Tremendous growth in reinvested earnings: Global companies show long-term faith in Canada
Looking back on the second quarter (Q2) of 2022, foreign direct investment (FDI) continues to grow and create tremendous opportunities for Canada.
Statistics Canada reported that Canada has attracted $22 billion in FDI inflows this quarter – making it among the strongest quarters on record. Breaking down the numbers, that’s an impressive 10.1% growth from the first quarter, reflecting Q2 net inflows over 65% greater than the 5-year quarterly average.
Much of the success seen in Q2 2022 has been driven by factors such as Reinvested Earnings and increased investments from Europe.
Diving Deeper into Canada’s FDI Numbers
Looking closer at Reinvested Earnings offers a better understanding of what's behind this success.
Global companies are continuing to have long-term faith in the Canadian economy by reinvesting here. The largest portion of FDI for Q2 2022 came from Reinvested Earnings – which captured 77.5% of inflows and reached a 10-year quarterly high of $17 billion.
Compared to the previous quarter, the value attributed to Reinvested Earnings increased by 28.4%.
Investing companies are putting down roots in Canada – recognizing that Canada’s innovative capacity, sustainable solutions, diverse talent pool, and economy are a trusted option for continued growth. This is good news for Canada and workers across the country.
Diversified Investments: More FDI from European Countries
During the first quarter of 2022, Switzerland stood out among major investing countries for investment into Canada. During this quarter, two additional European heavyweights joined the class – the United Kingdom and the Netherlands ($3 billion and $4 billion in FDI, respectively). Both accounted for over 35 per cent of FDI inflows. Australia also made the top 5 with $1.2 billion in FDI inflows, continuing to outperform its historical quarterly average.
While its share of overall FDI fell, the United States remained the biggest single source of investment in this quarter to the tune of $10.6 billion, almost doubling its investment level compared to Q1 2022.
Key Industries Seeing FDI Growth in Q2
During the second quarter of 2022, four key industries displayed significant quarterly growth. First, the Finance and Insurance industry saw 538% growth over Q1 2022, the highest quarterly growth rate by an industry in this quarter. Manufacturing saw an increase in its 5-year (+149 %) and 10-year (+ 64%) historical averages.
Mid-Year Momentum Suggests Another Strong Year Underway
With a mid-year total of $42 billion, Canada has built some strong momentum with FDI in the past two quarters. Examples of record-breaking growth seen in Q2 2022 continue to signal that Canada is a desirable place for foreign firms to invest – and reinvest.
Working with partners at home and around the world, Invest in Canada finds the best to invest. Learn more about FDI in Canada here.