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Canada's balance of international payments, third quarter 2017

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Released: 2017-11-30

Current account balance

-$19.3 billion

Third quarter 2017

Canada's current account deficit (on a seasonally adjusted basis) widened by $3.8 billion in the third quarter to $19.3 billion, as the deficit on international trade in goods expanded for the third quarter in a row.

In the financial account (unadjusted for seasonal variation), strong and continued foreign investment in Canadian bonds again led the inflow of funds into the economy.

Chart 1  Chart 1: Current account balances
Current account balances

Current account

Deficit on trade in goods continues to grow

The deficit on international trade in goods rose $3.6 billion to $8.9 billion in the third quarter, with both exports and imports declining. This was the third consecutive increase of the goods deficit and the second highest deficit on record.

On a geographical basis, the goods deficit with non-US countries was up $1.3 billion to a record $17.0 billion. This mainly reflected deteriorating trade balances with India and the United Kingdom, moderated by a lower deficit with China. Meanwhile, the surplus with the United States fell $2.4 billion to $8.0 billion.

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

Total exports of goods declined $11.0 billion to $131.1 billion in the third quarter, following four straight quarters of increases. Exports of motor vehicles and parts were down $3.5 billion. Work stoppages in the automotive industry and changes to certain models destined for the American market amplified the reduction over the quarter. Exports of energy products fell $2.4 billion on lower prices and, to a lesser extent, lower volumes of crude petroleum and natural gas.

After increasing by $10.7 billion over the first half of the year, total imports of goods were down $7.4 billion to $140.0 billion. Almost all the commodity sections were down in the quarter. Metal and non-metallic mineral products declined by $1.3 billion and consumer goods lost $1.2 billion on lower prices.

Non-goods deficit edges up

The non-goods deficit, reflecting international transactions in services and income, increased slightly to reach $10.4 billion in the third quarter, mainly on a higher portfolio investment income deficit and higher transfer payments.

The overall deficit on international trade in services was unchanged at $6.1 billion. The travel deficit increased $0.3 billion, mostly on higher payments by Canadians visiting non-US destinations. A record number of Canadian travellers went overseas during the quarter. On the other hand, the surplus in commercial services was up $0.3 billion, mainly on lower payments of financial services.

Income receipts on Canadian holdings of foreign securities declined by more than income payments on foreign holdings of Canadian securities in the quarter. Also contributing to the higher non-goods deficit were higher transfer payments, mainly from the government sector.

Financial account

Strong foreign acquisitions of Canadian bonds continue

Foreign investors increased their holdings of Canadian securities by $51.6 billion in the third quarter, an eighth consecutive quarter of strong acquisitions. During that period, foreign portfolio investment has totalled $351.7 billion or 70% of all foreign investment in Canada.

Foreign acquisitions of Canadian bonds reached $51.6 billion in the third quarter, the largest investment since the first quarter of 2015. Record foreign purchases of federal government bonds of $21.8 billion led the investment activity in the third quarter of 2017. Significant new issues of private corporate bonds placed abroad and denominated in US dollars also contributed to the inflows.

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

The Bank of Canada raised its benchmark overnight interest rate by 50 basis points to 1% in the quarter. Meanwhile, Canadian short- and long-term interest rates significantly increased and the Canadian dollar appreciated against its US counterpart by 3.1 US cents.

Non-resident investors withdrew $6.0 billion of funds from the Canadian money market in the third quarter. The foreign divestment was all in government paper, as foreign investors increased their holdings of Canadian corporate paper. At the same time, non-residents added $6.0 billion of Canadian equities to their holdings in the third quarter, mainly shares from the management of companies and enterprises sector.

Canadian investment in foreign securities increases

Canadian investors increased their holdings of foreign securities by $12.0 billion in the third quarter. The purchases were almost evenly split between foreign bonds and foreign shares, and targeted US instruments.

Canadian investment in foreign shares declined from $8.0 billion in the second quarter to $5.4 billion. The activity in the quarter reflected acquisitions of $7.7 billion of US shares. Investors also added foreign debt securities to their portfolios, mainly US corporate bonds.

Direct investment increases and generates a net outflow of funds

Cross-border foreign direct investment activities resulted in a net outflow of funds in the third quarter, as direct investment abroad outpaced direct investment in Canada for an eighth straight quarter.

Direct investment abroad reached $21.6 billion, almost entirely in the form of equity investment. Merger and acquisition activities accounted for just under half of this investment, with the majority in countries other than the United States.

Direct investment in Canada increased to $9.8 billion in the third quarter, following a small divestment in the second quarter. Equity investment made by foreign parents in Canadian affiliates accounted for the bulk of the activity. More than one-third of the direct investment was in the manufacturing sector. Inward cross-border merger and acquisition transactions remained low in the third quarter. In the last eight quarters, this activity totalled only $7.2 billion.

Chart 4  Chart 4: Foreign direct investment
Foreign direct investment

Telling Canada's story in numbers; #ByTheNumbers

In celebration of the country's 150th birthday, Statistics Canada is presenting snapshots from our rich statistical history.

Direct investment is a key component of the financial account of the balance of payments and plays a significant role in economic globalization. Quarterly data on foreign direct investment transactions are available from 1950.

From 1950 to 1980, foreign direct investment in Canada surpassed Canadian direct investment abroad for each year with no exception. This general trend changed starting in 1981, as direct investment abroad exceeded direct investment in Canada for 26 of the 36 subsequent years.

  Note to readers


Annual and quarterly data have been revised for the reference years 2014 to 2016. This is in keeping with the general policy to revise national accounts statistics at the time of the third quarter data release. In general, the revisions reflect more current sources of information coming from annual surveys and administrative data.


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.

Foreign direct investment (FDI) is presented on an asset-liability principle basis (that is, gross basis) in the financial account. FDI can also be presented on a directional principle basis (that is, net basis), as shown in supplementary FDI tables, CANSIM 376-0121 and 376-0122. The difference between the two FDI 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, also referred to as direct investment abroad in this text, and (2) is classified as a liability and included in direct investment liability, also referred to as direct investment in Canada in this text.

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 December 11. For more information, consult the document, Real-time CANSIM tables.

Next release

Balance of international payments data for the fourth quarter of 2017 will be released on March 1, 2018.


The updated Canada and the World Statistics Hub – United States (Catalogue number13-609-X) is available online. This product illustrates the nature and the extent of Canada's economic and financial relationship with the United States using interactive graphs and tables. This product provides an easy access to information on trade, investment, employment and travel, including merchandise trade by Canadian provinces and US states.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available. This publication will be updated to maintain its relevance.

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; or Media Relations (613-951-4636;

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

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