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Canada's balance of international payments, fourth quarter 2017

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Released: 2018-03-01

Current account balance

-$16.3 billion

Fourth quarter 2017

Canada's current account deficit (on a seasonally adjusted basis) declined by $2.2 billion in the fourth quarter to $16.3 billion, mainly on a lower goods deficit.

In the financial account (unadjusted for seasonal variation), transactions in the form of currency and deposits led the inflow of funds into the economy in the quarter as portfolio and direct investment activity mostly offset each other.

For the year 2017, the current account deficit reached $63.9 billion, which was $1.4 billion less than the deficit recorded in 2016. In the financial account, transactions in securities generated a significant net inflow of funds in 2017, which was largely offset by an outflow from direct investment transactions as direct investment abroad exceeded direct investment in Canada.

Chart 1  Chart 1: Current account balances
Current account balances

Current account

Deficit on trade in goods narrows

The deficit on international trade in goods narrowed by $1.9 billion to $7.2 billion in the fourth quarter, following three consecutive increases.

For the year as a whole, the deficit reached $23.9 billion, compared with a record deficit of $25.9 billion in 2016.

On a geographical basis, the goods deficit with non-US countries was up $0.7 billion to a record $17.6 billion in the fourth quarter. This mainly reflected deteriorating trade balances with the European Union countries and with China, moderated by lower deficits with Japan and Mexico. Meanwhile, the surplus with the United States was up $2.6 billion to $10.5 billion.

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

Total exports of goods were up $6.4 billion to $137.7 billion in the fourth quarter, following a significant decline of $10.7 billion in the third quarter. Exports of energy products increased by $2.8 billion, mainly on higher crude petroleum prices.

Total exports of goods were up $28.0 billion in 2017, with stronger exports of energy products accounting for most of the gains.

Total imports of goods were up $4.5 billion to $144.9 billion in the fourth quarter. Imports of energy products increased $1.2 billion as prices of crude petroleum rose. Aircraft and other transportation equipment and parts were up $1.2 billion, mostly on higher imports of aircraft.

For 2017, imports grew by $26.1 billion with increases spread among several sections.

Non-goods deficit decreases

The non-goods deficit, reflecting the difference between Canada's receipts and payments on international transactions in services and income, narrowed $0.4 billion to $9.2 billion in the fourth quarter. Higher profits on Canadian direct investment abroad contributed the most to this decline.

The deficit on investment income decreased $0.8 billion to $1.5 billion in the fourth quarter, a fourth consecutive quarterly reduction. Profits earned by Canadian direct investors rose $1.7 billion. This was partially offset by higher income earned by foreign investors, both direct and portfolio, on their financial assets in Canada.

The overall deficit on international trade in services rose $0.3 billion to reach $6.5 billion. Payments of commercial services were up $0.6 billion, mainly due to financial services which posted a strong increase following a decline in the third quarter. The travel deficit decreased $0.2 billion in the fourth quarter as a record number of foreign tourists visited Canada.

For the year 2017, the services deficit increased $1.8 billion to $25.1 billion, mostly on higher payments of financial services, notably with the United Kingdom, and transport services with non-US countries. Despite a record number of foreign tourists during the year, the travel deficit expanded in 2017 as spending by Canadians travelling abroad was up by more than receipts from non-residents travelling to Canada.

Financial account

Foreign investment in Canadian bonds remains strong

Foreign investment in Canadian securities totalled $37.9 billion in the fourth quarter, down from $51.1 billion in the third quarter. The investment activity mainly targeted the Canadian bond market.

On an annual basis, foreign investment in Canadian securities totalled $188.5 billion in 2017, led by record foreign acquisitions of Canadian bonds.

Non-resident investment in Canadian bonds reached $41.2 billion in the fourth quarter, a fourth consecutive quarter of strong investment. New issues of Canadian private corporate bonds placed in foreign markets, largely denominated in foreign currencies, accounted for the bulk of the investment activity.

Foreign investors withdrew $6.1 billion of funds from the Canadian money market in the quarter, mainly corporate paper. At the same time, they added $2.9 billion of Canadian equities to their holdings, the lowest investment since the third quarter of 2015. Canadian stock prices were up 3.7% and the Canadian dollar depreciated slightly against its US counterpart in the quarter.

Chart 3  Chart 3: Foreign portfolio investment
Foreign portfolio investment

Record Canadian purchases of foreign shares

Canadian investors acquired $33.7 billion of foreign securities in the fourth quarter, led by record purchases of foreign shares.

On an annual basis, Canadian investment in foreign securities totalled $84.7 billion in 2017, up significantly from a $13.8 billion investment in 2016.

Canadian investors increased their holdings of foreign shares by a record $29.6 billion in the fourth quarter. This activity reflected strong acquisitions of both US and non-US foreign shares. At the same time, Canadian investors acquired $4.0 billion of foreign debt securities, largely US instruments.

Direct investment in Canada remains low

Direct investment abroad was $19.4 billion in the fourth quarter, comparable to the level of investment observed in the previous two quarters. The investment was largely in the form of equity instruments in foreign affiliates and was mainly directed to the United States.

Direct investment in Canada remained low at $8.3 billion in the fourth quarter. Equity investments made by foreign parents in Canadian affiliates accounted for all of the activity in the quarter, mainly in the form of reinvested earnings.

For the year 2017, direct investment in Canada amounted to $33.8 billion, the lowest level of investment since 2010 and well below the record of $126.1 billion observed in 2007. Cross-border mergers and acquisitions generated a withdrawal of funds from Canada for the first time since 2007, when these data started to be compiled.

Chart 4  Chart 4: Foreign direct investment
Foreign direct investment

The other investment category generates inflow of funds from abroad

The other investment category of the financial account, which mainly reflects cross-border transactions conducted by Canadian banks, generated a net inflow of funds of $19.1 billion in the fourth quarter. A significant increase in currency and deposits held by non-residents in Canada and denominated in foreign currency contributed the most to 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.

Foreign direct investment is presented on an asset-liability principle basis (that is, gross basis) in the financial account. Foreign direct investment can also be presented on a directional principle basis (that is, net basis), as shown in supplementary foreign direct investment tables, CANSIM tables 376-0121 and 376-0122. 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, 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 March 12. For more information, consult the document Real-time CANSIM tables.

Next release

Balance of international payments data for the first quarter of 2018 will be released on May 30.


The updated Canada and the World Statistics Hub – United States (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the United States using interactive graphs and tables. This product provides 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;

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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