Investment Recovery Won’t Happen Overnight: Canada’s Two-Year Business Investment Outlook

The Conference Board of Canada, 14 pages, March 1, 2021
Issue Briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on international trade. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • After plummeting in 2020, non-residential investment spending will recover only partially this year, as businesses remain hesitant to invest, particularly in the first half.
  • Business confidence hit record lows in the second quarter of last year. Confidence improved in the second half of 2020 but remained low by historical standards, contributing to our pessimistic outlook for investment spending this year.
  • A recovery in confidence and higher capacity utilization will allow investment activity to accelerate heading into 2022. However, outside of the energy sector, we do not anticipate investment spending to return to pre-pandemic levels over the next two years.
  • Canada’s competitiveness compared with the U.S. remains a sore spot, especially since corporate taxes were cut sharply by the Trump administration in 2017. However, the prospect of higher taxes under the new Biden administration could start to level the playing field between the two countries.
  • After a dramatic plunge in 2020, investment in the energy sector is poised for a sharp rebound this year, thanks largely to the LNG Canada project and recovering oil prices.

Table of Contents

Key findings
Business investment snapshot
Overview
Investment drivers
Investment by industry
Methodology

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