Accountants body’s survey finds trade, US economy among the factors weighing on sentiment
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Canada’s professional accountants are well-placed to gauge sentiment in the economy and right now, they say it’s trending lower.
Chartered Professional Accountants of Canada (CPA Canada)’s Business Monitor for the first quarter of 2019 reveals that only 22% of accountants in leadership positions are optimistic about the Canadian economy over the next 12 months.
That is a 4-percentage-point dip from the last quarter of 2018 and a full 12 points below its Q1 2018 figure. The last time sentiment was so low was in Q3 2016.
However, the share of those who are pessimistic about the economy is lower than at the end of 2018 at 31% (down from 35%); while 47% are taking a "wait and see" neutral position, up from 39 per cent in the last quarter.
"The growing pessimism among Canada's business leaders reflects the weakening near-term outlook for the Canadian economy," says Joy Thomas, president and CEO, CPA Canada. "Economic growth has slowed significantly over the course of the last year and uncertainty in the global political landscape clearly continues to weigh on sentiment."
The biggest concerns
The top three challenges that respondents see for the economy are:
- uncertainty surrounding the Canadian economy (22%, up sharply from 15% in Q4 2018);
- protectionist trade sentiment in U.S. (17%); and
- the state of the U.S. economy (9%).
"The growing pessimism among Canada's business leaders reflects the weakening near-term outlook for the Canadian economy," says Joy Thomas, president and CEO, CPA Canada. "Economic growth has
slowed significantly over the course of the last year and uncertainty in the global political landscape clearly continues to weigh on sentiment."
Optimism in their own business
While they may not be overly-upbeat about the economy, when asked about their business, respondents were more positive.
Almost half (49%) are optimistic about the prospects for their business over the next 12 months, with 62% predicting increased revenues, 55% foreseeing increased profits, and 42% expecting to increase the number of their employees (up from 39% in Q4 2018).
Asked about the federal budget and tax system, 80% would like to see a return to a balanced budget, and while 68% think political parties should commit to a comprehensive review of the country's tax system as part of their federal election platforms.
"The evidence is clear that such a review would benefit many Canadians because it would lay the ground work for the development of a tax system that simpler, fairer, more efficient and internationally competitive," added Thomas.
