Twice a year, EDC surveys 1,000 Canadian exporters to provide insights not available in traditional trade statistics, such as: exporters’ expectations for the future; their evolving international operations and strategies; and views on emerging issues. This presentation provides an overview of the results from our Mid-Year 2018 survey.

1. Mid-Year 2018 results
Released July 2018; survey conducted April/May 2018
Export Development Canada’s
Trade Confidence Index
The outlook according to Canada’s exporters

2. 2
› EDC surveys 1,000 Canadian exporters twice a year
› Providing insights not available in traditional trade statistics,
such as Canadian exporters’:
- expectations for the future
- evolving international operations and strategies
- views on emerging issues
About the Trade Confidence Index (TCI)

3. 3
Canadian exporters are more optimistic about the
near-term outlook
› EDC’s index of Canadian exporters’ confidence increased over the past six
months, with broad-based gains for all firm sizes, sectors and regions.
› Exporters reported increased U.S. orders, and plan to increase hiring and
investments.
› These results are consistent with the recent pickup in the global economy
and trade performance that is happening despite elevated U.S. trade
policy uncertainty.
Key Finding #1

4. 4
At the same time, however, ongoing NAFTA talks
appear to be taking a toll
› A growing proportion of Canadian exporters say NAFTA talks have had a
negative impact on their Canadian operations (28%) as well as their
investment plans (19%), which appears to reflect an “investment
hesitation” by some firms.
Key Finding #2

5. 5
Canadian exporters are diversifying their
international operations
› Since the last survey, there was a significant increase in the proportion of
Canadian exporters who started exporting to new countries and who plan
to do so.
› Significantly more exporters have, or plan to have, investments outside of
Canada.
› After a recently-signed trade deal (CPTPP), Canadian exporters are paying
more attention to the Asia Pacific.
Key Finding #3

6. 6
Canadian exporters are more optimistic
about the near-term outlook

7. 7
73.5
76.5
55
60
65
70
75
80
85
90
Mid-Year1999
Year-End1999
Mid-Year2000
Year-End2000
Mid-Year2001
Year-End2001
Mid-Year2002
Year-End2002
Mid-Year2003
Year-End2003
Mid-Year2004
Year-End2004
Mid-Year2005
Year-End2005
Mid-Year2006
Year-End2006
Mid-Year2007
Year-End2007
Mid-Year2008
Year-End2008
Mid-Year2009
Year-End2009
Mid-Year2010
Year-End2010
Mid-Year2011
Year-End2011
Mid-Year2012
Year-End2012
Mid-Year2013
Year-End2013
Mid-Year2014
Year-End2014
Mid-Year2015
Year-End2015
Mid-Year2016
Year-End2016
Mid-Year2017
Year-End2017
Mid-Year2018
EDC’s overall Trade Confidence Index increased and
is now above its historical average…
Historical average

8. 8
…driven by higher expected domestic and export sales.
15.6
16.6
13.2 13.3
14.8
17.0
18.0
13.0
13.5
15.0
Domestic sales Export sales Domestic economic
conditions
World economic
conditions
International business
opportunities
TCI components’ contributions to the overall index
Year-End 2017 Mid-Year 2018

9. 9
Gains for all firm sizes, especially small
73.5
73.4
74.5
71.6
76.5
79.3
76.1
74.6
Overall
Small
Medium
Large
Year-End 2017 Mid-Year 2018
Business sizes grouped by annual sales: Small companies < $10 million, medium= $10-50 million, and large >$50 million.

10. 10
Gains for all major sectors, especially transportation,
light manufacturing and ICT
73.5
77.1
74.8
75.7
73.3
70.5
71.0
76.5
77.9
78.0
76.6
77.0
73.6
75.0
Overall
Extractive
Information & Communication
Technology (ICT)
Infrastructure & Environment
Light Manufacturing
Resources
Transportation
Year-End 2017 Mid-Year 2018

11. 11
76.5
77.1
75.5
78.4
75.5
Overall
West
Ontario
Quebec
Atlantic
Gains for all regions, especially Atlantic Canada and Quebec
TCI, Mid-year 2018 score, by region
Change from last survey

12. 12
Increased orders from U.S. customers in the past six months
17% 13%
47%
41%
36%
46%
Year-End 2017 Mid-Year 2018
In the past six months, orders from U.S. customers have…
Increased
Remained the same
Decreased
Q7a. In the past six months, have orders from your U.S. customers increased, decreased, or remained the same?
Note: 82% of respondents export to U.S.

