Canada's international investment position, second quarter 2024
Released: 2024-09-11
$2,062.4 billion
Second quarter 2024
Canada's net foreign asset position, the difference between its international financial assets and international liabilities, reached $2,062.4 billion at the end of the second quarter, an increase of $88.6 billion from the first quarter. The upward revaluation due to market price changes and, to a lesser extent, fluctuations in exchange rates contributed to the increase. Canada's net foreign asset position has constantly grown since the fourth quarter of 2022, largely on the strength of the US stock market.
Chart 1
Canada's net international investment position
Changes in market prices led to a $66.6 billion increase in Canada's net foreign asset position in the second quarter of 2024. Most major foreign stock markets rose, led by the United States (+3.9%), while prices on the Canadian stock market (-1.3%) declined. Canada's international assets and liabilities are highly exposed to equity market performance, as 69.1% of Canada's international assets and 42.0% of its liabilities were held in the form of equities at the end of the second quarter.
The revaluation effect from fluctuations in exchange rates (+$36.6 billion) led the value of assets to increase by more than that of liabilities in the second quarter, further contributing to the overall increase in Canada's net foreign asset position. Over the second quarter, the Canadian dollar depreciated by 1.0% against the US dollar, by 1.1% against the Euro, and by 1.5% against the British pound. At the end of the quarter, 97.0% of Canada's international assets were denominated in foreign currencies, compared with 41.8% of its international liabilities.
Chart 2
Contributors to the change in the net international investment position
On a geographical basis, Canada's net foreign asset position with the United States reached $1,669.6 billion at the end of the second quarter, an increase of $143.8 billion from the first quarter. The upward revaluation of US dollar-denominated instruments resulting from the depreciation of the Canadian dollar, as well as equity prices in the United States and Canada heading in opposite directions, contributed to this increase. Meanwhile, Canada's net foreign asset position with the rest of the world decreased by $55.2 billion to $392.8 billion.
Chart 3
Canada's net international investment position, by region
Canada's international assets continue to increase strongly
Canada's international assets increased by $217.5 billion (+2.3%) to $9,717.2 billion at the end of the second quarter. Sizable acquisitions of foreign assets (+$99.0 billion) as well as upward revaluations attributable to market price changes (+$61.4 billion) and exchange rate fluctuations (+$53.1 billion) contributed to the growth.
On the other side of the ledger, Canada's international liabilities amounted to $7,654.7 billion at the end of the second quarter, an increase of $128.9 billion (+1.7%). This increase was mainly due to investments from abroad (+$110.7 billion), mostly foreign acquisitions of debt securities and direct investment in Canada, primarily in the form of mergers and acquisitions. The revaluation due to exchange rate movements (+$16.7 billion) also contributed to increasing Canada's liabilities with the rest of the world, while market price changes (-$5.2 billion) somewhat moderated the overall growth.
Chart 4
Canada's international assets and liabilities
Canada's gross external debt rises
Canada's gross external debt, or the value of Canadian debt instruments held by foreign investors, was up by $113.5 billion (+2.7%) to $4,272.8 billion at the end of the second quarter and amounted to 142.2% of the gross domestic product.
The gross external debt of the government sector increased by $62.2 billion to $749.9 billion at the end of the second quarter, the largest quarterly increase on record. The growth was driven by foreign acquisitions of debt securities issued by the federal government. The gross external debt of the financial sector stood at $2,537.2 billion and represented the highest proportion of Canada's gross external debt at the end of June. Nearly 60% of this debt was in short-term instruments (instruments with an original maturity of less than one year).
Chart 5
Canada's gross external debt as a percentage of gross domestic product
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Note to readers
Definitions
The international investment position is the value and composition of Canada's assets and liabilities to the rest of the world.
Canada's net international investment position is the difference between Canada's assets and liabilities to the rest of the world. An excess of international liabilities over international assets can be referred to as Canada's net foreign debt. An excess of international assets over international liabilities can be referred to as Canada's net foreign assets.
Foreign direct investment is presented on an asset–liability principle basis (that is, a gross basis) in the international investment position. Foreign direct investment can also be presented on a directional principle basis (that is, a net basis), as shown in supplementary foreign direct investment tables 36-10-0008-01, 36-10-0009-01 and 36-10-0659-01. The difference between the two foreign direct investment conceptual presentations resides in the classification of reverse investment, such as (1) Canadian affiliates' claims on foreign parents and (2) Canadian parents' liabilities to foreign affiliates. Under the asset–liability presentation, (1) is classified as an asset and included in direct investment assets, and (2) is classified as a liability and included in direct investment liabilities.
Next release
International investment position data for the third quarter of 2024 will be released on December 11.
Products
The Economic accounts statistics and International trade statistics portals are available from the Subjects module of the Statistics Canada website.
The Canada and the World Statistics Hub (13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world through interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, the United Kingdom, Mexico, China, and Japan.
The product Canada's international trade and investment country fact sheet (71-607-X) is available online. This product provides easy and centralized access to Canada's international trade and investment statistics, on a country-by-country basis. It contains annual information for nearly 250 trading partners in summary form, including charts, tables and a short analysis that can also be exported in PDF format.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available.
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