Canada moved up to third place worldwide in the 2016 edition of the prestigious A.T. Kearney Foreign Direct Investment Confidence Index. This index measures the confidence of leading multinational companies in terms of foreign direct investment (FDI) destinations. This is also the fourth consecutive year that Canada ranks in the “top four” global ranking.
The general classification of the index shows that the markets targeted by the surveyed businesses are diversified, the first 10 places are divided between the Americas, Asia and Europe. North America, however, stands out on top of the ranking, thanks to the United States and Canada holding the “top 3″.
The level of optimism towards Canada is also the highest. Thus, in 2016, 39% of managers demonstrate a more positive view of Canada with respect to the previous year, which ranks it 2nd in the world for this indicator. In this sense, Canada – and Greater Montréal remain well positioned to increase their share of FDI in the years ahead.
An expected FDI increase in the coming years
The confidence index developed by A. T. Kearney is a key indicator for globalized national and local economies as it reflects the intentions of the world’s leading corporations to engage in foreign direct investment over the next three years. This year’s report tells us that almost three-quarters of surveyed business executives are considering increasing their FDI in the next three years, as a pillar of their growth strategy. The outlook for Greater Montréal in the years ahead is definitely positive, as the region will build on Canada’s excellent reputation, making the most of the anticipated increase in FDI flows, and its many attractiveness factors.
Several factors explain the strong confidence in the Canadian economy. First of all, A.T. Kearney notes that investor sentiment towards emerging markets continued to deteriorate since the beginning of 2015, partly due to the economic and political instability in these regions. The report also cites the recent reforms brought to the regulatory environment of Canada that make the country even more attractive as an FDI destination.
Greater Montréal should meanwhile easily hold its own. Indeed, the 2016 edition of the FDI Confidence Index identifies market size, labor costs, and governance as the top three factors that influence the decision for the FDI destination, which are all strengths of Canada and Greater Montréal. Moreover, it is important to remember that in 2016, Greater Montréal remains the top North American metropolis with the most competitive operating costs, according to KPMG’s Competitive Alternatives study, in addition to offering a strategic location with direct access to American and global markets.
The full A.T. Kearney report is available here.
By Marie-Hélène Le Rossignol
Analyst, Strategy and Communications