Key facts about Canada’s competitiveness for foreign direct investment
December 2025Footnote 1
Highlights
- The Canadian economy grew by an estimated 1.6% in 2024, and its economic growth is projected to remain stable among the G7 economies in 2025 and 2026.
- Canada’s inflation has come down within its target range of 1-3% and remains below that of the U.S. (2.2% in November vs the most recent U.S. rate of 3.0% in September). Globally, inflation forecasts have been revised up for most countries, with a few exceptions.
- In 2024, Canada had the highest employment and population growth rates among the G7 and is expected to maintain this position in 2025. However, the impact on various age groups differs.
- Canada has the lowest net debt in the G7 and is expected to maintain this position in 2025 and 2026.
Canada is open for business and welcomes foreign investment
- Canada will be the 2nd best country in the G20 for doing business throughout the next five years (2026-2030); it has consistently ranked among the top 10 countries in the last 5 years.
Economist Intelligence Unit, October 2025 - Among the G7 countries, Canada ranks 3rd with respect to the ease of starting a business.
GEM Consortium, Global Entrepreneurship monitor – 2024/2025 Global Report, 2025 - Canada ranks 4th among G20 countries in terms of the least complex jurisdiction for conducting business.
TMF Group’s Global Business Complexity Index, May 2025 - Foreign investors choose Canada: Canada had the second-largest foreign direct investment (FDI) stock to GDP ratio among G20 countries in 2024.
United Nations Conference on Trade and Development, September 2025 - Of the 25 countries included in the Kearney FDI Confidence Index, a measure of the likelihood of a market attracting investment in the next three years, Canada ranks 2nd overall after the United States. Additional analysis shows that Canada’s high-quality infrastructure and economic performance are the top drivers of investor motivation for FDI in 2025.
Kearney, April 2025
Fiscal soundness and resilient economy
- Canada’s economic growth is expected to remain stable among G7 countries in 2025 (1.2%) and 2026 (1.5%) amid elevated uncertainty.
IMF, World Economic Outlook, October 2025 - Canada has been able to rein in inflation back within its target range of 1-3%. It stood at 2.2% in November 2025, below the most recent U.S. rate of 3.0% in September %. Globally, inflation forecasts have been revised up for most countries, with a few exceptions (e.g., China).
Statistics Canada, December 2025, U.S. Bureau of Labor Statistics, October 2025 and IMF, World Economic Outlook, October 2025 - As inflation is now within set targets, the Bank of Canada announced in December 2025 the holding of its overnight rate at 2.25%.
Bank of Canada, December 2025 - Canada is expected to have the highest employment growth rate in 2025 (1.4%). However, the unemployment rate among youth (ages 15-24) in Canada in 2024 stood at 13.1%, more than double the rate for age groups 25-54 (5.4%), 55-64 (5.1%), and 65 and over (4.3%).
IMF World Economic Outlook, October 2025 and Statistics Canada, January 2025 - Canada has enjoyed the lowest net debt to GDP ratio in the G7 for the last 20 years (12.5% in 2024) and is expected to maintain this position in 2025 and 2026.
IMF, World Economic Outlook, October 2025
Low cost, low tax environment
- At 26.0%, Canada has a competitive statutory corporate income tax rate comparable to its G7 peers (ranging from 25.0% to 36.1%).
OECD Tax Database, April 2025 - At 13.2%, Canada’s tax treatment for new business investment is the lowest in the G7, below the OECD average and significantly lower than that of the United States (17.6%).
Finance Canada, Budget 2025 - Canada has the lowest marginal effective tax rate (METR) on new business investments in G7. The Productivity Super-Deduction announced in Budget 2025 lowered Canada’s METR by more than 2 percentage points, strengthening its tax competitiveness with the United States.
Finance Canada, Budget 2025
Enabling environment for green businesses
- Canada has the lowest statutory corporate income tax rate (17.8%) for zero-emission technology manufacturing and processing in the G7.
Finance Canada, Budget 2025 - Canada also offers a full tax deduction in the first year of investments for the entire cost of machinery and equipment used for the manufacturing of goods and certain clean energy equipment.
