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Oct 25, 2023

Increase in economic optimism stalls

Economic optimism among business leaders is starting to decline, reversing a trend of increases earlier this year, indicating a view that the economy may be softening, says CPA Canada in its third quarter ‘Business Monitor.’ 

Roughly one in five (19 percent) respondents to the Business Monitor survey say they are optimistic about the economy over the next 12 months, down from 28 percent in the second quarter of 2023. Just over one quarter (26 percent) point to increases in interest rates as the biggest challenge to the growth of the Canadian economy, followed by the rise in inflation (14 percent) as the next most frequently mentioned challenged. 

Business optimism is also softening somewhat, with 48 per cent of respondents optimistic about the prospects for their businesses in the next year, compared to 56 per cent last quarter. Projected individual organizational metrics are similar to the second quarter with 62 per cent of Canadian companies saying they will have increased revenue over the next year (compared to 57 per cent in the second quarter. As well, 49 per cent say profits will increase over the next year (identical to the second quarter), and 44 per cent anticipate a climb in employee numbers (compared to 42 per cent). 

Currently, 80 per cent of respondents believe that inflation is hurting their company, with almost half (49 per cent) of all respondents believing that inflation will continue to hurt their company for at least another year. Over two-thirds (72 per cent) believe that current interest rates are having a negative impact on their company, and 86 per cent believe current interest rates are having a negative impact on the Canadian economy. 

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