Business Environment Profiles - Canada
Published: 25 January 2025
Private investment in computers and software
50 $ billion
3.3 %
Private investment in computers and software, measured as gross fixed capital formation (GFCF), accounts for net private investment on computers, peripheral equipment and software made by businesses. This driver measures net additions to fixed capital, computers and software, but is not adjusted for depreciation. Data is sourced from Statistics Canada and is measured in chained 2017 dollars.
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Overall, private investment in computers and software has experienced strong growth over the past decade. While this metric fell 10.6% in 2009, it quickly recovered in 2010 and 2011, as improving conditions in the broader Canadian economy stimulated private investment activity. At the same time, budgetary uncertainty in the United States and continued problems with the European economy caused businesses to be more cautious in the years following the recession. Additionally, the Canadian economy itself was stuck in a sluggish growth trajectory. As a result, private investment in computers and software has fluctuated in growth since 2012. In fact, this figure declined in 2015 as falling crude oil prices resulted in falling corporate profit margins and low levels of capital investment across the Canadian energy and mining sector.
However, the driver returned to growth in 2017 and 2018. Despite the strong growth in recent years, this level of growth did not continue in 2019, in large part due to considerable weakening in the Canadian economy at the tail-end of 2018 through much of 2019. In 2020, companies cut back on overall investment to save working capital to weather the effects of the COVID-19 on the economy. However, investment in computers and software was partially insulated from the worst of the fallout. Businesses that have been able to have employees work remotely have invested in technology to have their employees work more efficiently from home. Ultimately, private investment in computers and software managed to increase by 4.7% in 2020 despite general downward pressure on business investment. In 2021, investment in computers and software accelerated significantly as economic activity rebounded and companies increased investment while remote work remains in place. However, a semiconductor shortage in 2021 and into 2022 has pressured inventory for computer investment while other inflationary concerns have further inhibited corporate spending. In 2023, computer investment fell 3.0%. Corporate profit is anticipated to remain constrained in the current period as inflation concerns push consumers to cut back spending. During a period of economic challenges and budget constraints, the appeal of certain equipment types diminished, leading to a 3.3% decrease in investments in 2024. However, as inflationary trends stabilize and interest rates become more favorable, investments are projected to increase by 7.5% in 2025.
With commodity price swings expected to ease over the coming years, rising non-energy exports and...
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