TORONTO, April 27, 2023 (GLOBE NEWSWIRE) -- More than two-thirds of executive level CPAs believe there will be a recession in Canada this year, according to the recent Chartered Professional Accountants of Canada (CPA Canada) Business Monitor (Q1 2023) survey. In addition, only 18 per cent of respondents are optimistic about the Canadian economy, compared to 40 per cent in Q1 2022.
Most likely scenarios for the Canadian economy in 2023
Results also show that respondents are less likely to be optimistic about their businesses, with 45 per cent reporting optimism this quarter compared with 64 per cent one year ago. All metrics regarding respondents’ outlooks for their own organizations also dropped this year compared to Q1 2022:
- 61 per cent believe their companies will have increased revenue over the next year compared to 74 per cent,
- 51 per cent say profits will increase over the next year, compared to 63 per cent and
- 38 per cent anticipate a climb in employee numbers, compared to 56 per cent.
Outlook for the Canadian economy
“CPAs in business have a very realistic economic outlook, with the consensus anticipating a mild recession coming this year. However, very few envision declaring bankruptcy or shutting down,” says David-Alexandre Brassard, CPA Canada’s chief economist. “The Canadian economy has been surprisingly resilient in early 2023, but there are many signs that it will weaken before it gets better.”
Inflation (19 per cent) and interest rates (18 per cent) continue to be seen as the main challenges the economy faces. Just over two-thirds of business leaders say they are still being impacted by inflation, the majority of whom feel that it will impact their business for at least six months.
“CPA business leaders expect inflation to remain high with price pressures now coming from the labour side,” says Brassard. "Companies are continuing to adjust wages for higher costs of living, which is sustaining inflation. This means that the high interest rate environment may remain for longer than anticipated.”
Thirty-eight per cent of respondents feel inflation will impact their businesses for a year or more, 28 per cent say it will impact their businesses for less than a year and three per cent say they don’t know the duration of the impact. A further 31 per cent either say inflation is not impacting or are unsure if inflation is impacting their businesses.
Inflation often appears to be impacting how companies are compensating their employees, with 37 per cent saying they have or will likely increase employee wages by five per cent or more to address cost of living concerns. A further 43 per cent indicated they will or have increased compensation by three to five per cent, with 12 per cent doing so at a lower amount. The remaining eight per cent either don’t know if they will do so or have no plans to give any compensation adjustment.
Methodology
The CPA Canada Business Monitor is issued quarterly, based on a survey commissioned by CPA Canada and conducted by NielsenIQ. The report draws upon business insights of professional accountants in leadership positions in privately and publicly held companies.
For the Q1 2023 study, emailed surveys were completed by 322 of 5,638 people identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). Respondents work for a mix of small, medium and large companies, as determined by employee size. The response rate was 15.4 per cent, with a margin of error associated with this type of study ±5 per cent, with a confidence level of 95 per cent. The survey was conducted from March 15 to April 5, 2023. Further information can be found in the survey’s background document, which is available online at cpacanada.ca/businessmonitorQ12023.
About Chartered Professional Accountants of Canada
Chartered Professional Accountants of Canada (CPA Canada) works collaboratively with the provincial, territorial and Bermudian CPA bodies, as it represents the Canadian accounting profession, both nationally and internationally. This collaboration allows the Canadian profession to champion best practices that benefit business and society, as well as prepare its members for an ever-evolving operating environment featuring unprecedented change. Representing more than 220,000 members, CPA Canada is one of the largest national accounting bodies worldwide. cpacanada.ca
For more information, contact:
Carla Peacock
Manager, Corporate Communications and Emerging Issues
Chartered Professional Accountants of Canada
416-204-3491
media@cpacanada.ca
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