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Canada's balance of international payments, first quarter 2016

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Released: 2016-05-30

Current account balance

-$16.8 billion

First quarter 2016

Canada's current account deficit (on a seasonally adjusted basis) increased $1.1 billion in the first quarter to $16.8 billion on a larger trade in goods deficit.

Chart 1  Chart 1: Current account balances
Current account balances

In the financial account (unadjusted for seasonal variation), foreign investment in Canadian bonds was the largest contributor to the net inflow of funds in the economy.

Current account

Trade in goods deficit widens

The deficit on international trade in goods expanded $1.3 billion to $6.3 billion in the first quarter.

On a geographical basis, the goods surplus with the United States edged up $0.2 billion to $7.5 billion. The deficit with non-US countries rose $1.5 billion to $13.9 billion, mostly reflecting a larger deficit with countries other than Canada's principal trading partners.

Chart 2  Chart 2: Goods balances by geographic area
Goods balances by geographic area

Overall, total exports of goods decreased $1.5 billion to $130.4 billion in the first quarter. Exports of energy products were down $3.4 billion despite higher volumes. The decline in crude petroleum prices was the largest contributing factor to the reduction in exports of goods in the quarter.

Exports of metal ores and non-metallic minerals (-$0.4 billion) and aircraft and other transportation equipment and parts (-$0.4 billion) were both down on lower volumes. Moderating these declines were gains of $1.8 billion in exports of motor vehicles and parts, led by higher volumes of passenger cars and light trucks.

At the end of the first quarter, energy products accounted for 11% of all Canadian exports, the lowest share observed since 2002. In contrast, exports of motor vehicles and parts represented 20% of all exports, the highest level since 2005.

Total imports of goods edged down $0.2 billion to $136.7 billion. The largest reduction was in energy products, down $1.3 billion on lower prices. Aircraft and other transportation equipment and parts also contributed to the decline, with a $0.9 billion reduction on lower volumes. On the other hand, consumer goods advanced $0.8 billion, while motor vehicles and parts gained $0.6 billion.

Trade in services deficit edges down

The overall deficit on international trade in services narrowed $0.2 billion to $5.7 billion in the first quarter. This change reflected a reduction in the travel deficit moderated by a lower surplus on commercial services, continuing the trend observed in recent quarters.

The travel deficit was down $0.3 billion to $3.7 billion in the first quarter, with all the reduction related to travel between the United States and Canada. Compared with the first quarter of 2015, the travel deficit narrowed $0.7 billion as a result of higher receipts generated by foreign travellers in Canada and lower payments made by Canadians travelling abroad.

This gain was slightly offset by a lower commercial services surplus, down $0.1 billion to $0.4 billion. Imports of commercial services were up for a sixth straight quarter, leading to the lowest surplus since 2010.

Investment income receipts and payments both down

The investment income deficit was unchanged at $3.4 billion in the first quarter, as both receipts and payments fell by the same amount.

On the payments side, profits earned by foreign direct investors on their Canadian assets fell $1.7 billion in the first quarter to levels last seen in 2009. This was moderated by higher payments on other investment liabilities and, to a lesser extent, portfolio investment liabilities.

On the receipts side, income earned by Canadian direct investors on their assets abroad was the main contributor to the decline, with a $1.0 billion reduction, mainly on lower profits.

Financial account

Foreign investment in Canadian securities increases

Foreign investment in Canadian securities reached $44.5 billion in the first quarter, led by sizable foreign acquisitions of Canadian bonds.

Foreign acquisitions of Canadian bonds amounted to $30.3 billion, with about half of the investment in new issues of Canadian corporate bonds denominated in foreign currencies. Foreign purchases of federal government bonds on the secondary market also contributed to the investment activity in the quarter.

At the same time, foreign investment in the Canadian money market was $3.9 billion. Foreign acquisitions were all in corporate paper, as foreign investors reduced their holdings of Canadian government paper in the first quarter. Both Canadian short- and long-term interest rates were down and the Canadian dollar appreciated against its US counterpart by 4.8 US cents in the quarter.

Non-residents added $10.3 billion worth of Canadian equities to their holdings in the first quarter, the largest such investment since the third quarter of 2014. The investment was led by purchases on the secondary market. Canadian stock prices were up 3.7% in the quarter.

Chart 3  Chart 3: Foreign investment in Canadian securities
Foreign investment in Canadian securities

Canadian holdings of foreign securities decline

Canadian investors sold $8.3 billion of foreign securities in the first quarter, the highest such quarterly divestment since the fourth quarter of 2008. Canadian investors continued to invest in foreign debt securities, but reduced their holdings of equities during the quarter.

Canadian holdings of foreign equities were down by a record $14.7 billion on sales of both US and non-US foreign shares. US stock prices edged up in the quarter. Moderating this divestment activity was the acquisition of $7.6 billion in foreign bonds by Canadian investors, following a record investment in the fourth quarter.

Direct investment increases following a low fourth quarter

Direct investment assets increased $14.0 billion in the first quarter. This was the result of Canadian direct investment in foreign affiliates in the form of equity. About two-third of the investment in the quarter was related to mergers and acquisitions.

On the liabilities side, direct investment was up $7.2 billion, following a marginal investment in the fourth quarter. Equity investment made by foreign parents in Canadian affiliates was the main contributor to the inflows, at $4.9 billion.

Chart 4  Chart 4: Foreign direct investment
Foreign direct investment

The other investment category generates outflow of funds

The other investment category of the financial account generated a net outflow of funds of $27.7 billion in the first quarter, following a $40.0 billion inflow in the fourth quarter. The activity in the first quarter mainly reflected a decrease in currency and deposits held by non-residents in Canada. As was the case in the previous quarter, transactions between Canadian banks and their foreign affiliates and branches accounted for most of the activity.

  Note to readers


The balance of international payments covers all economic transactions between Canadian residents and non-residents in three accounts: the current account, the capital account and the financial account.

The current account covers transactions in goods, services, compensation of employees, investment income and secondary income (current transfers).

The current account data in this release are seasonally adjusted. For information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.

The capital account covers capital transfers and transactions in non-produced, non-financial assets.

The financial account covers transactions in financial assets and liabilities.

In principle, a net lending (+) / net borrowing (-) derived from the sum of the current and capital accounts corresponds to a net lending (+) / net borrowing (-) derived from the financial account. In practice, as data are compiled from multiple sources, this is rarely the case and gives rise to measurement error. The discrepancy (net errors and omissions) is the unobserved net inflow or outflow.

For more information on the balance of payments, consult the Frequently asked questions section in the System of macroeconomic accounts module of our website. The module also presents the most recent balance of payments statistics.

Real-time CANSIM table

Real-time CANSIM table 376-8105 will be updated on June 6. For more information, consult the document, Real-time CANSIM tables.

Next release

Balance of international payments data for the second quarter will be released on August 30.


The document, "Revisions to Canada's Balance of International Payments," which is part of Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X), is available from the Browse by key resource module of our website, under Publications.

The Methodological Guide: Canadian System of Macroeconomic Accounts and User Guide: Canadian System of Macroeconomic Accounts will soon be available.

To enquire about the concepts, methods or data quality of this release, contact Denis Caron (613-808-2278;, International Accounts and Trade Division.

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300;

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