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Canada's balance of international payments, first quarter 2021

Released: 2021-05-31

Current account balance

$1.2 billion

First quarter 2021

Canada's current account balance (on a seasonally adjusted basis) posted a $1.2 billion surplus in the first quarter after recording a $5.3 billion deficit in the fourth quarter of 2020. This was the first surplus since the third quarter of 2008. The surplus in the first quarter mostly reflected the first positive trade in goods and services balance since 2008, which was partially offset by a lower investment income surplus.

The goods balance posted a slight surplus in the first quarter, while the services balance remained in an unusual surplus position in the context of the COVID-19 pandemic. In comparison, the last surplus, observed in the third quarter of 2008, reflected a much stronger goods surplus, moderated by a services deficit to which travel services were the main contributor.

In the financial account (unadjusted for seasonal variation), portfolio investment was the main contributor to the net lending activity, generating the largest outflow of funds since the fourth quarter of 2007. Strong Canadian acquisitions of foreign shares, combined with a decline in foreign holdings of Canadian debt securities, contributed to this activity.

Direct investment in Canada exceeded direct investment abroad by the largest amount since the second quarter of 2013, resulting in a net inflow of funds totalling $9.3 billion. Direct investment in Canada rebounded in the first quarter, following lower activity in 2020. Meanwhile, direct investment abroad slowed on weaker merger and acquisition transactions.

Chart 1  Chart 1: Current account balances
Current account balances

Current account

First trade in goods and services surplus in more than 12 years

The trade in goods and services balance recorded a $2.1 billion surplus in the first quarter, the first positive balance since 2008. This surplus was led by higher exports of goods. Meanwhile, the trade in services balance remained in an unusual positive position from a historical perspective.

Exports of goods were up by $11.8 billion to $152.7 billion in the first quarter. The largest contributors were energy products (+$6.8 billion) and forestry products and building and packaging materials (+$1.4 billion), mostly on higher prices, as well as aircraft and other transportation equipment and parts (+$2.3 billion), mainly on higher volumes.

Imports of goods edged up by $0.9 billion to $151.0 billion, led by higher imports of energy products (+$1.0 billion). The largest declines were in imports of consumer goods (-$1.2 billion) and motor vehicles and parts (-$1.1 billion).

On a geographical basis, the goods surplus with the United States was up by $9.8 billion in the first quarter on stronger exports. The deficit with countries other than the United States narrowed by $1.2 billion, led by stronger trade balances with Mexico, Saudi Arabia and Hong Kong, which partially offset the deterioration of the balance with the United Kingdom.

The trade in services surplus edged up $52 million to $458 million, posting a positive balance for a fourth straight quarter. By type of service, the transport services deficit narrowed as imports of sea transport were down in the quarter. The travel surplus increased as Canadians reduced their expenses on travel abroad compared with activity recorded in the fourth quarter of 2020. On the other hand, the commercial services surplus decreased by $416 million, mostly on higher imports, moderating the overall increase in the services surplus.

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

Profits on foreign direct investment in Canada increase

The investment income surplus declined by $4.9 billion to $1.0 billion in the first quarter. This reduction largely resulted from stronger payments related to profits earned by foreign direct investors in Canada. These profits were up by $4.7 billion to $12.0 billion, a level closer to the values recorded in 2019. Interest payments on foreign holdings of Canadian debt securities were down for a seventh consecutive quarter, moderating the overall increase in payments. Lower borrowing costs, a stronger Canadian dollar and a recent decline in foreign demand for these instruments all contributed somewhat to this reduction over the period.

Financial account

Direct investment in Canada exceeds direct investment abroad

Direct investment in Canada amounted to $19.6 billion in the first quarter, the highest level since the second quarter of 2019. Foreign parents' injection of funds in existing Canadian affiliates accounted for the largest part of the activity in the quarter. Meanwhile, merger and acquisition activity totalled $5.7 billion. Direct investment in Canada was mainly in energy and mining, as well as in manufacturing, in the first quarter.

Direct investment abroad slowed to $10.5 billion in the first quarter, compared with a $20.1 billion investment in the fourth quarter of 2020. The investment was predominantly with the United States. Merger and acquisition activity slowed, with Canadian sales of existing assets abroad ($6.3 billion) exceeding acquisitions of such assets ($5.8 billion) for the first time in almost 10 years.

Chart 3  Chart 3: Foreign direct investment
Foreign direct investment

Canadian investment in foreign securities remains strong

Canadian investors acquired $37.4 billion of foreign securities in the first quarter, following a significant investment of $42.5 billion in the previous quarter. Canadian investors increased their holdings of foreign shares by $31.9 billion, largely shares of large capitalization technology firms and investment fund shares tracking broad market indices. Over the first quarter, the US stock market, as measured by the S&P500, grew by 5.8%.

On the other side of the ledger, foreign investment in Canadian securities slowed to $12.7 billion in the first quarter, compared with a $21.9 billion investment in the previous quarter. Non-residents significantly invested in Canadian shares, but reduced their holdings of debt securities. This was the first divestment in Canadian debt securities since the fourth quarter of 2018, and it followed foreign acquisitions totalling $122.0 billion in 2020.

Chart 4  Chart 4: Foreign portfolio investment
Foreign portfolio investment

  Note to readers

Foreign direct investment on a gross and net basis

This release includes new data on flows of foreign direct investment in Canada and Canadian direct investment abroad on a gross and net basis. Table 36-10-0656-01 provides details on both the increase and the decrease of inward and outward investments, broken down into equity and debt instruments and by type of foreign direct investment flow. Data can be disaggregated according to two industry groupings (goods- and services-producing industries) and are available from the first quarter of 2015. These data are made available in an effort to further define the nature of foreign direct investment and shed light on investments that could be associated to greenfield investment and to extension of capacity, although no internationally agreed definition of this concept exists in foreign direct investment statistics. Such investments introduce additional resources and assets and contribute to gross fixed capital formation (GFCF). GFCF data in the broader context of activities of multinational enterprises in Canada are available in Table 36-10-0356-01 and include investment in machinery and equipment, non-residential construction, and intellectual property by type of multinational.

Changes to tables concerning European Union

With this release, in tables 36-10-0023-01 and 36-10-0024-01, the principal trading partner category European Union was renamed European Union excluding United Kingdom, and values were revised accordingly. Similarly, in other tables, the country or region category Other European Union countries was renamed European Union countries excluding United Kingdom.


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 (+) or net borrowing (-) derived from the sum of the current and capital accounts corresponds to a net lending (+) or 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, 36-10-0473-01 and 36-10-0656-01. 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 June 7. For more information, see Real-time tables.

Next release

Balance of international payments data for the second quarter of 2021 will be released on August 30, 2021.


The product Methodology for Exports of Energy Products within the International Merchandise Trade Program, which is part of Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X), is now available.

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 Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.

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 Denis Caron (, International Accounts and Trade Division.

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