Economic pessimism on the rise

By The IJ Staff | February 01 2019 09:30AM

Photo: Freepik

Pessimism about the national economy over the next 12 months is growing among Canadian business leaders, indicates a survey by Chartered Professional Accountants of Canada (CPA Canada) released Jan. 30.

Pessimism jumped to 35 per cent among the professional accountants in leadership positions surveyed for the CPA Canada Business Monitor in Q4 2018. That is up from 28 per cent in the previous quarter. It is a significant increase from one year before when pessimism stood at 16 per cent. CPA underlines that these findings came before the Bank of Canada reduced its 2019 GDP growth forecast to 1.7 per cent from 2.1 per cent.

Optimism down sharply

The survey showed that optimism sits at 26 per cent, which is its lowest level since 2016, down sharply from 48 per cent in Q4 2017. Thirty-nine per cent of respondents are neutral about the economy's prospects.

Asked about challenges facing the economy, the top three concerns cited by respondents were: protectionist trade sentiment in U.S. (18 per cent); uncertainty surrounding the Canadian economy (15 per cent); and oil prices (12 per cent).

"Despite the recent spate of strong economic data, the sharp deterioration in economic sentiment highlights that Canada's business leaders are rightly worried about the numerous external risks facing the economy," says Joy Thomas, president and CEO, CPA Canada.

Looking for a return to budgetary balance

She added that while the government took several steps to improve business investment in the Fall Economic Statement, more needs to be done to strengthen Canada competitively and support sustainable economic growth. "As optimism in the economy softens, Canadian business leaders are looking for a federal fiscal plan that charts a return to budgetary balance and addresses other factors contributing to economic uncertainty.