Foreign Direct Investment recovering from pandemic’s impacts . . .
Despite the COVID-19 pandemic’s disruptive impact on the global economy, both inbound and outbound investment between Canada and the Asia Pacific increased significantly in 2021. Last year, Asia Pacific economies invested a total of C$14.4 billion in Canada, more than twice as much as the C$6.4 billion invested in 2020. At the same time, Canadian investment in the Asia Pacific increased by almost 70 per cent in 2021, reaching C$25.5 billion in 2021 and surpassing pre-COVID-19 investment levels. The number of deals between the two regions also grew – outbound deals increased from 88 to 105 from 2020 to 2021 and inbound deals from 180 to 218 – indicating a rebound in the investment relationship between Canada and the Asia Pacific.
Australia leads the pack . . .
In 2021, Australia re-emerged as the largest Asia Pacific investor in Canada, at C$4.8 billion. It was also the largest Asia Pacific recipient of Canadian investment, at C$15.3 billion. Australia’s dominance was largely due to several acquisitions in Canada’s mining sector and Canadian investments in Australia’s utilities sector. Canadian outbound investment in Australia increased incredibly quickly, experiencing a remarkable 532 per cent year-over-year increase, suggesting Canadians significantly strengthened their economic ties to Australia in 2021. The 2021 trends reaffirm Australia’s strong showing as one of Canada’s top-five inbound and outbound investment partners since 2003.
China drops in rankings . . .
The COVID-19 pandemic has contributed to inflation, supply chain disruptions, and global economic instability, which have the potential to disrupt FDI flows in the coming years. The disruption of supply chains, for example, has accelerated efforts to diversify trade and investment partners. As a result, Canadian outbound investment to the Asia Pacific last year went to new economies at the expense of traditional investment partners, including China, which fell to sixth place in 2020 and eighth place in 2021. But data from 2021 also demonstrates the resilience of Canada-Asia Pacific investment flows and indicates that, despite the turbulence and reshuffling caused by the pandemic, the investment relationship will continue to grow and deepen.