Aggregate private investment

Private investment in Canada in 2025 is projected to increase by 1.1%, reaching $434.5 billion. The imposition of US tariffs is a primary factor tempering investment growth, raising the cost of cross-border trade and diminishing the investment appeal for US-based multinationals. As a result, Canadian private investment is expected to rely more heavily on domestic and non-US sources in order to prevent a deeper contraction. Heightened competition from the US, negotiating deals with countries such as Japan and the UK, further complicates the investment environment, drawing growth and capital away from Canada. Housing and construction investment remains relatively resilient, supported by domestic demand, but overall momentum is anticipated to remain weak. The investment climate is further weighed down by global trade volatility and ongoing financial stresses that limit risk appetite.

Between 2020 and 2025, aggregate private investment was shaped by a series of dramatic cycles, swinging from sharp contraction to vigorous, yet temporary, rebounds. The COVID-19 pandemic in 2020 triggered a collapse in global demand and energy prices, leading to an 11.1% fall in private investment. A strong rebound in 2021 was fueled by vaccination rollouts, stimulus, and a surge in pent-up construction and industrial spending, with investment jumping 15.3%. In subsequent years, driven by supply chain disruptions and the war in Ukraine, rising inflation pushed interest rates higher, eventually curbing investment. After modest gains, private investment reversed again in 2023 with a 7.7% decline as inflation persisted and borrowing costs surged. The energy sector—which has long accounted for roughly a fifth of Canadian business investment—was buffeted by global price swings and intensified global and domestic policy uncertainty as Canada moved towards greener energy sources. Canceling landmark energy projects like Keystone XL underscored vulnerability in resource-linked investments. Housing, a traditional driver of private investment, began to lose strength as affordability and tighter monetary policy constrained new development. Throughout this period, fluctuations in the Canadian dollar supported export-oriented industries, while federal stimulus and targeted infrastructure investment programs partially cushioned the downturn. Aggregate private investment across this turbulent five-year period grew at a muted 2.3% CAGR, masked by sharp upturns and downturns.