Canada’s Diversity and Positioning Is Promising

While this past year called for worldwide resiliency and adaptation, foreign investment flows slowed down globally, and Canada was no exception. In fact, global FDI flows plunged by 35 percent in 2020, down to $1 trillion. For comparison, these levels are 20 percent lower than FDI in 2009 after the global financial crisis. Similarly, Canada’s foreign investment performance dipped by 49 percent, led by a decrease of 57 percent in FDI inflows from the United States, and Canadian direct investment abroad dropped by 41 percent. Consequently, Canada’s source of FDI is now more geographically diverse, with Europe and Asia now responsible for the majority ownership of FDI stock.

Globally, the pandemic and national lockdowns forced multinationals to reconsider new projects and intra-firm financial flows. While, developed economies were subject to a greater decline in the value of FDI, down by 58 percent, developing economies experienced the strongest decline in the number of FDI projects. Indeed, the decline in numbers of new greenfield project announcements and cross-border M&A were more significant in developing countries (42 percent and 24 percent, respectively) than in developed economies (19 percent and 10 percent, respectively).

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