Ottawa: Canadian companies were beginning to feel more hopeful about the economy earlier this year, but that confidence has been shaken by rising global tensions linked to the Iran war.
A new survey from the Bank of Canada shows that many firms expected better days ahead in the weeks before the conflict began at the end of February. Businesses reported improving sales outlooks and a gradual return of hiring and investment plans after a period of uncertainty.
The survey, conducted in February, captured a moment when companies were seeing steady demand and planning for growth. Many firms said they were ready to expand operations, supported by stronger customer activity and improving financial conditions.
However, the situation changed quickly after the outbreak of the conflict involving Iran. A follow up survey carried out in March among businesses more exposed to the crisis revealed growing concern, especially over rising costs.
Energy prices have increased sharply due to disruptions in global oil supply routes, particularly around key shipping areas such as the Strait of Hormuz. For Canadian businesses, this has meant higher fuel and transportation costs, which are now putting pressure on profit margins.
Recent data shows that inflation in Canada has also risen, with fuel prices playing a major role. This has added another layer of difficulty for companies already dealing with global uncertainty.
Economists say the shift in sentiment highlights how quickly global events can affect local economies. While demand for goods and services has not collapsed, many businesses are becoming more cautious about making big decisions.
The findings suggest that Canada’s economic recovery was gaining strength, but external shocks have slowed that progress. Companies are now watching global developments closely, aware that continued instability could further impact costs and future growth.