2017 has not been international trade’s best year. Oh, growth is having a good run alright; the problem is political. Election after election in Western Europe had significantly negative trade overtones, and at one point it looked like globalization’s number could be up. Thankfully, those elections went the other way. However, last year, America’s didn’t, and this year has put the NAFTA deal at great risk. Canadian exporters have every reason to doubt the future. Just how is trade confidence doing?

All things considered, it’s holding its own. In our Fall 2017 survey, conducted between October 2 and 25, EDC’s Trade Confidence Index is down marginally, extending a softening trend that began three years ago. The drop in the Index was a barely-noticeable 0.4 points, to 73.5, a level that’s just a hair below the series average. Given what might have happened, the result is a relief. Juxtaposed with actual export performance, though, things could easily have been better. It seems that these two factors sort of offset each other, producing the bland shift.

What do the details say? Of the five Index elements, the domestic questions were clearly down. The balance of opinion on near-term prospects for domestic sales showed the largest movement, dropping 9 percentage points to 34 per cent. Perceptions of near-term domestic economic conditions also slid, but not by as much – the balance of opinion was even in the spring survey, but has since slid by 2 percentage points.

Shifting to the external questions, export sales once again posted the most positive balance-of-opinion scores, but between surveys the result weakened, from 54 to 50 per cent. The rest of the trade-related scores were up. Feelings are still net negative about world economic conditions, but less so this time: the balance of opinion score improved from -9 per cent to just -1 per cent. On balance, feelings about trade are showing much greater progress than the domestic economy metrics. This squares with the fundamental weakness of Canada’s current domestic economy (that is, high consumer indebtedness and a housing bubble) versus resurgent global demand and its effects on trade.

Drilling further into the results, the majority of respondents still believes that export sales will increase over the next six months. Of these, 13 per cent attribute this to new business, 12 per cent cite growing demand and 11 per cent say expansion into new markets will boost their activity. This is in line with the recent upswing in global demand.

Feelings about world conditions are less upbeat, although there is less pessimism than in the Spring survey. Of the 20 per cent feeling gloomy, over one-third fear global recession and instability. Fallout from the US election still troubles 30 per cent of exporters polled, and uncertainty surrounding free trade agreements was mentioned by 17 per cent as a negative factor – up from just 3 per cent in the spring.

In contrast, respondents are less pessimistic about international business opportunities. Those expecting improvement on this front rose slightly, to 35 per cent of the sample group. Of these, 16 per cent credit free trade agreements for their optimism, strange in light of NAFTA renegotiation. We can only conclude that they are referring to the CETA agreement with Europe, and possible new free trade agreements with other countries and regions, although this is not specified in survey results. Demand again appears to be a factor in this enthusiasm – 10 per cent point to growth in foreign markets, and 9 per cent cite stability of the global economy and markets in general.

Talk about mixed! This survey’s results are obviously going off in different directions. But this is a direct reflection of the clash of conditions we now see in the global economy: at the very moment we seem to be emerging from the post-recession abyss, significant threats face the very architecture of the global economy. Results show that businesses are at least considering a re-jig of their investment plans. If there is a soft silver lining, though, it’s that the word diversification is again creeping into international trade street-speak – partly because of policy turmoil, but more a result of improving market conditions.

The bottom line? Trade confidence is holding steady, pulled in both directions by opposing forces. We can only imagine what it would look like without the NAFTA uncertainty.

This was written by Peter G Hall, EDC Vice President and Chief Economist.