Canada lost over $1 trillion in investment since 2015, as outflows doubled inflows | Daily Hive

Canada lost over $1 trillion in investment since 2015, as domestic outflows doubled foreign inflows

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Canada lost more than $1 trillion in investment to other countries between 2015 and 2024, according to a new analysis from the Royal Bank of Canada.

This was the largest capital outflow in the country’s history.

The report paints a stark picture: for every $1 of foreign investment coming into Canada, $2 left the country over that period.

This means Canadian money has been flowing outward faster than foreign money has been coming in. While Canada still attracted billions in foreign direct investment (FDI), Canadian companies and investors were putting even more money into projects abroad.

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Economists with RBC state there are a few reasons for this. Companies may find bigger markets, higher returns, or fewer regulatory hurdles outside Canada. But over time, this imbalance has added up — and it is now affecting the country’s economic performance.

Recently, critics have increasingly blamed Canada’s structural economic and financial issues on the policies of the federal Liberal government, which has been in power since 2015.

The report describes the past decade as a kind of “capital drought,” where Canada has not invested enough at home in things that drive growth — like new machinery, advanced technology, and innovation.

Investment is a key engine of economic growth. When businesses spend money on new equipment, infrastructure, or technology, it boosts productivity and raises living standards.

But Canada has been lagging behind other G7 countries in these areas. That helps explain why productivity growth has slowed and why the economy has struggled to keep pace with global peers.

With that said, according to the bank’s economists, there are early signs that the trend may be shifting.

Foreign investment into Canada jumped to nearly $100 billion last year, the highest level since 2015. For the first time in about a decade, more investment came into Canada than left.

That suggests global investors may be seeing new opportunities in the country, especially as supply chains shift and geopolitical tensions reshape where companies put their money.

Still, RBC economists warn that without deeper changes, the improvement may not last.

Looking forward, the report notes that Canada will need $1.8 trillion in new investment over the next 10 years to fully unlock growth in key sectors.

The surprising part? Apparently, the money already exists.

Canadian companies alone are sitting on more than $1 trillion in cash and liquid assets, meaning the issue is not a lack of capital — it is that the capital is not being invested at home.

Currently, the Canadian economy is worth $3 trillion per year.

RBC is calling for a new approach to how Canada attracts and uses investment, such as updating tax and investment rules to make Canada more competitive, reinvesting proceeds from public infrastructure into new projects, using government spending to help scale up Canadian industries, and encouraging partnerships between public and private investors.

The report also suggests the importance of working more closely with Indigenous communities to move major projects forward more quickly.

The largest key growth sector is in oil and gas, at $705 billion, where new pipelines and LNG terminals could expand exports, strengthen energy security for allies, and support the development of carbon capture technologies. However, growing Canada’s fossil fuel-based industries have been the subject of immense controversy, especially proposed pipelines that lead to processing and export facilities on British Columbia’s coast, with projects facing significant delays and uncertainty.

Close behind is electricity, requiring $670 billion to significantly expand nuclear, hydro, and renewable power while modernizing the grid to deliver reliable, affordable, low-emission energy for industry.

In agriculture and food processing, $205 billion in investment — particularly in research and development — could drive decades of export growth, boost domestic food production, and enhance global food security.

The metals and minerals sector would need $200 billion to position Canada as a key alternative supplier of critical minerals, helping reduce Western reliance on China while supporting the energy transition and defence supply chains.

One emerging major area is national defence, with the federal government’s first-ever Defence Industrial Strategy over the next 10 years seeking to invest $180 billion in defence procurement and $290 billion in defence and security-related infrastructure. Such historic spending — driven by Canada’s commitment to NATO to triple defence spending to five per cent of GDP by 2035 — is expected to lead to more than $125 billion in additional downstream economic benefits and create more than 125,000 high-paying jobs.

RBC notes that this defence strategy could generate $100 billion for Canadian companies and transform the country from a defence equipment importer to a contributor to allied military capabilities.

Furthermore, $12 billion in the space sector could build on Canada’s expertise in satellites, robotics, and aerospace, opening new opportunities in defence, advanced manufacturing, and high-tech innovation.

The federal government is also prioritizing the Alto high-speed rail line project between Toronto and Quebec City, with an initial phase potentially beginning construction before the end of this decade. There has been some speculation that Alto could carry a total construction cost approaching $100 billion, but it would provide enormous long-term, sustained economic spinoffs.

Alto is being delivered as a private-public partnership involving both Canadian and European companies.

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