbulence, the result appears behind the times – until the Index components are examined. True to unfolding external conditions, the Index got no help from its international elements. Exporters’ perceptions of both world economic conditions and global business opportunities faded in the Spring survey, and expectations for near-term export sales were flat. Read more here