Canada’s mining and oil and gas sectors plan to scale back investment in 2013, due to economic uncertainty and a widening gap between international and Canadian crude oil prices, TD Economics reports.
Canadian firms intend to invest $398 billion in 2013, an increase of $6.7 billion (or 1.7%) from 2012.
“This is the slowest increase in investment intentions since the decline in 2009 and is a dramatic pullback from the 8.5% average annual pace of growth between 2010 and 2012,” the report states.
Sectors that are planning increased investment are:
- utilities: 7.7%;
- wholesale and retail trade: 10.7%;
- transportation and warehousing: 12.8%;
- finance and insurance: 11.9%; and
- professional and technical services: 7.8%.
The overall increase in investment is being pulled down by the mining and oil and gas sectors, which account for one-fifth of Canada’s non-residential investment in Canada.
The report states that “the slow pace of gains in investment intentions does not necessarily bode well for the Canadian economy, specifically because business investment is being looked to as a driver of economic growth as households and government shift to restraint.”
Other sectors expecting declining investment include:
- agriculture: -2.2%;
- construction: -1.1%; and
- education: -7.7%.
The report does offer some optimism, however: “With Canadian businesses in a very strong financial position, interest rates low and credit markets wide open, an improving economic picture could lead to a stronger picture for capital spending as 2013 progresses.”
