According to EDC’s survey, CUSMA brings relief but trade worries persist.

1. EDC’S TRADE CONFIDENCE INDEX
The outlook according to Canada’s exporters
2018 year-end results
Released December 2018; survey conducted October/November

2. 2
TRADE CONFIDENCE INDEX (TCI)
• Twice a year, EDC surveys 1,000 Canadian exporters
• The TCI is designed to provide insights not available in
traditional trade statistics, such as Canadian exporters’:
– expectations for the future;
– evolving international operations and strategies;
– views on emerging issues.

3. 3
KEY FINDING #1
• The outlook according to Canadian exporters remains
solid, but is weaker than our last survey.
• The downgrade to the outlook is modest, but broad-
based, and reflects softer expectations for global
conditions.

4. 4
KEY FINDING #2
• Protectionism is impacting global strategies for a
significant share (32%) of Canadian exporters.
• Trade barriers have become a top concern−particularly
steel and aluminum tariffs.
• The end of NAFTA renegotiations, however, provides
some relief and should reactivate delayed investments.

5. 5
KEY FINDING #33
• Canadian exporters are continuing to diversify their
international operations.

6. 6
THE OUTLOOK ACCORDING
TO CANADA’S EXPORTERS

7. 7
CANADIAN TRADE CONFIDENCE FELL
BACK TO ITS HISTORICAL AVERAGE…S
76.5
73.8
55
60
65
70
75
80
85
90
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Historical average
EDC’s Trade Confidence Index

8. 8
…ALL 5 TCI COMPONENTS FELL. THE SOFTER WORLD
OUTLOOK WAS THE BIGGEST CONTRIBUTOR...
17.0
13.0
18.0
13.5
15.0
16.5
12.7
17.2
12.3
14.9
Domestic sales Domestic economic
conditions
Export sales World economic
conditions
International business
opportunities
Mid-Year 2018 Year-End 2018
Contributions to the overall index, by component

9. 9
…THE OUTLOOK FOR WORLD ECONOMIC CONDITIONS IS
NOW AT ITS LOWEST LEVEL SINCE THE OIL PRICE SHOCK.
8
9
10
11
12
13
14
15
16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
9/11
Great
Recession
Oil price
shock
Contributions to the overall index
European
credit crisis
13.5
12.3

10. 10
U.S. ORDERS WERE ROBUST–CONSISTENT WITH THE STRONG
U.S. ECONOMY–BUT HAVE COOLED OFF SOMEWHAT.
0%
5%
10%
15%
20%
25%
30%
35%
40%
2012 2013 2014 2015 2016 2017 2018
33%
27%
U.S. orders for Canadian exports over the past six months, balance of opinion*
*Balance of opinion: percentage of respondents who say US order increased minus percentage who say orders decreased over the past six months.

11. 11
THE NEAR-TERM OUTLOOK FOR CANADIAN EXPORTS
REMAINS STRONG, ALTHOUGH IT HAS ALSO SOFTENED.
0%
10%
20%
30%
40%
50%
60%
70%
80%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Exports will increase over next six months, percent of respondents
73%
64%

12. 12
ALMOST HALF OF CANADIAN EXPORTERS PLAN
TO INCREASE HIRING IN THE NEAR TERM…
0%
10%
20%
30%
40%
50%
60%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Plan to increase hiring over the next six months, percent of respondents
50%
48%

13. 13
…BUT THEY FACE GROWING DIFFICULTIES IN
ACCESSING SKILLED LABOUR.
EDC survey: Percentage of firms finding it “very difficult” to access skilled labour.
Bank of Canada survey: Percentage of firms that face shortages of labour that restrict their ability to meet demand.
0%
5%
10%
15%
20%
25%
30%
35%
40%
2013 2014 2015 2016 2017 2018
37%
35%
Bank of Canada
survey
EDC survey
Percent of respondents

14. 14
ALMOST ONE THIRD OF CANADIAN EXPORTERS
EXPECT TO RAMP UP OVERALL INVESTMENTS...
Plan to increase investment*, percent of respondents
*If the Canadian dollar stays around its current level for the next two years.
0%
5%
10%
15%
20%
25%
30%
35%
40%
2015 2016 2017 2018
37%
31%

15. 15
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
44%
Foreign direct investment will increase over next six months, percent of respondents
….CANADIAN EXPORTERS’ OUTWARD INVESTMENT
PLANS ARE ABOVE THE HISTORICAL AVERAGE.
Historical average

16. 16
FOREIGN AFFILIATE SALES EXPECTED TO CONTINUE
RUNNING ABOVE THE HISTORICAL AVERAGE.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Foreign affiliate sales will increase over next six months, percent of respondents
75%
72%
Historical average

17. 17
RESULTS BY FIRM SIZE,
INDUSTRY AND REGION

18. 18
THE TCI DECLINED FOR ALL FIRM SIZES…
Business sizes grouped by annual sales: Small companies < $10 million, medium= $10-50 million, and large >$50 million.
79.3
76.1
74.6
74.9
69.8
69.0
Small
Medium
Large
Mid-Year 2018 Year-End 2018
Small firms are the most
optimistic, with the second
largest differential relative
to medium- and large-sized
firms since 2007.

