North America: A dynamic market ripe with opportunities

Still driving the global economy

The U.S. economy accounts for 24% of global GDP and retains a reputation for its entrepreneurial culture and a track record of innovation. Individually, the U.S. South, Northeast, West and Midwest are among the world’s top five economic areas. While Canada’s economy is smaller, its reputation for stability and quality of life – the third highest in the world – mean that North America is a key target for many companies from around the world.

Certainly, there are some concerns that the U.S. will suffer an economic hard landing, with potential weakness emerging in the labor market. However, compared to many other major markets, its prospects look broadly positive. In April, the IMF predicted that the U.S. will grow at 2.7% this year – double the rate of any other G7 country; the next best performance is expected to be Canada at 1.2%.

The U.S. is the world's single largest consumer market, a bellwether of consumer habits and behaviors and a driver of global trends. The U.S.’s 330 million people have a high standard of living and the third highest spending power in the world (Canada is 12^th). The North American culture of paying for high quality goods and services supports the growth and profitability of companies both within the U.S. and Canada, and those from elsewhere seeking to benefit from its market dynamics.

But North America is about much more than just consumption. It boasts a diverse business landscape, with major tech companies, including Artificial Intelligence (AI) innovators, concentrated in the West of the U.S. This region is also home to leading firms in life sciences, fintech, and other cutting-edge industries. The Southwest U.S. and Canada play key roles in global energy markets whilst the Midwest is an industrial center, and the Northeast is home to the world’s leading financial institutions as well as a hub for tech and healthcare innovators.

North America’s economic breadth and vitality is supported by a robust legal system, strong intellectual property protections, and a deep and mature financial market. The U.S. is ranked sixth in the world for ease of doing business by the World Bank, while Canada is 23^rd. These factors facilitate easy setup for foreign companies, while the U.S. and Canada offer access to top-tier talent and collaboration opportunities with leading research institutions. Indeed, Canada has the most educated workforce in the world, with 62.7% of the population achieving tertiary-level education.

Unprecedented investment in key sectors

In recent years, the U.S. economy has been bolstered by legislation including the Inflation Reduction Act and the CHIPS Act. These measures have spurred business across key sectors, such as renewable energy, electric vehicles (EVs) and battery production, and semiconductors. The pace of development is rapid: with solar plants now being built, Texas will have added more solar capacity per capita in a single year than any country in the world, for instance.

Given the United States-Mexico-Canada Agreement, which facilitates free trade, Canada stands to benefit from the investment. Mexico, which is tightly integrated with the U.S. economy, has also gained from nearshoring of high-tech sectors given its high productivity and relatively low costs.

There is now greater focus of foreign direct investment than in the past and geopolitical tensions have been reflected in a series of trade sanctions and tariffs in recent years.

However, such developments are not unique to North America. Moreover, US industrial policy will continue to be a focal point under either president given the divergent views.

How to succeed in North America

Companies from Asia, Europe and Latin America increasingly view the U.S., Canada and Mexico as a single entity for treasury purposes. Often companies base treasury operations in the U.S. or Canada to gain access to talent and financial infrastructure and may establish a shared service center in Mexico to minimize costs.

In contrast, operational structures tend to be regional in nature given the scale and diversity of North America; consumer-focused companies in particular need to take into account regional tastes, which vary greatly between the east and west of Canada and the Southern and Northeast U.S.

That said, the U.S. or Canada can act as a springboard for further expansion into North, Central and South America. By establishing a presence in the U.S., companies can gain valuable experience and knowledge that can be applied to other markets in the Americas.

Steadfast support and deep knowledge

To thrive in this diverse market, firms entering North America need bankers that understand their needs and aspirations. Citi Commercial Bank offers deep expertise in various sectors and can advise on industry-specific treasury practices and regulatory and legislative changes.

With Citi’s Global Network Banking group, we tailor support to bridge cultural and business differences, helping companies from Asia, Europe and Latin America to hit the ground running when they enter markets in North America and providing valuable connectivity with headquarters and their operations around the world.

Citi has a longstanding presence in North America, spanning over two centuries in the U.S. and 105 years in Canada. In 2022, Citi Commercial Bank launched in Canada, enabling mid-sized companies to benefit from the same capabilities that that Citi offers to the world's largest companies, customized to their specific needs. Citi Commercial Bank also provides coverage across U.S. regions, helping clients to navigate state-specific rules and regulations and understand business conditions at a local level.

Committed to innovation and offering a range of comprehensive solutions, we empower companies worldwide to seize opportunities across the U.S. and Canada.