In the face of a challenging global economics, experts say Canada needs to boost investment by both Canadian and foreign investors to bolster our economic resilience, spur innovation and improve growth rates.
Without more investment in the economy from Canadian businesses and institutional investors, including Canada’s pension funds and foreign investors, the country’s growth rates will stagnate, job growth will suffer, educated workers will leave the country and our quality of life will decline, experts suggest.
“If we don’t fix things, we’re going to continue to decline internationally,” says Jack Mintz, a senior fellow with the C.D. Howe Institute and the president’s fellow of the school of public policy at the University of Calgary.
“That’s what’s happened in the past decade – we’ve been losing out on investment, our standard of living is declining relative to other countries, and then it makes it more appealing for our young people to move abroad,” he says.
Past growth factors
Most of Canada’s recent growth has been through immigration, he explains, and that’s pressured our housing and health care system. Canada has since reduced immigration numbers – which may ease those pressures, but also slow overall growth.
“If you look at our GDP (gross domestic product) growth, it’s still one per cent … we’re growing at a very poor pace,” he says. “When that happens, you just increasingly fall behind,” which is concerning for Canada with the large U.S. economy next door drawing in more capital.
“It’s very important that we make sure we can be attractive so people can say: ‘Gee, I can invest in Canada,’” Mintz says.
Falling in the ranks
Canada has been in the Top 10 global countries for GDP growth for the past few decades, but has been falling in the rankings, says Armine Yalnyzian, an economist and Atkinson Fellow on the Future of Workers at the Atkinson Foundation.
According to data from the International Monetary Fund (IMF), Canada was the 10th largest economy in the world in 2025 with a GDP of $2.32-trillion and a GDP growth rate of 1.74 per cent, behind Russia in 8th and Italy in 9th.
In 2024, Canada was 9th, with GDP of $2.27-trillion and a growth rate of 2.05 per cent.
In the first quarter of 2026, Canada’s GDP contracted by 0.1 per cent following a decline of one per cent in the fourth quarter of 2025 marking a technical recession of two consecutive quarters of negative growth.
“What we are looking at, if we do not sufficiently invest either publicly or privately, is continued shrinkage” in GDP, Yalnyzian says.
Economic impact of reduced investment
A shrinking economy “means that we will be able to raise fewer public revenues at a time when the demand for public services is growing, and nobody wants to pay more taxes,” she explains.
The other consequence of a shrinking economy “is not necessarily that there are fewer jobs, but the jobs are worse,” she says.
“We might end up moving quite far backwards … from value-added production to just hewers of wood and drawers of water, a much more extractive economy designed to be part of a supply chain that feeds the value-added machine someplace else,” she says.
“That’s why we want more investment.”
Positive investment
But that investment needs to come with some rules so that it boosts the Canadian economy and profits don’t just flow to a foreign entity rather than benefiting or being reinvested in the Canadian economy and its work force, she notes.
Amid a push from the federal government to diversify trade and encourage investment, foreign direct investment in Canada reached $96.8 billion in 2025 – the highest inflows since 2007 – and increased from $86.6 billion in 2024.
“Merger-and-acquisition activity was the primary driver of the increase,” says a report by TD economics.
“Sector gains were concentrated in trade and transportation and management companies, followed by manufacturing.”
Without additional investment, the government may have to step in to be a major investor in infrastructure and other programs, which it has done during times like the Great Depression, says Danny Parys, a fellow at Social Capital Partners and a strategy and governance consultant based in Montreal.
Opportunity costs
While that could be positive, with the government funding construction, hiring and training people on its own, “that would be a last resort.”
“If that didn’t happen, it would just be stagnation, malaise, and I think also, without more growth, it would just be doubling down on the existing industries as they are and looking for more ways of extracting value of those industries already,” instead of investing in and developing new emerging industries, he says.
The federal government recently announced the Canada Strong Fund, a sovereign wealth fund that “will invest in strategic Canadian projects and companies alongside other investors – with a clear objective to achieve commercial returns to build the wealth of Canada.”
But there’s an “opportunity cost” if Canada is unable to encourage its pension funds and other investors to invest more at home, says Parys.
“If the Canadian pension funds are going to build … a wind farm in Brazil or a wind farm in Alberta, the advantage is pretty clear that we want that to be in Canada.”
Interested in learning more about the benefits of increased investment in Canada and its companies? See what the experts have to say here.
