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Canada's balance of international payments, third quarter 2019

Released: 2019-11-28

Current account balance

-$9.9 billion

Third quarter 2019

Canada's current account deficit (on a seasonally adjusted basis) widened by $3.1 billion to $9.9 billion in the third quarter, following a reduction of $10.1 billion in the second quarter. The overall deficit on trade in goods and services rose by $2.4 billion, on a higher goods deficit.

International transactions in services moderated the overall increase in the current account deficit in the third quarter. The commercial services surplus was up, while the travel deficit narrowed in the quarter. The growth in receipts from education-related travel to Canada, largely from countries other than the United States, has led to the narrowing of the travel deficit in recent years.

In the financial account (unadjusted for seasonal variation), inflows of funds from abroad to finance the current account deficit came mainly from transactions in currency and deposits in the third quarter, as non-residents increased their holdings of these assets in Canada by $47.0 billion.

Direct and portfolio investment activity mostly offset each other in the third quarter. Portfolio investment generated a net inflow of funds in the economy of $1.5 billion. Strong investments in corporate bonds were moderated by significant declines in holdings of government bonds on both sides of the ledger.

Meanwhile, direct investment activity generated a net outflow of funds totalling $1.6 billion. Both Canadian direct investment abroad and foreign direct investment in Canada slowed on lower mergers and acquisitions activity in the third quarter.

Chart 1  Chart 1: Current account balances
Current account balances

Current account

The goods deficit expands after a reduction in the second quarter

Canada's deficit on international trade in goods increased by $2.8 billion to $3.9 billion in the third quarter, following a reduction of $7.6 billion in the second quarter.

Exports of goods decreased by $3.9 billion to $149.5 billion in the third quarter. The decline was led by lower sales of energy products, down $2.8 billion from the second quarter on lower prices. Weaker exports of farm, fishing and intermediate food products, basic industrial and chemical products as well as aircraft and other transportation equipment and parts also contributed to the decline. This followed gains in the second quarter for all four categories of products.

Import of goods were down by $1.0 billion to $153.4 billion in the third quarter, largely on lower imports of motor vehicles and parts as well as industrial machinery, equipment and parts. A rise in imports of metal ores and non-metallic mineral products moderated the overall reduction in imports.

On a regional basis, the goods surplus with the United States was down in the third quarter from the highest goods surplus in a decade in the previous quarter. The goods deficit with non-US countries widened, due primarily to a deterioration in trade balances with Hong Kong, Saudi Arabia and South Korea.

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

Financial account

Portfolio investment activity concentrated primarily in private corporate bonds

Following a $7.0 billion divestment in the second quarter, foreign investment in Canadian securities resumed, reaching $7.4 billion in the third quarter. The investment activity predominantly targeted the Canadian bond market. Foreign acquisitions of Canadian bonds totalled $8.1 billion, mostly in the form of new issues of private corporate bonds denominated in foreign currencies, mainly in UK pound sterling. This activity was moderated by a foreign divestment in federal government bonds, the sixth decline in seven quarters for a total divestment of $46.7 billion over this period.

Foreign investors withdrew $2.8 billion of funds from the Canadian money market in the third quarter, while they added $2.1 billion in Canadian shares to their holdings. This investment was led by the issuance of new shares to non-resident portfolio investors in September as foreign investors sold Canadian shares on the secondary market for a second straight quarter.

On the other side of the ledger, Canadian investment in foreign securities slowed to $5.9 billion in the third quarter, from $9.0 billion in the second quarter. Purchases of US corporate bonds and non-US foreign bonds were moderated by the largest divestment in US Treasury bonds since the fourth quarter of 2016.

Chart 3  Chart 3: Foreign portfolio investment
Foreign portfolio investment

Direct investment activity slows

Direct investment abroad slowed to $15.0 billion in the third quarter, down from $24.9 billion in the second quarter. Mergers and acquisitions activity totalled $6.5 billion, the lowest level in five quarters. Nearly half of the investment was directed to the United States.

Direct investment in Canada totalled $13.4 billion in the third quarter. Mergers and acquisitions activity slowed to $4.0 billion following strong investments in the second quarter. On a country basis, direct investment in Canada came primarily from the United States and, to a lesser extent, from Australia.

Chart 4  Chart 4: Foreign direct investment
Foreign direct investment

  Note to readers


This release incorporates statistical revisions back to the first quarter of 1981 as part of the revision exercise of the Canadian System of Macroeconomic Accounts. In the current account, revisions come from the integration of illegal cannabis and the expanded coverage and improvements in methodologies related to estimates on international travel services. In the financial account, revisions mostly reflect the integration of new data sources.


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 36-10-0025-01, 36-10-0026-01, and 36-10-0473-01. 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, 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 chapter 8, "International accounts," in the User Guide: Canadian System of Macroeconomic Accounts, available on our website. The chapter also presents the most recent balance of payments statistics.

Real-time table

Real-time table 36-10-0042-01 will be updated on December 9. For more information, see Real-time tables.

Next release

Balance of international payments data for the fourth quarter of 2019 will be released on February 27, 2020.


The product 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 Economic accounts statistics portal, accessible from the subject module of our website, features an up-to-date portrait of national and provincial economies and their structure.

The document, "A preview of the 2019 revision of the Canadian System of Macroeconomic Accounts," which is part of Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X), is now available.

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.

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 Éric Simard (613-219-5932;, International Accounts and Trade Division.

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