Opening Track
The week in review
This week, the U.S. Federal Reserve hikes its interest rates, and Mark Carney unveils his doctrine.
Download slides
Top of the Charts
Chart of the Week | A New Investment Cycle in Canada?
Prime Minister Carney returned to his investment-banking roots this week by hosting a Canada-focused investor day. The objective is clear: revive investment after a decade of stagnation. Investment’s share of Canadian GDP has fallen from 25% at the end of the expansionary cycle that began in the early 2000s to just over 20%.
This decline has left Canada with a clear shortfall in the amount of capital available per worker. According to the OECD, Canadian workers have 40% less capital—machinery and equipment, buildings, and other assets—than the median among developed countries. Given the scale of the investment required, this gap will widen further unless Canada attracts foreign capital. This is a key source of the country’s weak productivity.
At the same time, President Trump has drawn attention to Canada’s excessive dependence on an increasingly unpredictable trading partner. The solution to both challenges is to accelerate investment rapidly and substantially across the country.
The Carney government’s plan to mobilize $1 trillion in capital over five years could bring investment back near previous peaks. However, the details will matter, and major obstacles remain: navigating Canadian regulations is difficult, and it is unclear whether the country has enough skilled workers to achieve its ambitions.
