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Among mid-sized companies in Canada and globally, there is a positive outlook regarding 2021, according to Grant Thornton’s latest Global business pulse index.
Results reveal that Canadian mid-market businesses are relatively confident about the recovery of business performance over the next year.
One year ago, Canadian businesses from coast to coast were shut down to help reduce the spread of COVID-19. Over the last year, we saw businesses struggle, many were forced to permanently close, others tried to reinvent themselves by investing in new technologies and changing their business model. Yet, in the midst of all this, half of Canadian mid-market businesses are optimistic about the recovery of future business performance as stated in Grant Thornton’s latest Global business pulse.
“Canada proved its resilience and ability to innovate during the pandemic by implementing various measures to support Canadian businesses. Canada is renowned as an open-minded, politically stable, culturally diverse country with strong entrepreneurial values and a talented workforce,” states Emilio B. Imbriglio, Raymond Chabot Grant Thornton’s President and CEO.
Grant Thornton’s global index findings
Grant Thornton’s global business pulse is the only index to track the business health of mid-market organizations worldwide. The latest index results draw on interviews with 5,000 mid-market business leaders between October and December 2020. This index result provides a timely snapshot of business health amid a challenging environment in which COVID-19 dominates the agenda, vaccines are announced and where businesses look to the year ahead.
Overall, despite rising by more than 6pts. in H2 2020, the global business pulse index score for Canada remained in negative territory with a score of -5. However, the improvement in the headline index was similar to the global aggregate score, which also rose by 6pts. to -4. Although improved, it is still the second-worst result since the index records began a decade ago.
Businesses confidence in strong sustained growth
As the results show, Canadian businesses are notably more optimistic, compared to the end of H1 2020. This rise in optimism is primarily being driven by the approval of a COVID-19 vaccine and its roll-out in the next year. With revenue, profit and export outlooks looking more positive, the index also reveals a decline in economic uncertainty, leading to a more hopeful future and recovery for businesses across Canada.
Additionally, according to the Financial Post, Bank of Canada Governor Tiff Macklem also recently released a statement stating that Canada’s economy will see a solid rebound in coming months as COVID-19 restrictions are loosened. An expected ramp-up in vaccination is boosting confidence in sustained strong growth into 2022. As more Canadians are vaccinated, the hardest-hit segments of the service industry will be able to begin resuming operations, resulting in strong job growth.
Rebalancing investment priorities towards more traditional categories
While more hopeful about future growth, Canadian businesses are still acutely aware of the challenges that they still face due to the pandemic. To position themselves for recovery, leaders are reprioritizing their investments as well as updating their long-term visions and plans. As the index suggests, compared to the rest of the world, Canadian businesses increased investments in staff skills and technology, as opposed to more traditional new buildings or plant and machinery.
Our experts attribute this to a number of factors. Many companies had put off investment during the course of the pandemic and are catching up. Others are investing to be ready for the expected uptick. Nonetheless, investing in technologies and strengthening a business plan with a digital transformation strategy is a must to remain competitive nationally and internationally post-COVID. In the past year, many businesses have updated their business strategy and invested in new technologies, which will result in a post-pandemic market that will be very different from the pre-pandemic situation.
Want to know more about developing a digital transformation strategy, consult our Evolution page.
COVID-19 has changed the world on many levels; it shifted the economy and forced businesses to adopt major changes. For some, this may be an opportunity to reinvent themselves and move towards new goals. For others, it may be a little more challenging to picture their business’s future.
Our experts are here to support the relaunch of your activities and help you adapt this new normality.
Grant Thornton’s Global business pulse is the first index to track the health of mid-sized companies at a global, regional, country and sector level. Here is more information on the methodology.