Canada ranks second in Kearney’s annual Foreign Direct Investment (FDI) Confidence Index for 2021, a jump from ranking third in 2019.
Although business leaders are relatively less confident about the outlook for the global economy in the fallout of the COVID-19 pandemic, they remain highly optimistic towards Canada’s economic prospects, proving Canada’s unrelenting strength in today’s global economy.
The 2021 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 remains promising for investors
This year, only 57% of investors reported that they are optimistic for the three-year outlook for the global economy—a significant decline from 72% reported before the onset of the pandemic.
Despite this, Canada remains a top-three country in the FDI Confidence Index, and investment interest in Canada remains steady. Canada’s advanced economy and political stability continue to encourage new investment from abroad.
Investors are optimistic about Canada’s developed markets
According to the report, investors focus on the governance and regulatory climate, as well as market assets and infrastructure, when considering a country in which to invest.
Due to the pandemic, investors are placing a heavier emphasis on market assets and infrastructure. Research and development (R&D) capabilities break into the top five factors, a significant leap from ranking thirteenth in 2019. Investors continue to prioritize governance and regulations and increase their interest in market assets and infrastructure. Canada remains a promising FDI option due to its high governance and technology scores as well as its low risk of commodity price increases, geopolitical tensions and economic crisis in an emerging market.
Investors remain bullish on Canada’s economy
Nearly one-third of investors are more confident and optimistic about Canada’s economy this year, leading to a confidence score of 2.10, 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.
The post-pandemic global economy
Despite the global economic and financial setbacks from the pandemic, investors continue to trust that FDI will drive corporate profitability and competitiveness in the next three years. Given this continued trust from investors, the FDI Confidence Index remains an accurate predictor of a country’s economic prospects, and Canada’s high ranking reflects the continuation of international investments in the country.