Government of Canada, Accelerated investment incentive - Canada ranks 2nd out of 23 countries, featuring 9 of the world’s top 100 cleantech companies most likely to have the best market impact for the next five to ten years.
Cleantech Group – Global Cleantech 100, 2025 Edition - In October 2025, the government completed its first transaction of 2025-26 in the Green Bonds Program via a $2.5 billion dual tranche issuance which attracted a mix of Canadian and international investors. In parallel, $1 billion of a new 30-year green bond was issued, alongside a $1.5 billion reopening of the 7-year bond first issued in 2025.
Finance Canada, Budget 2025 - Canada has abundant and reliable clean energy as 66% of Canada’s energy generation comes from renewable sources (2023).
Natural Resources Canada, Energy Fact Book 2025-2026
Highly educated and competitive workforce
- In 2024, Canada’s population growth rate of 2.9% was the highest among the G7, and it is expected that it will maintain this position in the coming years.
IMF, World Economic Outlook, October 2025 - Canada has the most educated talent pool in the OECD: 65% of its population aged 25 to 64 has completed tertiary level education.
OECD, Education at a Glance, September 2025 - Canadians are linguistically diverse: Nearly 1 in 4 Canadians speaks one of over 200 languages in addition to English or French.
Statistics Canada, Census 2021 - Canada has a Global Skills Strategy to ensure that businesses can bring in highly skilled foreign workers. The strategy has a high approval rate of 90% of the applications received (over 242 000 work permits granted between June 2017 and May 2025).
Immigration, Refugees and Citizenship Canada and Employment and Social Development Canada, May 2025 - Budget 2025 announced the establishment of a Foreign Credential Recognition Action Fund to keep attracting international talent in key sectors such as research and advanced industries.
Finance Canada, Budget 2025
Gateway to North America and the world
- Canada has 15 active free trade agreements covering 51 countries.
Global Affairs Canada and IMF World Economic Outlook, October 2025 - Businesses in Canada enjoy preferential access to 51 markets with a combined GDP of over US$67 trillion, representing 60% of the global economy and home to 1.5 billion consumers.
IMF, World Economic Outlook, October 2025 - Cross-border Canada-U.S. trade is valued at over US$2.5 billion each day. Anchoring this trade are 16 of Canada’s 20 largest cities located within a 90-minute drive of the Canada-U.S. border.
U.S. Bureau of Economic Analysis, December 2025 - As a Canada-United States-Mexico Agreement (CUSMA) member, Canada offers foreign investors preferential access to a combined market of over US$30 trillion in real GDP with over 500 million consumers.
IMF, World Economic Outlook, October 2025
Environment conducive to leading-edge innovation
- Canada ranks 2nd in the G7 in research and development (R&D) spending in post-secondary research as a share of GDP.
OECD Main Science and Technology Indicators, September 2025 - Canada offers one of the most generous R&D tax incentives to businesses in the G7. Budget 2025 proposes an additional public investment of $440 million on an ongoing basis to catalyze private sector R&D investment and generate an economic output of $1.2 billion a year—about a three-time return for Canada’s economy.
OECD R&D Tax Incentive Database, October 2025; Finance Canada, Budget 2025 - Canada’s is the first country in the world to introduce a national AI strategy. Since 2017, Canada’s world-class AI hub trained over 1200 graduates and postdoctoral fellows and facilitated the creation of over 350 active industry partnerships.
Invest in Canada, 2024, Fall Economic Statement 2024
One of the world’s most stable financial sectors
- Canada’s financial system is one of the soundest in the world: it ranks 2nd in the G7 and G20, and 4th out of 69 countries.
IMD World Competitiveness Center, 2025 - Seven of the world’s 50 safest and most dependable banks are in Canada.
Global Finance Magazine, 2025
Great place to live and prosper
- Canadians enjoy one of the world’s highest standards of living.
IMF, World Economic Outlook, October 2025 - Canada ranks 4th among G20 countries for social progress. It also ranks 1st for equal opportunity and 3rd for justice among G7 countries.
Social Progress Imperative, January 2025; IMD World Competitiveness Yearbook, 2025 - Canada is ranked 2nd in the G20 countries for economic freedom.
Heritage Foundation – Index of Economic Freedom, 2025
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