Canadian businesses have become more gloomy than their global counterparts — on a number of fronts, a new survey reveals. The study by HSBC that surveys thousands of business leaders in 14 global markets finds that Canadian businesses are more pessimistic than their global peers about future growth.

In the United States, 72% of businesses are more optimistic than they were a year ago and globally it’s 64%. In Canada it’s 56%. In fact, Canadian businesses don’t expect to return to pre-pandemic levels of profitability until November 2022, said HSBC.

“The fact that Canadian businesses don’t expect to return to pre-COVID profitability levels before November 2022 and 43% of Canadian respondents see another wave of COVID-19 as the top risk to growth prospects demonstrate we may not have turned the corner on this pandemic as many would like to believe,” said Alan Turner, head of commercial banking, HSBC Bank Canada. “Our North America neighbours are more optimistic – both expect to return to pre-COVID profit in Q3 of 2022.”

Canada also lags on trade. 29% of businesses have increased the number of international suppliers they work with in the past year, compared to 36% globally. Only one in 10 Canadian businesses expect international trade to become easier over the next year — much lower than the 20% of leaders globally who see it getting better.

Turner says it appears that many businesses are more comfortable shoring up their domestic supply chains rather than pushing out into the world — and that could cost them in the long run. “After the myriad trade concerns experienced during the pandemic, and with more supply chain challenges to come, it is clear many Canadian leaders are feeling fatigued about international trade,” he said. “However, a short-term shift in focus on working with and selling to those closer to home shouldn’t come at the expense of long-term opportunity – particularly when businesses in other global markets are positioning themselves to take advantage of a lack of competition from Canadians.”

The survey also offers some interesting insights into how Canadian businesses feel about climate change and efforts to combat it. HSBC says corporate leaders are becoming increasingly wary about the effectiveness of global pacts against climate change.

“I think a lot of Canadians would be disheartened to learn that 11% of businesses in this country believe global climate pacts and accords will have zero effect on making meaningful impacts in the fight against climate change,” said Turner. “That’s almost twice as high as their international peers. Not only that, just over a quarter of Canadian businesses (27%) believe these climate meetings are crucial for driving policy and action which is also much lower than the global average we surveyed at 39%.”

The survey found that only 16% of Canadian businesses believe that sustainability risks are a threat to growth — and it shows in their operations. On average, Canadian businesses invest 5.9% of operating profit into sustainable practices, compared with 7.9% in the U.S. and 7.3% globally.

Source: Financial Post