When chartered accountants were asked in the third quarter of 2011 to predict where the Canadian and US economy would be in the first half of 2012, more than a quarter expected a recession.

One quarter later, things are looking more positive, with the majority predicting a positive outlook for their company’s revenues and profits.

The number who now expect a recession in the first six months of 2012 has been cut in half, to just 13 per cent.

Impact of US and European economies on growth in Canadian economy

Although not as strong as the Canadian outlook, respondents to the CICA/RBC Business monitor also have better expectations for the American economy. Forty-four per cent are now projecting a statewide recession, down 18 per cent from 62 per cent last quarter.

The expected weakness in the US is seen as the most significant challenge for the growth of the Canadian economy amongst 45 per cent of survey respondents.

Some chartered accountants are redirecting their concern from the US to Europe, with 22 per cent now believing that the European debt crisis will present the most significant challenge.

"Although the European debt crisis is beginning to weigh on Canadian CAs, this saga doesn't appear to be softening their optimism for their companies' growth projections," says Peter Conrod, vice president, Client and Business Strategy, RBC. "Canadian businesses believe that there are strong opportunities among the challenges expected in 2012."

Increase in optimism, expectation for hiring and profits

While the majority of survey respondents (57 per cent) are neutral about the Canadian economy, the number who are optimistic has risen to 20 per cent since last quarter, an increase of four per cent.

When it comes to their own companies, almost half (49 per cent) of respondents report that they are optimistic about their company’s economic prospects, which is consistent with the numbers reported last quarter.

Sixty-eight per cent now expect company revenues to increase in 2012 and 39 per cent expect their profits to rise by five per cent or more.

Almost half (42 per cent) expect to see their staffing increase while 41 per cent do not expect to see a change in staffing numbers.

Survey viewpoint: who is behind the numbers

The CICA/RBC Business Monitor is a survey based on business insights from chartered accountants in leadership positions in privately and publicly held companies across Canada. The fourth quarter 2011 survey was completed by 311 CAs who were identified by the Canadian Institute of Chartered Accountants (CICA) as holding senior positions (CFOs, CEOs and COOs).

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