The stock of Canadian direct investment abroad rose by 4.5% to reach $1,555.6 billion at the end of 2021, on the strength of cross-border mergers and acquisitions activity. Meanwhile, the stock of foreign direct investment in Canada increased by 7.8% to reach $1,082.5 billion, more than offsetting the 4.3% decline observed in 2020. As a result, Canada’s net direct investment position with the rest of the world narrowed by $10.7 billion to $473.1 billion in 2021.
Chart 1
Canada’s foreign direct investment position
The increase in Canadian direct investment abroad concentrated in the United States
The stock of Canadian direct investment abroad grew by $67.2 billion in 2021, following a $41.5 billion increase in 2020. Despite an overall rebound, some industries saw slower growth rates, or declines, when compared with the previous year.
On an industry basis, the growth in Canadian direct investment abroad was largely concentrated in the transportation and warehousing sector, increasing by $33.5 billion in 2021. The finance and insurance sector grew by 3.6% in 2021 following an increase of 4.8% in 2020. The real estate, rental and leasing sector declined by 2.0% in 2021 following an increase of 17.5% the previous year. Meanwhile, the mining and oil and gas extraction industry edged up by 0.4% in 2021 after a growth of 7.0% in 2020.
On a geographical basis, most of the increase in 2021 was driven by investments in the United States. This growth was slightly moderated by the downward revaluation effect of an appreciating Canadian dollar against the US dollar. The stock of Canadian direct investment in the United States reached $744.9 billion, up by $60.6 billion compared with 2020. The United States remains the main destination for Canadian direct investment abroad, accounting for 47.9% of all holdings.
Meanwhile, Canadian direct investment in Europe represented 25.2% at the end of 2021, led by the United Kingdom ($127.7 billion) and Luxembourg ($98.6 billion). While being relatively modest when compared with the United States and Europe, the value of Canadian direct investments in Asia/Oceania grew the most in 2021, reaching $125.6 billion, representing 8.0% of all holdings at year end.