A new International Business Report on the growth landscape in Quebec released by Grant Thornton
MONTRÉAL, October 21, 2014 – New research shows that rising optimism in Quebec is feeding into brighter business growth prospects but that bureaucracy is constraining those very same growth plans. The results from Grant Thornton’s International Business Report (IBR), a survey of 2,500 senior executives in 34 economies, reveals that despite roadblocks businesses in Quebec are focused on incentivizing productivity improvement and enhancing sales force effectiveness in a bid to boost growth over the next 12 months.
When presenting at The Montreal Council on Foreign Relations Business Series earlier today, Ed Nusbaum, global CEO of Grant Thornton, said: “The global economy is delicately poised. Growth is slowing sharply in Europe and many large emerging markets such as Brazil and China; the spectre of deflation is apparent in the Eurozone and Japan; while conflict and falling commodity prices is dampening oil-producing countries’ growth prospects. I would echo the words of the IMF and call on governments to not resort to protectionism and instead enact reforms that free up dynamic businesses around the world to generate the jobs and growth they are capable of.”
According to the IBR, though Quebec’s economy compares favourably to most western economies, it has grown more slowly since the global financial crisis, when compared to the Canadian average. This slower growth is expected to persist over the short- to medium-term. Quebec’s economy posted an expansion of 1.5% in 2012 and 1.1% in 2013, compared to 1.7% and 2.0% for Canada as a whole respectively. This is due in part to the greater fiscal restraint required in Quebec and weaker demographics affecting population growth.
“Senior executives in Quebec are more optimistic about future business growth prospects than the Canada average and yet they anticipate lower profits and growth prospects,” stated Emilio B. Imbriglio, President and Chief Executive Officer of Raymond Chabot Grant Thornton. “We have a responsibility to address the roadblocks they face, because we cannot afford to squander this optimism nor business executives’ commitment to increasing productivity,” added Mr. Imbriglio.
The IBR survey found that regulations are the major constraint facing businesses in Quebec; 38% of businesses cite them as a hindrance to their efforts to expand operations, compared to 28% across both Canada and North America. The recent creation of the function of the minister for Small and Medium Enterprises, Regulatory Streamlining and Regional Economic Development is widely considered a move in the right direction. The Minister’s plans for regulatory streamlining in response to the survey’s results are anxiously awaited. Furthermore, the quality of local transport infrastructure also emerges as a challenge, cited as a growth constraint by 22% of the province’s businesses compared with just 10% countrywide.
Despite these challenges, the optimism of businesses in Quebec towards the economic outlook rose sharply in Q3, climbing to net 70%, up from 42% in Q2, suggesting growth is set to pick up pace over the coming months. Optimism amongst Canadian businesses as a whole has remained fairly stable over recent quarters but is lower than in Quebec; in Q3, a net 57% of Canadian business leaders as a whole indicated optimism for the outlook.
To stimulate growth, close to three in five businesses are looking at productivity improvements (58%) compared with 37% across Canada and 32% across North America, while 52% are looking at boosting the effectiveness of their sales force, above the Canada (50%) and North America (43%) averages. In terms of M&A activity, two in five Quebec businesses (43%) plan to grow through acquisition over the next three years, compared to 40% in Canada and 47% across North America. This compares with 31% globally. The vast majority of Quebec companies (87%) are looking at domestic opportunities.
The full report Quebec: the business growth landscape can be consulted here: www.rcgt.com/en/IBR-QC-2014.
Notes to editors
The Grant Thornton International Business Report (IBR) is the world’s leading mid-market business survey, interviewing approximately 3,300 senior executives every quarter in listed and privately-held businesses all over the world. Launched in 1992 in nine European countries, the report now surveys more than 12,500 businesses leaders in 45 economies on an annual basis, providing insights on the economic and commercial issues affecting companies globally. For more information, please visit: www.internationalbusinessreport.com.
The data in this report are drawn from interviews with chief executive officers, managing directors, chairmen and other senior decision-makers from all industry sectors in businesses with C$15M-C$500M. Q3 data is drawn from 2,500 interviews globally (50 in Quebec; 100 in Canada; 400 in North America) conducted in September 2014.
Data collection is managed by Grant Thornton’s core research partner – Experian. Questionnaires are translated into local languages with each participating country having the option to add a small number of country-specific questions to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.
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