Canada’s foreign direct investment declines in Q3 2025 – Investment Monitor

Report on Canadian Foreign Direct Investment and Sustainable Development Goal Alignment (Q3 2025)

Executive Summary: FDI Trends and Economic Context

Foreign Direct Investment (FDI) in Canada for the third quarter of 2025 was recorded at C$18.2 billion. This figure represents a significant decrease from C$29.9 billion in the same period of 2024 and C$21.9 billion in the second quarter of 2025. The current FDI level is the lowest since Q2 2024. These trends present challenges to achieving SDG 8 (Decent Work and Economic Growth) by highlighting concerns over sluggish business investment and its impact on national productivity.

• Total FDI Q3 2025: C$18.2 billion
• Year-to-Date FDI: C$72.4 billion
• Primary Drivers: Reinvested earnings (+C$9.6bn) and mergers and acquisitions (+C$5.4bn).
• Investment Balance: Canadian investment abroad (C$25.1bn) exceeded inbound FDI, resulting in a net outflow of direct investment for the second consecutive quarter.
• Current Account Deficit: Shrank to C$9.7 billion, aided by a smaller goods trade deficit and increased investment income.

Sectoral Investment and Alignment with SDG 9

Investment flows were concentrated in key sectors essential for economic development. These investments directly support the objectives of SDG 9 (Industry, Innovation, and Infrastructure) by enhancing industrial capacity and foundational economic structures.

1. Trade and Transportation: Investments in this area are critical for building resilient infrastructure and facilitating sustainable commerce.
2. Finance and Insurance: A stable financial sector underpins industrial development and provides capital for innovation.
3. Manufacturing: FDI in manufacturing promotes inclusive and sustainable industrialization.

Government Initiatives to Stimulate Growth and Achieve SDG 8

In response to concerns over low capital spending, the Canadian government has introduced fiscal measures aimed at stimulating investment. These policies are directly aligned with promoting sustained, inclusive, and sustainable economic growth as outlined in SDG 8.

• A new federal budget introduces measures designed to stimulate C$500 billion in investment over five years.
• Key initiatives include enhanced tax deductions for corporate investment in machinery, equipment, and new technologies, which also contributes to SDG 9.

International Partnerships and SDG 17

Canada’s FDI landscape underscores the importance of global collaboration, a central tenet of SDG 17 (Partnerships for the Goals). Strategic partnerships remain a cornerstone of the nation’s investment profile.

• Primary FDI Sources: The United States and the United Kingdom collectively accounted for two-thirds of all FDI in Q3 2025.
• New Strategic Partnership: A C$70 billion investment was secured from the United Arab Emirates (UAE), targeting strategic industries including energy, AI, logistics, and mining.

Energy Sector Investment: Balancing SDG 7, SDG 8, and SDG 13

Recent policy developments in the energy sector highlight the inherent complexities of balancing economic objectives with environmental commitments. While aimed at boosting investment in line with SDG 8, these measures present a direct challenge to SDG 13 (Climate Action) and the clean energy targets of SDG 7 (Affordable and Clean Energy).

• An agreement was reached with the province of Alberta to roll back specific climate regulations to encourage investment in energy production.
• The government is supporting the construction of a new oil pipeline to the west coast.
• These actions create a potential conflict between short-term economic growth objectives and Canada’s long-term commitments to climate action and sustainable energy transition.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article’s central theme is Foreign Direct Investment (FDI), a key driver of economic activity. It discusses concerns about “sluggish business investment” and “lacklustre productivity growth,” which are core issues related to sustainable economic growth.

• SDG 9: Industry, Innovation, and Infrastructure

  The article explicitly mentions investment in specific sectors crucial for industrial development and innovation. It highlights that the largest investments were directed towards “trade and transportation, finance and insurance, and manufacturing.” Furthermore, government initiatives aim to stimulate investment in “machinery, equipment and new technologies,” and new funding is set to target “energy, AI logistics, mining and other strategic industries.”

