Canada outperforms 5- and 10-year historic FDI averages in Q4 2022
As 2022 came to a close, foreign direct investment (FDI) in Canada remained steady with Statistics Canada reporting quarterly net inflows of $17.2 billion in the fourth quarter of 2022, a figure 21.5% higher than the 10-year quarterly and 17% greater than the five-year quarterly average. Total net inflows for the year reached $68.5 billion, the second highest level since 2014.
Breaking down Canada’s FDI numbers
In what has become a welcome trend over the past few quarters, global companies are proceeding with significant reinvestment into the country. By category, Reinvested Earnings accounted for no less than 77.2% of all flows, by far the largest portion. At $13.3 billion, total reinvested earnings are up 11% over last quarter. This result signals that global companies continue to demonstrate long-term faith in the Canadian economy. Mergers and Acquisitions was the second largest by investment type, comprising $5.8 billion of net FDI inflows in the quarter.
Top sources of FDI
Almost 75% of FDI inflows came from two countries: the United States (44.4%) and the United Kingdom (30.1%) together account for 74.4% of all Q4 inflows. The United States’ share of overall FDI increased by nearly 20% in Q4 2022 after a decline between the second and third quarters.
Meanwhile, the United Kingdom outperformed its historical averages, recording its second highest quarter for FDI in the last decade at $5.2 billion. Investment from the U.K. was 367% higher than its five-year average and 728% higher than its 10-year average for this quarter.
Leading industries seeing FDI strength in Q4
In terms of sectors, four of them accounted for the bulk of FDI inflows this quarter. Finance and Insurance, after a dip last quarter, came back to the top spot this quarter with $4.8 billion, followed by Trade and Transportation ($4.3 billion), Manufacturing ($3.9 billion), and Energy and Mining ($3.2 billion).
On the right path
Overall, the numbers from Q4 experienced a decrease of 5.6% from Q3 2022 levels. Yet the numbers are still higher than Q2 2022 by 14.3%, and Canada continues to outperform 5- and 10-year historic averages.
For Canadians, this should be further reassurance that our country – with its strong fundamentals – remains an attractive place for global companies to invest, therefore continuing to provide growth and innovation opportunities to communities across the country.
For Invest in Canada, seeing these numbers reinforces the importance of attracting growth-minded global companies and helping them achieve success in communities across Canada.
To learn more about FDI in Canada, visit our FDI for Canadians page.