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Economic Viewpoint

Investment by Quebec businesses: An overview of determinants and outlooks

January 13, 2016
François Dupuis, Vice-President and Chief Economist • Joëlle Noreau, Senior Economist

Business investment is not a straightforward component of GDP. With consumers and governments keeping a tight grip on their purse strings, an upswing in investment would be quite welcome. However, it is taking its time in arriving, even though interest rates have been at historic lows for a decade. What’s more, businesses’ financial situations have improved substantially in recent years, and there is no shortage of cash on hand. The weak economic outlook and global uncertainty are removing the incentive for investment efforts, and making businesses cautious. At the same time, new business models are being deployed, based on the continuous integration of research and development (R&D), organizational and commercial innovation, and new production and communication technologies. In this time of great economic change, it seems that, beyond volume, the vitality of investment can also be measured in terms of businesses’ capacity to increase their expertise and expand their networks.