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Canada's balance of international payments, first quarter 2018

Released: 2018-05-30

Current account balance

-$19.5 billion

First quarter 2018

Canada's current account deficit (on a seasonally adjusted basis) rose by $3.0 billion in the first quarter to $19.5 billion. Higher deficits on trade in goods and investment income were the main contributors to this increase.

In the financial account (unadjusted for seasonal variation), foreign direct investment activity was the largest contributor to the inflow of funds in the economy in the quarter.

Chart 1  Chart 1: Current account balances
Current account balances

Current account

Deficit on trade in goods and services expands

The deficit on international trade in goods and services increased by $1.2 billion to $15.2 billion in the first quarter, the largest deficit since the second quarter of 2016.

The goods deficit rose by $1.5 billion from the previous quarter to $9.0 billion. The goods surplus with the United States decreased by $2.7 billion on higher imports. Meanwhile, the deficit with non-US countries narrowed by $1.3 billion to $16.0 billion, mainly reflecting a higher surplus with United Kingdom and lower deficits with Korea and the Netherlands.

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

Total exports of goods rose by $1.5 billion to $139.3 billion in the first quarter. Exports of energy products were up by $2.2 billion, on higher crude petroleum prices and volumes.

Total imports of goods were up $3.0 billion to $148.2 billion. Imports of motor vehicles and parts increased by $1.5 billion, led by higher volumes. Energy products (on higher prices) and basic and industrial chemical, plastic and rubber products (on higher volumes) both rose by $0.7 billion in the quarter.

The deficit on trade in services narrowed by $0.2 billion to $6.2 billion in the first quarter on a higher commercial services surplus. The surplus on commercial services increased by $0.3 billion as exports rose more than imports. These increases were led by stronger financial services. The travel deficit remained at $3.7 billion, as higher receipts from overseas travellers were offset by increased spending in the United States by Canadian travellers.

Primary income deficit increases

The deficit on primary income, which covers investment income and compensation of employees, widened by $1.9 billion to $3.8 billion in the first quarter.

Foreign direct investment was the main contributor to this activity. Receipts from Canadian direct investment abroad were down by $1.8 billion in the quarter, following record amounts in the fourth quarter of 2017. In addition, payments on foreign direct investment in Canada increased by $0.3 billion in the first quarter.

Financial account

Direct investment in Canada exceeds direct investment abroad

Direct investment in Canada reached $17.8 billion in the first quarter, the highest level since the third quarter of 2015. More than half of the investment occurred in the manufacturing sector. On a country basis, direct investment in Canada was primarily from the United States as well as from Switzerland and the Netherlands.

Direct investment abroad totalled $6.1 billion in the first quarter, the lowest level of investment since the second quarter of 2013. Merger and acquisition activity was at its lowest level since the first quarter of 2014. Canadian direct investment abroad was directed mainly towards the United States and Barbados.

As a result, foreign direct investment generated a net inflow of funds in the economy of $11.7 billion in the quarter, following nine consecutive quarters of net outflows of funds.

Chart 3  Chart 3: Foreign direct investment
Foreign direct investment

Foreign investors significantly reduce their holdings of federal government bonds

Foreign investment in Canadian securities totalled $18.3 billion in the first quarter, the lowest investment since the third quarter of 2015. The bulk of the investment activity was in short-term debt instruments.

Foreign investment in the Canadian money market reached $15.4 billion, more than offsetting the overall divestment recorded in 2017. Foreign acquisitions were mainly in corporate paper.

Foreign investors' holdings of Canadian bonds were down by $3.1 billion in the first quarter, the first divestment since the second quarter of 2013. Foreign investors reduced their holdings of federal government bonds by a record $27.6 billion. Sales of bonds on the secondary market and retirements both contributed to the decline. Foreign investment in private corporate bonds, mainly new bonds denominated in foreign currencies, moderated the overall reduction in the quarter.

Foreign investment in Canadian equities totalled $6.1 billion in the first quarter. A reduction in foreign holdings of Canadian shares in the energy and mining sector was more than offset by an increase in the manufacturing sector.

Chart 4  Chart 4: Foreign portfolio investment
Foreign portfolio investment

Canadian investment in foreign securities slows

Canadian investors acquired $20.0 billion of foreign securities in the first quarter, down from $33.7 billion in the fourth quarter. The purchases were almost evenly split between foreign bonds and foreign shares.

Canadian investment in foreign debt securities reached $11.9 billion in the first quarter, the highest investment since the fourth quarter of 2015. Acquisitions of non-US foreign bonds and US Treasury bonds contributed the most to the investment activity. Meanwhile, Canadian investment in foreign shares totalled $8.1 billion, led by strong purchases of US shares in January.

Official international reserves decline

Canada's official international reserves declined by $5.1 billion in the first quarter. A large reduction in Canada's currency and deposits reserve assets was partially offset by an increase in securities assets.

  Note to readers

This release incorporates additional information on flows of Canadian direct investment abroad and foreign direct investment in Canada for selected countries. Data are available in CANSIM table 376-0125.


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, 376-0122 and 376-0125. 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 June 11. For more information, consult the document Real-time CANSIM tables.

Next release

Balance of international payments data for the second quarter of 2018 will be released on August 29.


The updated Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world using 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 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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