Canadian Outlook Economic Forecast: Business Investment—August 2020

The Conference Board of Canada, 11 pages, August 6, 2020
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on business investment. For an overview of all major components of the economy, download the Canadian Outlook Summary.

Document Highlights

  • In the mid-2000s, Canadian business investment boomed thanks to high prices for natural resources. But since 2014, investment has fallen flat. Capital expenditures in the resource sector fell by more than $40 billion, while investment in the other sectors has not picked up the slack.
  • Business confidence remains low and domestic and global demand are weak as a result of the pandemic. After falling 0.4 per cent in 2019, we project non-residential business investment will fall by 11.9 per cent in 2020.
  • The global pandemic will shift many capital expenditures well into 2021, leading to a solid rebound as the economy and commodity prices recover. We expect non-residential investment to rise by 9.1 per cent next year.
  • Canada’s competitiveness compared with the U.S. remains a sore spot. Although there have been some targeted measures from the federal government aimed at boosting investment, for many firms the U.S. remains a more attractive destination in which to invest.
  • The Canadian economy’s transition toward more service-oriented output and away from natural resources does not bode well for long-term investment, as service industries generally require lower levels of investment per dollar of output.

Table of Contents

Key findings

Business investment snapshot

Investment set to plunge this year but recover in 2021

Canada’s weak investment performance

Investment drivers

Investment by industry

Investment by category

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