Trends show reason for optimism after a tough 2020 for small exporters

Canada’s goods exporters were greatly affected by the pandemic in 2020, in part due to changing patterns of demand and initial difficulty in understanding and adapting to a new constrained work and logistics environment. The impact was especially hard-felt by small exporters, a group that experienced greater losses in the number of exporters (-17.3%) in the initial wave of the pandemicFootnote1 relative to medium (-4.5%) and large (-8.7%) exporters.

The impact of the pandemic on Canadian exporters was most severe in the spring of 2020; in the second wave of the pandemic at the end of 2020, the loss in the number of Canadian exporters became much smaller (-6.6%). However, the recovery in the number of small exporters still lagged behind (-7.6% compared to pre‑pandemic level) large (-4.1%) and medium exporters (-0.3%). Encouragingly, the value of Canadian exports recovered to pre‑pandemic levels in the last few months of 2020, for enterprises of all sizes.

The Number of Canadian Exporting Enterprises fell in 2020 due to the Pandemic
The Number of Canadian Exporting Enterprises fell in 2020 due to the Pandemic
(percent change in the number of exporters relative to pre‑pandemic levelsFootnote1, by enterprise size)
     Small‑sized enterprisesMedium‑sized enterprisesLarge‑sized enterprises

Data: Statistics Canada Trade in Goods by Exporter Characteristics
Source: Office of the Chief Economist – Global Affairs Canada

Small exporters tend to export less in value on a monthly basis, which can partially explain the gap in performance as enterprises with lower export values are less likely to have well established export relationships. In 2019, only 6.8% of small exporters managed to export more than $1 million a month, while almost half of medium exporters and more than half of large exporters managed to do so.

The larger loss in the number of small exporters throughout 2020 can also be partially explained by the industry composition, with smaller exporters including relatively more retailers and wholesalers, who are third‑party exporters that generally export less in value per exporter than direct exporters such as natural resource extractors or manufacturers. For comparison, small exporters made up 91% of wholesale exporters on a monthly basis in 2019 but only 62% of mining, quarrying, and oil and gas extraction exporters, and 65% of transportation equipment manufacturing exporters.

The Upshot

Canadian exporters—especially small exporters—experienced significant challenges in the face of the pandemic, but the number of exporters and the value of their exports experienced a notable recovery by the second wave of the pandemic at the end of 2020. While Statistics Canada has not published monthly data on the number of exporters by size in 2021, the value of goods exports has continued to improve and stood at 13.9% above pre‑pandemic levels as of August 2021. This bodes well going into the next stage of a highly uncertain economic recovery.

1 Comparing 2020 performance against pre‑pandemic levels, which in this case is defined as the monthly average of equivalent months from 2015–2019.

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