Canada Faces $1 Trillion Capital Outflow Since 2015, RBC Report Says

A new report by Royal Bank of Canada (RBC), titled "Capital Gains: How Canada can unlock the $1.8 trillion it needs for growth," reveals that approximately $1 trillion in capital has flowed out of Canada between 2015 and 2024. The analysis highlights a decade-long capital recession characterized by tepid business investment, stalling productivity, and declining living standards. Notably, for every dollar of foreign direct investment entering the country, two dollars fled. RBC attributes this economic malaise to factors such as excessive regulation, permitting challenges, policy uncertainty, and low risk tolerance. Despite these challenges, the report suggests Canada is emerging from this period, citing recent foreign direct investment nearing $100 billion, the highest level since 2015. To capitalize on a potential $1.8 trillion growth opportunity, RBC proposes reforms including asset recycling programs, scale-enabling procurement, and changes to corporate tax and foreign investment regimes. However, the report avoids addressing structural issues like high personal income taxes and substantial government spending on healthcare and pensions, which continue to siphon capital from the private sector.