Canadian Businesses Score Low On Action

Canadian businesses have been slower than their global counterparts to act in managing the impacts from the economic challenges stemming from post-pandemic inflationary pressures, says data from the ‘2022 Grant Thornton International Business Report’ (IBR). Soaring prices and a range of related challenges have taken a significant toll on the economy, with annual inflation accelerating to a 39-year high in 2022, before slightly easing in July. And while it’s unclear if the Consumer Price Index (CPI) will climb or abate in the months going forward, broad-based inflation doesn’t appear to be going away any time soon. In fact, the Bank of Canada doesn’t foresee a return to its two per cent inflationary target until the end of 2024. While the central bank has raised interest rates in its efforts to tame prices, there are many related challenges that aren’t easy to solve. The report says common actions to combat inflation are only being pursued by about a quarter of Canadian businesses. When taking a closer look at the 12 specific actions cited in the survey, Canadians ranked lower than the global average in every category except for one (‘taking action to reduce levels of debt or interest’ – Canadian and global businesses were tied at 26 per cent). Grant Thornton says these findings may be related to the fact that Canada’s resource-based economy benefited heavily from the commodity boom that emerged from the pandemic; this potentially gave many businesses a false sense of confidence as inflation’s grip took hold. Whatever the reasons, keeping calm and carrying on – without taking decisive action – could give Canadian businesses a global disadvantage as other economies strive to overcome inflationary challenges.