Private investment under pressure from government spending, trade uncertainty, Poloz says

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The issue of weak private-sector investment has become more urgent after six quarters of declining productivity and a growing divergence with the United States

Former Bank of Canada governor Stephen Poloz delivers a keynote address to a business conference in Ottawa, on Nov. 24, 2022.Former Bank of Canada governor Stephen Poloz says private-sector investment is being crowded out by high levels of government spending and hurt by uncertainty about the future of trade with the United States.

Concerns about weak private-sector investment and lagging productivity are nothing new in Canada. But the issue has become more urgent after six quarters of declining productivity and a growing divergence with the United States.Mr. Poloz said business investment – a key ingredient for productivity growth – is also being hampered by uncertainty about trade with the United States.

Mr. Poloz said Canadian companies are investing more in the U.S. and less in Canada because of uncertainty about the future of the trade agreement. If Canadian politicians and policy makers want to reverse this trend, they need to double their efforts to ensure the USMCA remains in place and favourable to Canada.

Former federal finance minister John Manley, who spoke on a panel with Mr. Poloz, said Canadian politicians and trade representatives need to be touting the benefits of the USMCA not just to the U.S. government, but also to members of Congress and officials at the state and city level.

 

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