Source: The Canadian Press

Canada’s economic strength over many other developed countries has increased its popularity with foreign investors, according to a new report.

CIBC World Markets Inc. says that a growing list of “strategic advantages” are generating interest in Canada and boosting its presence in global portfolios.

“Canada is increasingly on the lips and minds of international investors,” says CIBC government strategist Warren Lovely.

“Indeed, it’s hard to recall a time when the country possessed such relative, if not absolute, strength.”

The report released Wednesday says Canada hasn’t been forced to take as many drastic measures to stabilize its debt ratios.

Provincial governments have not faced the same financial constraints that have burdened many U.S. states, and the report said both federal and provincial revenues are “brightening materially.”

The report said that years of fiscal outperformance and surpluses have enabled Canada to slash corporate tax rates and make other tax reforms that give the country an advantage over competing jurisdictions.

However, the country could face extra hurdles that would add pressure to a continued outperformance, Lovely said.

He pointed to the potential pressure Canada could face because of its reliance on the United States, historically the market for three-quarters of exported goods.

Other risks include continued strength of the loonie, which make exports of Canadian goods less competitive, an overheated housing market and highly indebted household sector, the report said.

“Notwithstanding these challenges, Canadian governments are courting international investors from a position of strength,” said Lovely.

“The message is getting through, and there’s every reason to believe that today’s strong foreign investor interest in Canada will have staying power.”

CIBC said the stronger domestic finances will help Canada further by reducing borrowing requirements and protecting both federal and provincial credit ratings.