• SDG 7: Affordable and Clean Energy

  Investment in the energy sector is a significant topic. The article notes that a C$70bn investment from the UAE will target “energy” and that the government is supporting the “construction of a new oil pipeline” to encourage investment in “energy production.”

• SDG 17: Partnerships for the Goals

  This goal is addressed through the article’s focus on international financial flows. The entire discussion revolves around FDI, which represents a financial partnership between countries. It specifies the sources of these funds, noting that “two-thirds of all FDI in Canada during Q3 came from the US and UK” and that a new C$70bn investment was secured from the “United Arab Emirates (UAE).”

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8: Decent Work and Economic Growth

  1. Target 8.1: Sustain per capita economic growth. The article’s concern over declining FDI, “sluggish business investment,” and “lacklustre productivity growth” directly relates to the challenge of sustaining economic growth.
  2. Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The government’s policy to provide “enhanced tax deductions” for companies “investing in machinery, equipment and new technologies” is a direct attempt to stimulate technological upgrading and boost productivity.

• SDG 9: Industry, Innovation, and Infrastructure

  1. Target 9.2: Promote inclusive and sustainable industrialization. The article highlights significant investment in key industrial sectors, including “manufacturing” and “mining,” which are central to industrialization efforts.
  2. Target 9.b: Support domestic technology development, research and innovation. The government’s strategy to “stimulate C$500bn in investment over the next five years” through measures favouring investment in “new technologies” and “AI logistics” aligns with supporting domestic innovation and technology adoption.

• SDG 7: Affordable and Clean Energy

  1. Target 7.a: Enhance international cooperation… and promote investment in energy infrastructure. The article provides a clear example of this target by detailing the C$70bn investment from the UAE to fund “energy” projects and the government’s support for the “construction of a new oil pipeline,” which is a form of energy infrastructure.

• SDG 17: Partnerships for the Goals

  1. Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. While Canada is a developed country, the principle of mobilizing international financial resources is central to the article. The text is entirely focused on tracking and encouraging FDI from various sources like the “US and UK” and the “UAE.”
  2. Target 17.5: Adopt and implement investment promotion regimes. The article describes Canada’s investment promotion regime, which includes “enhanced tax deductions” and the rollback of “some climate regulations to encourage investment.” These are policy measures designed to attract foreign capital.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicators for SDG 8

  The article provides direct quantitative data that can serve as indicators.

  • Indicator 8.1.1 (Annual growth rate of real GDP per capita): While not stating the growth rate directly, the concern for “lacklustre productivity growth” implies this is a key metric being monitored.
  • Total Foreign Direct Investment (FDI) flows: The article is replete with this indicator, providing specific figures such as “C$18.2bn between July and September 2025,” “Year-to-date, FDI stands at C$72.4bn,” and “Over the past four quarters, FDI totalled C$96.6bn.” These figures measure the volume of investment contributing to economic growth.

• Indicators for SDG 9

  The article implies indicators related to industrial and technological investment.

  • Indicator 9.2.1 (Manufacturing value added as a proportion of GDP): The article points to this by identifying “manufacturing” as one of the sectors receiving the “largest investments.” The amount of FDI directed to this sector is a proxy indicator.
  • Investment in new technologies: The government’s goal to “stimulate C$500bn in investment over the next five years” and the specific targeting of “AI logistics” and “new technologies” can be tracked as an indicator of progress towards innovation.

• Indicators for SDG 7

  The article provides a specific financial flow for energy investment.

  • Indicator 7.a.1 (International financial flows to developing countries in support of clean energy…): Adapted for a developed country context, the “equivalent of C$70bn in investment from the UAE” set to target “energy” serves as a direct indicator of international financial flows for energy infrastructure.

• Indicators for SDG 17

  The primary indicator is FDI, which is detailed throughout the article.

  • Indicator 17.3.2 (Volume of foreign direct investment (FDI) inflows): This is the main subject of the article. Specific data points include FDI of “C$18.2bn” in Q3 2025 and a secured investment of “C$70bn” from the UAE. The article also breaks down FDI by source country (“US and UK”).

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

Source: finance.yahoo.com