TD economists say $1 trillion in major projects could kickstart investment boom, but reforms are needed
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Canada is on the verge of an investment “supercycle” and its trade war with the United States might be the perfect time to make the bold changes needed to unlock it, according to a new report from Toronto-Dominion Bank.
The bank forecasts Canada’s growth in real gross domestic product (GDP) will double by 2027, but notes there is a lot of “upside potential” for the future as many of the federal government’s big investments — data centres, pipelines and transportation infrastructure — are expensive and will take years to complete.
“If governments can pair this ambition with a stronger competitiveness agenda, the investment backdrop can accelerate on its own accord, attracting and deploying private funds with fewer commitments from government coffers,” the report by TD economists Beata Caranci and Derek Burleton said.
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With about $1 trillion in major projects already underway, TD Bank argues that if Canada is successful in getting these off the ground and completed smoothly, it could then attract more private investment and in turn more major projects. In this scenario, the bank said Canada could trigger a “self-reinforcing feedback loop” that could last more than a decade.
To get there, however, TD Bank argues the country needs to lower regulations for major projects, eliminate tax disincentives and expand Canada’s skilled labour capacity.
“If policymakers get it right and lean more heavily into creating a pro-competitive environment, the investment outlook could be in for a series of upgrades that defies recent history,” the report said.
