OTTAWA – Canada is experiencing a sharp increase in capital leaving the country, with investors and residents pulling their money and, in many cases, relocating abroad. Statistics Canada reports that in May 2025 alone, there was a net outflow of $16.2 billion from Canadian securities.
This marks the fourth straight month of significant withdrawals, bringing the total since February to $83.9 billion. Alongside these numbers, more people are emigrating, raising concerns about the country’s future under the newly elected Liberal government led by Prime Minister Mark Carney.
Even though the S&P/TSX Composite Index showed a 5.4% gain in May, international investors sold off $2.8 billion in Canadian securities. $11.4 billion of that came from equities, especially in the energy, mining, and manufacturing industries.
This continues a four-month stretch where foreign investment has turned negative, highlighting growing doubts about Canada’s near-term economic health.
Domestic investors are responding in a similar way, sending their capital overseas at record speed. Canadians put $13.4 billion into foreign securities in May, a 227% jump from April. Most of that, $14.2 billion, went into US stocks, the highest amount since February.
Despite strong TSX returns, both local and international investors are looking to US assets, favouring American stocks and company bonds over Canadian investments.
The Canadian dollar is feeling the strain from these persistent outflows. Its decline is already making imported goods more expensive and adding pressure on inflation. Many households are already squeezed by high prices and rising costs.
New Highs in Emigration
Financial losses are only part of the challenge. Canada is also seeing a wave of people moving abroad, driven by soaring home prices, limited productivity growth, and a sense of economic uncertainty.
Official numbers are lacking, but reports and personal stories point to a clear rise in young professionals choosing countries like the United States and several European regions, where housing is more affordable and economies seem healthier.
Prime Minister Mark Carney, once celebrated for his roles at the Bank of Canada and Bank of England, was expected to revive the economy. But only a few months in, doubts are growing about his approach.
Carney’s agenda focuses on infrastructure projects, carbon capture investments, and strong climate goals. Critics argue this approach relies too heavily on monetary stimulus and big spending plans, echoing former Prime Minister Justin Trudeau without addressing core economic problems.
One Bay Street portfolio manager, who did not want his name published, summed up the mood: “Carney’s track record as a steady leader matters less if he keeps leaning on debt and ignores issues like productivity and housing affordability.
It’s tough to invest in Canada with these fundamentals.” The plan to release up to $200 billion in new bonds this year has sparked concerns about higher yields, especially if foreign buyers continue to walk away. In the first three months of 2025, international investors sold nearly $10 billion in government bonds, compared to record buying just last year.
Canada’s Economy Slides as Worries Grow
Canada’s growth forecast keeps slipping. The International Monetary Fund recently cut its 2025 outlook to 1.4% from a previously estimated 2%. Uncertainty over trade and slow productivity are key factors. The risk of new US trade barriers remains high, leaving Canada exposed as 75% of its exports go south of the border.
Although a weaker Canadian dollar can help boost exports, it also fuels inflation, putting even more pressure on consumers and business owners. In the bond market, foreign buyers have shifted toward long-term government bonds, picking up $13.1 billion in May, perhaps betting on a downturn and possible rate cuts from the Bank of Canada.
But sales of short-term bonds signal that investors are not convinced about stability in the immediate future.
The bigger issue is a loss of confidence. Years of weak investment in productivity and an overvalued housing market have left the economy exposed. Some worry that net-zero climate policies have discouraged investment in traditional sectors like energy and mining, industries that have long powered Canadian growth.
Carney hopes to reverse the trend by speeding up the approval of major projects like ports, mines, and pipelines. Still, markets remain cautious. An economist at the C.D. Howe Institute put it plainly: “Canada needs real change. Housing, tax rules, clarity on regulations—these are the steps that can restore faith. Right now, investors see more risks than rewards.”
With money and skilled workers continuing to exit, Canada stands at a crossroads. Without real efforts to tackle productivity, living costs, and faith in local investments, the outlook remains uncertain, and recovery looks tough.
