Canadian companies remain confident about their export prospects for 2005, despite the strength of the Canadian dollar and volatility in the world economy, according to a survey released today by Export Development Canada.

The agency said its Trade Confidence Index rose to 73.6 out of a possible 100 points, up from 70.6 in the fall of 2004. The index is based on responses to five questions on future global and domestic sales, economic conditions and trade opportunities.

The survey indicated that 79% of Canadian exporters believe the value of the dollar will stabilize and potentially decrease over the next six months, compared with 50% last fall.

The Canadian dollar has risen more than 25% against the U.S. dollar since January 2003 and is now trading above 80¢.

“In the past, a similar sharp increase in the currency would have caused an export crunch,” EDC said. “However, Canadian companies are adapting and are forecast to see exports increase by 4% in 2005.”

There are three main reasons for the change, according to Stephen Poloz, EDC’s senior vp and chief economist.

“First, global growth has slowed from the 2004 pace, but not by as much as had broadly been expected. Second, prices for commodities that Canadian firms export have outpaced increases in the dollar, preserving profit margins for primary producers. Third, manufacturers have been partially shielded from dollar movements by globalizing their supply chains,” Poloz said.

The agency said Canadian companies continue to focus on developed markets, particularly the United States, while China, Mexico and India are cited as export growth opportunities.

However, many remain wary about doing business in Asia, with 39% citing it as the zone with the greatest degree of risk, up 13% from the same period last year.

A total of 1,000 Canadian businesses participated in the survey, which was conducted by Opinion Search Inc. in May and June. The results are considered accurate within 3.43 percentage points, 19 times out of 20.