19. 19
…AND FELL FOR MOST SECTORS, ESPECIALLY EXTRACTIVE
− ONLY TRANSPORTATION WAS UP MODESTLY.
75.0
78.0
77.0
76.6
73.6
77.9
75.8
74.8
74.4
72.0
72.0
69.4
Transportation
Information & Communication Technology
Light Manufacturing
Infrastructure & Environment
Resources
Extractive
Mid-Year 2018 Year-End 2018

20. 20
REGIONALLY, MORE TRADE CONFIDENCE EAST OF ONTARIO.
74.9
74.3
73.5
72.9
Quebec
Atlantic
Ontario
West
TCI, Year-End 2018 score, by region
Canada
73.7
-2.0
-3.5
-1.2

21. 21
…AS WESTERN CANADA HAD THE LARGEST DECLINE
IN TRADE CONFIDENCE SINCE THE LAST SURVEY.
-4.2
-2.0
-3.5
-1.2
Trade Confidence Index, change from previous survey

22. 22
IMPACTS OF PROTECTIONISM

23. 23
PROTECTIONISM IS AFFECTING ALMOST ONE THIRD
OF CANADIAN EXPORTERS’ GLOBAL STRATEGIES…
32% 68%
NOYES
Is increased protectionism internationally affecting your
company’s export and international investment strategy?
(Percent of respondents)

24. 24
…THE IMPACTS ARE BEING FELT IN VARIOUS WAYS…
Describe how protectionism affects your strategy:
(Percent of respondents)
Higher tariffs
9% 4%
Promotes “Buy local”
or “Buy American”
3%
Reduces
competitiveness
#1

25. 25
What challenges are your company experiencing while contemplating,
growing or maintaining business outside of Canada?
(Percent of respondents)
Challenges contemplating, growing on maintaining business
outside of Canada
TRADE BARRIERS HAVE BECOME THE TOP CHALLENGE
REPORTED BY CANADIAN EXPORTERS…
Foreign tariffs or
trade barriers
14%
Obtaining
financing
11%
Finding
skilled talent
11%
Shipping
logistics
9%

26. 26
…WITH ONE THIRD OF EXPORTERS NEGATIVELY
IMPACTED BY STEEL AND ALUMINUM TARIFFS.
3% 63% 34%
Positive impact No impact Negative impact
Impact of steel and aluminum tariffs on Canadian exporters
(Percent of respondents)
Top actions taken by those negatively impacted:
• Raise prices (19%)
• Find alternate markets and suppliers (18%)
• Source locally (6%)

27. 27
ON BALANCE CANADIAN EXPORTERS ARE NEUTRAL
ON THE NEWLY-SIGNED CUSMA TRADE DEAL…
23% 52% 24%
Positive Neutral Negative
Overall assessment of the Canada United States Mexico Agreement (CUSMA)
(Percent of respondents)

28. 28
…WHICH HAS NOW GONE FROM HOLDING BACK
INVESTMENT IN CANADA TO ROUGHLY NEUTRAL...
9%
19%
63%
59%
28%
21%
Mid-Year
2018
Year-End
2018
Positive impact No impact Negative impact
Impact of the CUSMA on company’s Canadian investment
(Percent of respondents)

29. 29
…WHILE THE CONCLUSION OF CUSMA TALKS MAY
BOOST INVESTMENT AND REDUCE INVESTMENT DELAYS.
18%
57%
25%
23%
6%
41%
35%
19%
17%
15%
Increase investment
Delay investment
Reduce investment
Speed up investment
Increase hiring
Mid-Year 2018 Year-End 2018
Actions taken/considered by companies in response to CUSMA renegotiation
(Percent of respondents indicating an investment impact)

30. 30
DIVERSIFICATION

31. 31
CANADIAN EXPORTERS’ DIVERSIFICATION PUSH IS EVIDENT,
BUT SLIGHTLY LESS URGENT THAN DURING THE CUSMA TALKS
0%
10%
20%
30%
40%
50%
60%
70%
2012 2013 2014 2015 2016 2017 2018
Export to new markets
(Percent of respondents)
Started exporting (last 2 years) Planning to (next 2 years)
0%
5%
10%
15%
20%
25%
2012 2013 2014 2015 2016 2017 2018
Invest outside Canada
(Percent of respondents)
Have investments abroad Planning to

32. 32
TOP NEW MARKET DESTINATIONS FOR CANADIAN
COMPANIES PLANNING TO EXPORT
16% 13% 12%
10% 10%
(Percent of respondents)
U.K. Germany China
France Mexico

33. 33
TOP MARKET DESTINATIONS FOR CANADIAN
COMPANIES PLANNING TO INVEST ABROAD
64% 8% 8%
8% 8%
(Percent of respondents)
China U.K.U.S.
France India

35. 35
METHODOLOGY
• Conducted twice a year since 1999, the Trade Confidence Index (TCI) is a pulse check of Canadian exporters’ level of confidence
and their projections around international trade opportunities in the next six months.
• Sample size: 1,000
• Year-End 2018 TCI sample size: 692 (respondents must respond to all five TCI questions for a TCI score)
• Respondents: decision makers who are knowledgeable about their company’s export activities
• Methodology: telephone (CATI)
• Language: respondent’s choice of English or French
• Data collection: October 23 to November 13, 2018
– Note: Survey was conducted after the CUSMA agreement was announced on September 30, 2018
• Fieldwork completed by MRIA Gold Seal provider; EDC named as the sponsor of the survey
• Sampling approach: convenience sample from EDC databases
• Quotas: soft quotas of plus or minus 5% by business size, EDC customer base, region and market sector
• Target distributions: 70% small-sized companies and 30% medium- and large-sized companies; customer base of 20% EDC
customers and 80% non-customers; distributions by region and market sector are based on Canada’s export population.
• Don’t know responses were excluded from the calculations.
• For more information regarding the survey, please contact Jennifer Topping by email at jtopping@edc.ca or (613) 598-2992

36. 36
DISCLOSURE
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