TORONTO (Reuters) - The chief executive of Royal Bank of Canada, the country’s biggest lender by market value, said on Thursday that Canada’s struggle to compete with global peers is hurting its ability to grow the economy.
Canada, a G7 economy, has suffered in recent years from low productivity growth, lackluster foreign direct investment and difficulty in bringing oil, one of its major exports, to market due to a lack of pipeline capacity.
The Liberal government, which faces a general election in October, has committed to major infrastructure investment and has allowed businesses to write off additional capital investments to make them more competitive, but has opted not to match aggressive tax cuts by the United States.
“Our competitiveness is challenged. Our capacity to grow and advance our economy is stalling,” said RBC Chief Executive Dave McKay, in prepared remarks for shareholders at the company’s 150th annual meeting, in Halifax, Nova Scotia.
“When I travel overseas, I often hear concerns from investors about Canada’s falling position in the world,” McKay said.
RBC has a market capitalization of about C$149 billion ($111.70 billion), according to Refinitiv Eikon data.
Data last month for the fourth quarter showed that Canada’s economy barely grew due to plunging Canadian crude oil export prices and that the labor productivity of Canadian businesses fell by 0.4 percent.
Steps that Canada can take to improve its competitiveness include building digital and physical infrastructure, such as energy pipelines, McKay said.
Due to a lack of pipeline capacity, the price of Canadian heavy crude fell last October to a discount of more than $50 a barrel below the benchmark for U.S. oil.
A Canadian court last August overturned approval of the Trans Mountain oil pipeline expansion. The government has since bought the pipeline in an effort to save the project.
Reporting by Fergal Smith; Editing by Sandra Maler