Optimism about the country’s 12-month economic outlook has declined significantly according to CICA/RBC Business Monitor for the first quarter of 2008.

Only 24% of chartered accountants (CAs) in executive corporate positions across Canada are optimistic about the country’s economy for the coming year, down sharply from 63% at the end of 2007. As well, national business optimism for the next year has slipped to 48%, compared to 57% in Q4 2007.

A decline was also evident in optimism about the business outlook for specific regions of Canada for the next 12 months, dropping by 18% to a low of 49% in B.C., and by 16% to a low of 39% in Ontario. Business optimism in Alberta, meanwhile, has grown since the previous report, increasing to 60% in Q1 2008 compared to a low of 51% in Q4 2007.

The impact of some of the current challenges in the U.S. economy is reflected within the pages of the latest survey. Fifty per cent of survey respondents indicate that they expect their companies to be negatively impacted by a stalled U.S. economy. Nationally, corporate profits are expected to increase by only 1.3% over the next year, less than half of the 3.0% growth estimated just one quarter earlier.

“According to our RBC Economics research, while the U.S. economy appears to be unsure of its footing right now, there are signs it may begin to revive in the second half of 2008, which would be very good news for many Canadian businesses, particularly exporters,” notes Tracy Stevenson, vp, business financial services, RBC Royal Bank. “The Canadian dollar is also dipping below its record highs in the last quarter, and we are forecasting it will round off the year closer to US91¢. While the higher dollar has certainly benefited firms importing equipment from the U.S., a below par Canadian dollar would benefit Canadian exporters.”

Respondents did have some promising news for college and university graduates hoping to begin their careers. Despite the decrease in short and long-term business confidence, companies in Canada expect that the level of student recruitment will remain virtually unchanged across Canada, with a projected gain of 0.5%.