13. 13
More optimism about future domestic sales and export sales
41%
61%
Year-End 2017 Mid-Year 2018
Domestic sales will increase
over the next six months
(% of companies)
Q2. In the next six months, do you expect your company’s domestic sales to increase, decrease, or remain the same?
Q9. In the next six months, do you expect your company’s export sales to increase, decrease, or remain the same?
56%
73%
Year-End 2017 Mid-Year 2018
Export sales will increase
over the next six months
(% of companies)

14. 14
Hiring: Increased hiring expected in the next six months…
Q3. Over the next six months, do you expect your company’s plans to hire will increase, decrease or remain the same?
37%
50%
Year-End 2017 Mid-Year 2018
Increased hiring expectations
over the next six months
(% of companies)

15. 15
Hiring: …but growing challenges accessing skilled labour,
consistent with Bank of Canada survey
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%
FALL
2012
SPRING
2013
FALL
2013
SPRING
2014
FALL
2014
SPRING
2015
FALL
2015
SPRING
2016
FALL
2016
SPRING
2017
FALL
2017
SPRING
2018
EDC survey Bank of Canada survey

16. 16
Overall investment: Canadian exporters indicate
stronger investment plans
Q20c. If the Canadian dollar stays around the current level for the next two years, do you expect your company’s investments to
increase, decrease or remain the same?
5% 4%
68%
59%
28%
37%
Year-End 2017 Mid-Year 2018
Companies’ expectations of investments, if the Canadian dollar
stays around current level for the next two years
(% of companies)
Increase
Remain the same
Decrease

17. 17
11% 12%
17%
22%
Current investments Planned investments
Year-End
2017
Mid-Year
2018
Current and planned investments
outside of Canada
(% of companies)
Year-End
2017
Mid-Year
2018
Investments abroad: Significantly more exporters have,
or plan to have, investments outside of Canada
Q22. Does your company have investments outside of Canada, is it planning to invest outside of Canada,
or does it have no plans to invest outside of Canada?
Q27c. In which countries does your company plan to have investments outside of Canada?
Multiple responses allowed. Total may not add up to 100%.
63%
13%
9%
9%
11%
66%
6%
5%
17%
5%
U.S.
Mexico
India
China
U.K.
Mid-Year 2018
Top Markets
(% of companies)
Current investments
Planned investments

18. 18
Canadian exporters’ foreign affiliate sales expected to grow
66%
75%
Year-End 2017 Mid-Year 2018
Expectations that sales by foreign affiliates
will increase over the next six months
(% of companies)
Q25. Over the next six months, do you expect sales by your firm’s foreign affiliates or subsidiaries to increase, decrease or remain the same?

19. 19
Canadian exporters’ perceptions of risks
due to NAFTA and rising interest rates

20. 20
9%
6%
63%
71%
28%
23%
Positive impact No impact Negative impact
Impact of NAFTA renegotiation on company’s Canadian operations
(% of companies)
Year-End
2017*
Mid-Year
2018**
Growing share of Canadian exporters (28%) say NAFTA
talks have had a negative impact on their Canadian operations
Highest NAFTA concerns in the transportation sector,
large firms, Ontario and Western Canada.
Q15K What impact has the on-going renegotiation of NAFTA had on your company’s Canadian operations?
Q15Ka What actions has your company taken (or are considering taking) in response to the NAFTA renegotiation?
*October 2017; **April/May 2018

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How are Canadian exporters coping
with NAFTA renegotiation?

