Canada could gain as global investors rethink U.S. emphasis: BNP economist

Signage on a BNP Paribas Bank branch is seen in Nice, France, Wednesday, Sept. 14, 2011. THE CANADIAN PRESS/AP-Lionel Cironneau

TORONTO — Canada stands to gain as global investors rethink their focus on the United States, the chief economist at one of Europe’s largest banks says.

BNP Paribas chief economist Isabelle Mateos y Lago said in an interview that the volatility in the U.S. is making investors regain an appreciation of the value of stable returns and predictability, even if it means giving up some of the outsized gains it has offered in recent years.

“The general situation is every investor on the face of the planet has been very overweight (the) U.S. economy, and is now going through a thought process of thinking, maybe I shouldn’t be so overweight the U.S. economy, and I need to diversify and find alternatives,” she said.

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“So every other geography is going through a bit of a beauty contest right now in the eyes of global investors, and has an opportunity to shine, and I think Canada is one of those.”

Mateos y Lago, who was in Toronto this week visiting clients, said Canada’s recent election helps give the country some momentum, while efforts to address structural barriers like internal trade will also help growth.

“It’s a moment of opportunity and so I would be shocked if Canada didn’t benefit from it.”

The effects of investors shifting away from the U.S. can already be seen in Canada’s main stock index, as the S&P/TSX composite hit record highs this week.

Mateos y Lago, who was chief markets strategist at U.S. investment manager BlackRock before taking the top economist job at BNP last year, said the focus on the U.S. in recent years has also meant other markets are relatively cheap, helping make them opportunities worth looking at. 

European countries are looking to Canada as a source of trade diversification, just as Canada is looking across the Atlantic. Geography does present challenges, but otherwise there’s much going for increased ties including language, culture and regulations, she said.

“There are obvious complementarities, and things that should make this easier than with some other potential trade counterparts,” said Mateos y Lago.

“There’s a renewed momentum on both sides to try and diversify from the U.S. market, and so this mutual interest, I’m sure the talks will be fruitful.”

While Canada already has free trade deals in place with Europe, along with many other partners, Mateos y Lago said there’s room to be more ambitious by further reducing tariffs and trade barriers between partners.

Prime Minister Mark Carney will have an opportunity to talk directly with his European counterparts as G7 leaders, which include France, Germany, Italy and the United Kingdom along with Japan and the U.S., are set to meet next week in Alberta. 

As chair of the G7 this year, Canada has an important role to play in trying to save and preserve the rules-based global order that has benefited so many, said Mateos y Lago.

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“Canada is one of the countries that can help emphasize the interests that all the key economies have in common, and keep working together and trying to safeguard as much of the existing system of rules as can be because that will be to the benefit of all,” she said.

“The more we see that there is common ground still across all the members of the G7, and maybe on some issues with the broader invited guests, I think the more that will be a sign to economic agents everywhere that it’s OK, that the house is still standing.”

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Ian Bickis, The Canadian Press

This report by The Canadian Press was first published June 12, 2025.