Canada has yet again made the top 3 in A.T. Kearney’s annual Foreign Direct Investment (FDI) Confidence Index. With nearly a 60 per cent increase in FDI inflow and a rise in investors’ optimism towards Canada’s economic prospects, Canada remains a strong force in today’s global economy.

The 2019 A.T. Kearney’s Foreign Direct Investment Confidence report compiles data on global markets, investors’ focus and top-of-mind governance and market asset factors that impact FDI inflows for the top 25 countries according to FDI intentions.

Canada is an attractive place to invest

With the Americas receiving almost a third of global FDI flows in 2019, investment interest in Canada remains steady. Canada’s advanced economy and political stability have proven successful in encouraging new investment from abroad. The signing of the United-States-Mexico-Canada Agreement has reduced the pressure on the North American trade environment however the deal’s ratification will be necessary for long term stability.

Canada’s political stability offers a haven for investors

According to authors of the report, results of this year’s FDI Confidence Index highlight investors’ focus on governance and regulatory factors, and market asset and infrastructure factors when considering a place to invest. The only market asset and infrastructure factors that ranks among the top five however, is technological and innovation capabilities–a telling sign of where the world is going. As 79 per cent of investors intend to increase FDI in 2019, they will invest in markets that focus on availability quality targets and a solid macroeconomic environment. A shift toward developed markets also sidesteps risks including commodity price increases, political instability in emerging markets and an overall increase in geopolitical tensions; all of this making Canada a more attractive FDI option.

Investors are bullish on Canada’s economy

Following a three per cent expansion of Canada’s economy in 2017, 38 per cent of investors are more confident and optimistic about the country’s economy this year, leading to a confidence score of 1.87, which is the second highest rating among the 25 countries ranked by the index. In fact, investors reported greater net confidence for Canada than the United States.

Investors favour pursuit of a business-friendly, global economy

Canada’s business-friendly regulations, stable security environment, and continued pursuit of global economic integration through agreements such as the CPTPP is why the country was the net winner in terms of the share of companies increasing versus decreasing FDI, according to the report.

Despite Canada’s change in ranking, its scores have risen since 2018. In fact, among all countries surveyed, most have experienced gains according to this year’s Index. These increases represent a new trend in the history of the Index; one that shows that companies are more likely to invest broadly around the globe.

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October 29, 2019
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