22. 22
Q15LA. Specifically, what impact has the on-going renegotiation of NAFTA had on your company’s investment?
Nearly one-in-five Canadian exporters say NAFTA talks
have had a negative impact on their investment plans
7% 74% 19%
Positive impact No impact Negative impact
Impact of NAFTA renegotiation on company’s investment
(% of companies)

23. 23
Q15LC. What actions has your company taken (or are considering taking) to your investments in response to the NAFTA renegotiation?
Investment hesitation: Six percent of Canadian exporters say
they are delaying their investments due to NAFTA uncertainty.
Negatively-affected Canadian exporters’
response to NAFTA renegotiation
(% of companies)
19%
negative impact
33%
delay investment

24. 24
6%
4%
65%
76%
30%
21%
Positive impact No impact Negative impact
Impact of higher interest rates on company’s export sales
(% of companies)
Year-End
2017*
Mid-Year
2018**
Growing share of Canadian exporters (30%) say higher interest
rates have had a negative impact on their export sales…
Q21C. What has been the impact of higher interest rates on your company's export sales?
Q21D. Why did higher interest rates have a positive/negative impact on your company's export sales?
*October 2017; **April/May 2018
Of those who are negatively affected:
42% say higher interest rates raise their costs and lowers profit margins.
10% say higher interest rates make it harder to borrow money.

25. 25
Q21E. What actions have your company taken to adapt to higher interest rates?
…But even if exporters are feeling impacted by
higher interest rates, many are not taking any action
40%
8%
7%
6%
6%
4%
No action
Reduced expenses
Stopped or reduced borrowing
Considered alternate sources of capital
Raised prices
Focus more on debt repayment
Actions companies have taken to adapt to higher interest rates
(% of companies)

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Canadian exporters are diversifying
their international operations

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Significant increase in exporters who have started
exporting to new countries and plan to do so
0%
10%
20%
30%
40%
50%
60%
70%
Year-End
2012
Mid-Year
2013
Year-End
2013
Mid-Year
2014
Year-End
2014
Mid-Year
2015
Year-End
2015
Mid-Year
2016
Year-End
2016
Mid-Year
2017
Year-End
2017
Mid-Year
2018
Shares of Canadian companies that have started exporting to new countries,
or are planning to do so
(% of companies)
Started exporting to new countries in last two years Planning to export to new countries in next two years
Q7b: During the last two years, has your company started exporting products or services to new countries?
Q7c: During the next two years, is your company planning to export products or services to new countries?

28. 28
Expanding Canadian exporters are responding
to increased foreign demand
32%
13%
11%
7%
6%
6%
6%
5%
4%
4%
4%
In response to demand for our products from foreign buyers
Market growth
Company growth
Domestic market poor/limited/saturated
Increase sales
Good products/services/commodities/prices
Better market (unspecified)
Dealing with distributors/distribution channels
Access to foreign contacts/agents/distribution channels
Make money/profit
Increased our marketing/online presence
Main reasons for company exporting to new countries
(% of companies)
Q7b1. What are the main reasons your company started exporting products or services to new countries?
Multiple responses allowed. Total may not add up to 100%.

29. 29
Top 5 new export markets; past and future two years
30%
11%
11%
9%
9%
U.S.
Mexico
China
Australia
U.K.
Started exporting past two years
Q7b3. During these last two years, in which new country or countries has your company started exporting products or services…?
Multiple responses allowed; totals may not add up to 100%.
17%
12%
12%
10%
10%
China
U.K.
U.S.
Germany
Japan
Planning to export next two years

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Q15m: In March 2018, Canada and 10 other Pacific-Rim countries (Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore
and Vietnam) signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Among other things, this agreement
will reduce tariffs, and thereby enhance market access for Canadian exports to these countries. As a result of this recently-signed trade
agreement, is your company:
With signing of CPTPP, roughly one quarter of Canadian
exporters are paying more attention to Asia-Pacific
58%
26%
19%
15%
12%
11%
CPTPP won't affect my company's exporting
strategy
Pay more attention to CPTPP markets
Export more to CPTPP
Start exporting to CPTPP
Start importing from CPTPP
Import more from CPTPP

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› 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
› Spring 2018 TCI sample size: 733 (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: April 18, 2018 to May 11, 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 by telephone at (613) 598-2992
Methodology

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