The head of Quebec’s largest pension fund said investors have emerged from the “Goldilocks years” of 2016 and 2017 into an uncertain period for businesses due to a number of global trade tensions.
“2018 is a very different world and we’re seeing it in the volatility this year,” said Michael Sabia, president and chief executive of Caisse de dépôt et placement du Québec, in an interview with BNN Bloomberg Tuesday.
“It’s not the tariffs in Europe, the tariffs in China or uncertainties around [the North American Trade Agreement]. It’s the cumulative effect of all of those things which, in our judgement, will have an impact on business confidence ... the willingness of businesses to step up and invest because that’s what the world needs.”
Sabia’s comments come after the Trump administration last week lifted tariff exemptions on steel and aluminum imports from Canada, Mexico and the European Union. The move prompted the Canadian federal government to respond swiftly with its own levies on as much as US$16.6 billion of U.S. imports.
This and a number of other trade uncertainties are deterring businesses from stepping up to invest, Sabia said.
“If we’re going to increase the potential growth rates in developed countries, it’s going to be because large enterprises and small enterprises are investing more – making themselves more productive and pushing out the production frontier, and therefore the growth potential of those countries,” he said.
“Uncertainties around trade are making it harder to do that.”