Canadian businesses approach 2010 with optimism, but believe an economic
recovery has yet to start

TORONTO, Feb. 25 /CNW/ - Canada's privately held businesses are optimistic about the country's economic outlook in 2010-but they believe a significant turnaround will come later, rather than sooner.

In a recent survey by Grant Thornton International Ltd, which interviewed 300 senior executives of small and mid-sized businesses across the country, 72% were "very" or "slightly" optimistic about Canada's economic outlook over the next 12 months, with 35% believing the economy will turn around in the second half of 2010, and 22% believing that recovery will take place in 2011.

The findings are part of the Grant Thornton International Business Report, which surveys 7,000 senior executives across 36 countries. The results of the report reveal that Canadian executives' expectations are in line with those of their global counterparts.

"Privately held businesses across the world are starting to see the results of aggressive government stimulus spending and low target interest rates, and that's creating a sense of optimism," says Bill Brushett, National Leader for Privately Held Business in Canada. "Canada has weathered the recession better than most due to its manageable government deficit and strong banking system, and that's put us in a better position for an early recovery."

Fifty-one percent of Canadian executives surveyed expect to see an increase in revenue in the coming year, while 49% expect to see an increase in profitability, and 41% plan to invest more money in plants and machinery. The accessibility of financing was another area that reflected a sense of optimism, with 37% of those surveyed expecting it to remain at the same level of accessibility over the next 12 months, and 34% expecting it to become more accessible.

When it comes to areas that executives believe will likely remain the same in 2010, 56% of those surveyed believe employment levels at their respective companies will remain stagnant, 51% said they would keep selling prices the same, and many said they would not increase their investments in new buildings (34%), research and development (39%), or exports (23%).

Provincial outlook

While the survey revealed that each of the provincial regions had an outlook that was more optimistic than pessimistic, the Western provinces definitely had the rosiest perspective - with 84% of those surveyed claiming to be either "very optimistic" or "slightly optimistic" about the year ahead. Ontario followed shortly behind (78%), with Quebec (68%) and the Atlantic Provinces (68%) experiencing the least amount of optimism.

Quebec executives were a little more reserved than their other Canadian counterparts, with only 12% willing to say they were "very optimistic" about the year ahead, compared to the Western provinces (30%), Ontario (28%) and the Atlantic provinces (26%).

"Those sectors that were the hardest hit will experience the strongest recovery in the coming months," says Bill Brushett. "Because of this, the Western provinces have good reason to be optimistic because the resources and energy sectors were greatly affected during the recession."

The survey also revealed other differences between regions:

    
    -   A variance in recovery predictions. Executives in Quebec (40%),
        Western provinces (36%) and Ontario (26%) were more likely to believe
        an economic upturn will occur in the second half of 2010, while those
        in the Atlantic provinces were more likely than any other province to
        believe it will happen in 2011 (30%).

    -   Employment expected to be more likely in the West. While 56% of
        Canadian executives expect employment to remain the same in 2010, 46%
        of those in the Western provinces believed that employment will
        increase.

    -   Investment in new buildings is less likely in Ontario. As the rest of
        the country expects investment in new buildings to stay the same in
        2010, 14% in Ontario believed that their investments will decrease in
        this area.
    

Global outlook

The survey also provides an interesting glance at the global outlook. In particular, as Canadian privately held businesses prepare for an upturn in the worldwide economy, 44% of those surveyed said they are placing an increased focus on new target markets, 43% are planning to improve the skills of their current workforce and 39% plan on developing new products and services- strategies that are also the most popular globally.

Canadians view revenue and profitability as the top two areas they expect to see an increase in 2010-an outlook that is also mirrored globally, with 40% of businesses worldwide expecting to see a revenue increase, and 29% expecting an increase in profitability. The major difference here is that the third most positively perceived area worldwide is research and development (25%), which only ranks fifth in Canada.

While thirty four percent of executives surveyed across the world feel that their lenders are very supportive towards their businesses, those in Canada surveyed are considerably more positive. Those in the Western provinces (44%), Atlantic provinces (44%) and Ontario (40%) believe their lenders are very supportive. Only those in Quebec were below the global average, with 25% saying their lenders are very supportive.

"Canada's banking and financial system has proven to be one of the strongest in the world," says Bill Brushett. "Because this system wasn't severely affected by the recession, Canadian banks and lenders are in a better position to support privately held businesses."

About the Grant Thornton International Business Report

The Grant Thornton International Business Report (IBR) is an international survey of the opinions of medium to large privately held businesses (PHBs) from all over the world. Launched in 1992 in nine European countries, the survey now covers over 7,400 respondents in 36 countries.

Notes to editors:

About Grant Thornton in Canada

Grant Thornton LLP is a leading Canadian accounting and advisory firm providing audit, tax and advisory services to private and public organizations. Together with the Quebec firm Raymond Chabot Grant Thornton LLP, Grant Thornton in Canada has more than 3,100 people in offices across Canada. Grant Thornton LLP is a Canadian member of Grant Thornton International Ltd, whose member and correspondent firms operate in over 100 countries worldwide.

About Grant Thornton International Ltd

Grant Thornton LLP is a Canadian member firm of Grant Thornton International Ltd (Grant Thornton International). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently.

For further information: Further enquiries, please contact: Sandra Cusato, National Marketing Manager, Grant Thornton LLP, T [phone], E [email protected]