Iraq and the Economy: CIBC/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication October 15, 2002

Transcription

1 Iraq and the Economy: CIBC/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication October 15, COMPAS Inc. Public Opinion and Customer Research

2 Introduction On balance, Canada s CEOs and business leaders think that now is the best time for investors to be looking for buying opportunities but there is a hint that Iraq-related uncertainty may be edging up. While they do not think that the world situation involving Iraq affects their own organizations or the organizations they deal with, they do think that the economy as a whole would benefit sharply from a quick toppling of the Saddam government and be harmed by a prolonged land war. These are the key findings from the current web-survey of CEOs and other business leaders conducted by COMPAS on behalf of the National Post under sponsorship of the Canadian Chamber of Commerce and CIBC Small Business. Now is the Best Time for Stock Buying, But Uncertainty May Be Rising Because of Uncertainty about Iraq Roughly half of the Canadian CEOs and business leaders still consider right now to be the best time to be looking for buying opportunities, as shown in table 1. Over the last three months, however, the proportion of respondents who feel that it is a good time to buy may be edging up-- from 11% in July to 20% today (table 1). To the extent that business leaders may be uncertain about whether it is a good time to invest, uncertainty about Iraq may be at the core, as explained below. Table 1: When do you think is the best time for investors to be looking for buying opportunities? Please check one. [NO ROTATION] July 19, Oct 11, Right now In three months Six months months 3 3 It s not clear DNK 2 3 1

3 A Quick Lancing of the Boil of Saddam Would Spur the Economy, but a Long-Term Land War Would Be Worse than Protracted, Uncertain Inaction To the extent that uncertainty about the economy may be edging up, such uncertainty may be linked to the perceived uncertainty of the current situation involving Iraq. A U.S. invasion resulting in the quick toppling of the Saddam government is considered the best scenario from the perspective of the economy, whereas a long-term land war would have the worst effect. Under a scenario of a quick end to the Saddam regime, only 16% anticipate contraction or a flat economy. This rises to 51% under a scenario of continued uncertainty and 66% in the event of a prolonged land invasion, as shown in table 2. A quick toppling of Saddam and a prolonged land war represent extreme scenarios in respondents thinking. Their forecast under the former scenario is at least as sanguine as any economic forecast they have made since December 2001, as shown in table 3. By contrast, their forecast under a scenario of prolonged land war is at least as doubtful as any during the same period. Table 2: Combined Predictions for the Canadian Economy Saddam Topples Quickly** Continued Apparent Uncertainty* Prolonged War*** Contraction Flat Modest growth Strong growth DNK *Note: Question 2 was worded, there is talk about how the world economy and Canada s own economy may be affected by the situation in Iraq. Suppose the present situation of apparent uncertainty continued for another 12 months. What would you predict for the Canadian economy? [NO ROTATION] **Note: Question 3 was worded, suppose the U.S. launched an invasion and Saddam s government were toppled quickly. What would you predict for the Canadian economy? [NO ROTATION] ***Note: Question 4 was worded, suppose the U.S. launched an invasion but the land war went on for months without a firm conclusion. What would you predict for the Canadian economy? [NO ROTATION] 2

4 Table 3: Tracking Data* December 19, 2001 February 18, July 12, August 23, Contraction Flat** Modest growth Strong growth DNK *Note: This question was worded, which of the following are your predictions about the economy for the next six months? **Note: This category was worded as flat growth December 19, Possibility of War Does Not Affect Business Leaders own Organizations Although the predictions for the economy of Canadian CEOs and business leaders depend on the outcome of the current world situation involving Iraq, few respondents are worried about their own particular business. Seventy percent of respondents do not feel that the situation affects the planning of their own organization or the organizations they deal with, as shown in table 4. Table 4: Does the world situation involving Iraq affect the planning of your own organization or the organizations you deal with? [ROTATE POLES] Very much so 3 Somewhat 25 Not really 43 Not at all 27 DNK 3 % 3

5 Methodology The National Post/COMPAS web-survey of CEOs and leaders of small, medium, and large corporations and among executives of the local and national Chambers of Commerce was conducted October 9-10,. Respondents constitute an essentially hand-picked panel. Because medium and small companies are more numerous in the economy and hence among Chamber membership, the actual respondents in this consultative panel are drawn more from these strata than from the stratum of the largest companies. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of n=163 are deemed accurate to within approximately 8 percentage points 19 times out of 20. The principal and coinvestigators on this study are Conrad Winn, Ph.D. and Jennifer McLeod. 4