FX.co ★ Canada clicks into gear through investment

Canada is changing its development model: instead of relying on a steady influx of migrants, the country is focusing on equipment renewal, automation, and increasing output per worker. The previous approach created a kind of growth driven by population, but masked a decline in real income per capita.

Morgan Stanley analysts estimate that launching large-scale investment will accelerate the national economic growth from current rates to 1.7–2.0% per year.

Two stages of acceleration

• Until the late 2020s: companies buy equipment, digitize processes, and raise labor productivity.

• In the 2030s: the demographic factor will kick in. While Europe and Japan suffer from aging populations and labor shortages, Canada will retain a sufficient pool of working-age people.

Main challenges

• There is enough money, but no investment. Canadian pension funds hold huge assets, but they are reluctant to invest in the domestic real economy. The government will need to cut taxes, remove bureaucratic barriers, and provide firm guarantees so that businesses can start building factories, modernizing agriculture and retail (rather than just extracting commodities and expanding transport).

• Pressure from the United States. The main current obstacle is trade uncertainty. Companies fear taking risks and postpone launching large projects because of the risk of new US tariffs and duties.