US Economy Sure to Affect Canadian Business Growth

US Economy Sure to Affect Canadian Business Growth in the Near Term

I must admit I am very proud of Canada's economic track record. Our consistent federal and provincial budget surpluses, debt maintenance, low interest rates, commodity price strength, and political stability position Canada as one of the world's strongest economies.

I also admit, that as a consumer the strength of the Canadian dollar against the USD feels pretty good after 30+ years.

That all being said, there are some significant challenges facing Canada in the near term.

The US is by for our largest trading partner. Weakness therefore in the US market directly affects trade. Canadian exporters are bracing for a double whammy. 1. The high Canadian dollar is eating into margins, 2. Export revenues will likely decrease do to the US economic downturn. The result, lower top and bottom line for many exporters.

There is no easy answer here.

Exporters have been dealing with the high dollar for several quarters now, and at the same time have been looking to diversify export markets beyond the US. Easier said than done, but necessary.

The economists and politicians are attempting to sound realistic and not add to the pessimism, but their guidance seems to have a shelf life measured in hours.

Canadian businesses who rely heavily on exports to the US, must rework their short and medium term financial assumptions. Airing conservatively that the Canadian dollar continues at par would be a wise move.

Businesses need to get closer to key customers, from a communications point of view, to proactively monitor their corporate health and the most likely impact on your top and bottom line.

Strap in - she is going to be a wild ride for sure.

Dan MacDonald