Responses to the summer Business Outlook Survey suggest that business activity is continuing to gain momentum, buoyed by indications that domestic demand will improve further. Positive business prospects are increasingly widespread across regions and sectors.
While greater global financial integration is beneficial, the authors discuss how foreign capital inflows can also facilitate the buildup of domestic vulnerabilities and potentially lead to destabilizing reversals. Canada’s current international investment position is typical of advanced economies and will likely continue to act as an economic stabilizer. However, the growth and composition of Canada’s international investment position warrant continued monitoring.