CFOs are pinching pennies, but there are many good structural and longer\u002Dterm reasons why this is an \u0022investment moment.\u0022 Find out more.
Let’s first consider the possibility that we have underinvested since the global financial crisis . Most would agree that the global economy has on balance spit out sub-par growth since 2008, not really generating a convincing recovery. Then consider the bubble of activity that preceded the crash back in 2008. There was arguably a lot of pre-GFC investment to support the unsustainable level of production, excess that had to be re-absorbed before a true, new investment cycle could begin.
If that seems like a stretch, consider that in Canada, business investment as a share of gross domestic product has been well below the long-term average for years — and that at a time of suppressed global growth. More importantly for global capacity, U.S. business investment as a share of GDP took a long time to recover post-GFC, and has not yet returned to pre-GFC levels.
in most OECD nations. In Canada, there is a higher number of employees for each unit of GDP, a feature of the post-GFC period. Compared with the long-term trend, a crude calculation has us employing 700,000 to 800,000 excess workers. Cut that in half, and it’s still huge.Article content Labour constraints aren’t likely to improve. A third argument for higher investment is our structurally skinny demographic situation. Many are hailingin 2022 as a cure to this chronic ill. Not so fast; immigration numbers were boosted last year by 607,782 non-permanent residents , abetted by Ukrainians fleeing the war. We can’t count on similar future surges, unless we can be assured that it is possible to boost Canada’s regular immigrant intakes.
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Peter Hall: Why companies should invest now, even if a recession is comingCFOs are pinching pennies, but there are many good structural and longer\u002Dterm reasons why this is an \u0022investment moment.\u0022 Find out more.
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