Foreign Investment in Canada Reaches 18-Month Low
New data from Statistics Canada reveals that foreign direct investment into the country declined significantly during the third quarter of 2024, marking the weakest performance since the beginning of the year. The numbers, released on Thursday, show that FDI totaled $18.2 billion between July and September, driven primarily by mergers and acquisitions along with foreign parent companies reinvesting their earnings in Canadian operations.
Quarterly Performance and Broader Trends
The latest figures represent a notable drop from the $21.9 billion in net inflows recorded in the previous quarter. This decline positions the third quarter as the poorest showing for foreign investment since early 2024. The data further indicates that Canadian investment abroad reached $25.1 billion, creating a second consecutive period where more direct investment dollars left Canada than entered the country.
Despite this recent downturn, the broader perspective offers some reassurance. Total FDI inflows over the past four quarters amount to $96.6 billion, which remains substantially higher than the 10-year average of $61.9 billion. This suggests that while current numbers are concerning, the overall trend maintains strength compared to historical patterns.
Policy Concerns and Government Response
Canada's lagging business investment has become a significant concern for economic policymakers. The Bank of Canada has specifically identified the shortage of investment outlays as a key factor contributing to the country's weak productivity levels.
In response to these challenges, Prime Minister Mark Carney introduced several measures in his first budget earlier this month. The government's strategy aims to support $500 billion in investment over the next five years. Among the key initiatives are tax deductions designed to provide favorable treatment for companies investing in machinery, equipment, and other technologies.
In related economic news, Statistics Canada also reported that the country's current account deficit narrowed significantly to $9.7 billion in the third quarter, down from a revised $21.6 billion in the previous quarter.
