In early March, the Bank conducted an online survey of Canadian firms to supplement the findings of the BOS and better understand the impact of the Russian invasion of Ukraine. Roughly half of the businesses surveyed anticipate that they will be affected by the conflict.
The most common expected impact is upward cost pressure (Chart 1), tied mainly to:
- increased prices for energy and other commodities
- further supply chain disruptions
Among the firms expecting the conflict to increase their input costs due to supply chain disruptions, many depend on goods coming from Europe or Asia. They anticipate rising transportation costs and longer delivery times, beyond those related to the COVID-19 pandemic. Other businesses expect delays and reduced availability of commodities. Many firms plan to pass conflict-related cost increases on to their customers.
While the invasion of Ukraine is clearly expected to increase firms’ input costs, the anticipated impact on their sales and investment plans is more ambiguous. Several businesses, predominantly those tied to energy and other commodities, expect higher sales. Other firms anticipate their sales will be lower because of supply chain disruptions and increased uncertainty. Some businesses noted that lingering uncertainty related to the pandemic, particularly around supply chain disruptions and associated costs, has been intensified by the conflict.