Foreign direct investment (FDI) in the Montreal area experienced a significant decline of 24% in 2023, primarily attributed to the scaling back of expansion plans by technology companies and challenges in industrial projects due to power shortages.
Montreal International, the city’s non-profit investment promotion agency, reported that the region attracted 87 FDI projects totaling $2.74 billion last year. While this figure represents a decrease from the record-high investment of $3.58 billion in 2022, it still ranks as the third highest in Montreal International’s 28-year history.
The decline in FDI mirrors global trends, with developed economies experiencing a 16% decrease in new investment projects, as per data released by the United Nations Conference on Trade and Development. Despite the challenges, foreign investment flows globally saw a modest increase of 3%.
Stéphane Paquet, CEO of Montreal International, emphasised the impact of the tech industry’s layoffs and cancellations of investment projects. Amidst Quebec’s commitment to achieving zero greenhouse gas emissions by 2050, the agency is now prioritising sustainable projects and those meeting essential needs in strategic value chains.
Clean technology and environmental services were the most active sectors in 2023, accounting for 24% of all projects. Notable investments include German logistics giant DHL’s initiative to electrify its vehicle fleet and Norwegian recycling company Tomra’s equipment acquisition for improved recovery processes.
While the IT sector attracted significant investment, some major projects were shelved, possibly due to rising interest rates and a focus on profitability. Additionally, energy availability emerged as a major hurdle, with Quebec tightening approval criteria amid surging industrial demand.
U.S. investors remained the most active in 2023, followed by France, signalling continued interest in Montreal’s potential despite economic uncertainties. However, foreign investors are taking longer to commit to projects, with the average time for project materialisation increasing to 533 days.
Despite the challenges, the 87 new investments in 2023 led to the creation of nearly 6,000 jobs with attractive average salaries. Montreal International also facilitated the recruitment of over 1,100 qualified foreign workers and students, contributing to the city’s diverse talent pool.
While acknowledging the decline in attractiveness on a global scale, Montreal International remains committed to promoting investment in the region. Municipal leaders emphasise the importance of redoubling efforts to maintain Montreal’s position as a competitive investment destination.
