Foreign investment in the wake of COVID-19 . . .
The global economic recession caused by COVID-19 has contributed to a year-on-year decrease in the value of foreign direct investment (FDI) flows from the Asia Pacific to Canada. However, despite the drop in inbound investment value, the number of Asia Pacific investments increased: 181 deals were struck in 2020, an 18-year record for inbound deals. Unlike inbound investment value, outbound Canadian investment flow to the Asia Pacific remained highly resilient in 2020. Canadian companies invested C$16.8 billion in the region, C$5.3 billion more than in 2019. In Canada, urban areas received the most investment from the Asia Pacific – 79 per cent of total inbound investment from the region – but rural communities are increasingly vital as they offer access to Canada’s abundant natural resources. The latter has attracted a total of C$42 billion in investment since 2003.
Recovery strategies in select Asia Pacific economies . . .
Due to the massive economic shock caused by COVID-19, this year’s report devoted a chapter to the recovery strategies of Australia, India, Singapore, and South Korea, specifically, the impact of their economic policies in the growing digital, clean energy, and research and development sectors. The focus on domestic economic growth in these economies may create headwinds for Canadian investment in the region.
Looking forward . . .
In the coming year, we can expect the pandemic to continue to significantly impact investment between Canada and the Asia Pacific. This may result in further decreases in inbound flow, as some experts have noted that a full global economic recovery could still be years away. However, it seems that the Canadian post-COVID recovery strategy encourages investment in the sectors mentioned above – digital, clean energy, and R&D sectors, which are also key sectors for Asia Pacific governments. For example, in the Federal Budget 2021, the Canadian government pledged $4.3 million per year for the next five years to the International Business Development Strategy for Clean Technology, an initiative to support Canadian firms in capitalizing on global opportunities in the clean technology sector.
- APF Canada: Investment Monitor 2021: Report on Post-COVID Recovery and Foreign Direct Investment Between Canada and the Asia Pacific
- Government of Canada: International business development strategy for clean technology
- Markets Insider: World Bank chief economist says full global recovery from the COVID-19 crisis may take 5 years