Concerns about tariffs, economy, supply chain remain elevated
The uncertainty around trading and economic conditions is keeping a lid on the confidence of business leaders in Canada and globally.
A new global poll by Dunn & Bradstreet reveals a 1.3% quarter-over-quarter decline in business optimism, although this is moderate compared to the 12.9% drop seen in the prior quarter. Supply chain continuity sentiment was flat quarter-over-quarter while financial confidence was down almost 9%.
The sectors most impacted by tariffs showed the largest decrease in confidence, but inflation concerns with a knock-on effect for interest rates is a broad factor in lower sentiment among global business leaders.
“In the face of macroeconomic uncertainty, rising capital costs, and a weakening growth forecast, businesses remain apprehensive about the global economic landscape and cautious about investment,” said Neeraj Sahai, President of Dun & Bradstreet International. “The reshaping of trade relationships and tariff uncertainty contributed to over 90% of the economies surveyed reporting a decline in their financial confidence index, in both emerging and advanced economies. Cost expectations remain elevated, especially in the economies most exposed to tariff hikes.”
The recent Bank of Canada Business Outlook also reflected the weakening sentiment with fewer businesses expecting sales growth to improve over the coming year compared to the previous quarter.
Taking economic, financial, and political conditions into consideration, 32% of Canadian firms are now planning with the assumption that a recession will occur in Canada over the coming year, up from 15% over the past two quarters.
The Conference Board of Canada also revealed that its Index of Business Confidence dropped 10 points in the most recent reading, taken between March 24 and April 8.
More than 30% of respondents said that government policies, weak market demand, depreciation of the Canadian dollar, and rising capital costs were weighing on planned investment, which is likely to remain subdued until these factors ease.
A recent MNP Family Office Services survey warned that tariffs and weakened business conditions could exacerbate the ‘silver tsunami’ of retiring business owners, many without succession plans in place which could mean closure of businesses.
