Canada's balance of international payments, first quarter 2025
Released: 2025-05-29
-$2.1 billion
First quarter 2025
Canada's current account deficit (on a seasonally adjusted basis) narrowed by $1.4 billion in the first quarter to reach $2.1 billion. This narrowing reflected a lower total income deficit. The goods and services deficit widened slightly in the first quarter, following a large reduction in the fourth quarter of 2024.
In the financial account (unadjusted for seasonal variation), inflows of funds from abroad to finance the current account deficit in the first quarter of 2025 came primarily from direct investment. Meanwhile, portfolio transactions generated a net outflow of funds from the Canadian economy of $45.9 billion, led by a record foreign divestment in Canadian shares.
Current account
Trade in goods and services deficit widens slightly
The trade in goods and services deficit widened slightly from the fourth quarter of 2024 to reach $1.4 billion in the first quarter of 2025. The trade in goods deficit widened by $0.1 billion to $0.5 billion. This is explained by both exports and imports posting large gains amid economic uncertainty surrounding the announcements and implementation of tariffs on certain goods traded between Canada and the United States. The trade in services deficit was essentially unchanged ($0.9 billion), as a narrowing transportation services deficit and an increased travel surplus were offset by a decrease in the commercial services surplus.
Imports and exports of goods post significant gains for a second consecutive quarter
Imports of goods increased 5.3% in the first quarter to reach $212.5 billion, a quarterly record high. Higher imports of motor vehicles and parts (+9.3%) and industrial machinery, equipment and parts (+10.3%) contributed the most to the quarterly increase. Imports of industrial machinery, equipment and parts reached $24.3 billion in the quarter, surpassing the previous high in business outlays recorded in the first quarter of 2023. Imports of consumer goods (+4.5%) and electronic equipment (+8.2%) also posted significant gains in the first quarter of 2025.
Exports of goods increased 5.3% in the first quarter to reach a quarterly record high of $212.0 billion. Motor vehicles and parts (+13.1%), energy products (+3.9%), industrial machinery, equipment and parts (+13.5%) and consumer goods (+5.4%) were the main contributors to the overall increase.
Services imports and exports post modest declines
Exports of services declined 0.3% to $54.0 billion in the first quarter, while imports of services edged down 0.2% to $54.9 billion.
The travel services surplus increased from $1.7 billion in the fourth quarter of 2024 to $2.0 billion in the first quarter of 2025, as imports (-4.8%) decreased more than exports (-2.9%). For both imports and exports, the decrease was due to lower personal travel spending by international travellers.
The transportation services deficit narrowed from $3.7 billion in the fourth quarter of 2024 to $3.2 billion in the first quarter of 2025. Transportation services exports increased 1.2% to $5.7 billion. This increase was led by land transport, reflecting the increase in transborder trucking related to the movement of goods between Canada and the United States. Transportation services imports fell 5.1%, led by lower payments of passenger fares.
Commercial services surplus declines
Commercial services imports increased 3.3% to $31.1 billion in the first quarter, while commercial services exports increased 0.8% to $31.5 billion. As a result, the commercial services surplus decreased from $1.2 billion in the fourth quarter of 2024 to $0.4 billion in the first quarter of 2025.
Financial commissions generated by higher volumes of transactions in securities led the increase in commercial services imports in the first quarter. The imports of services that relate to goods—namely trade-related intermediation commissions, equipment rental, and maintenance and repair—contributed to the quarterly increase, as did a rise in imports of scientific and technical services. While financial services (+2.6%) were the main contributor to the modest increase in commercial services exports, royalties received by enterprises in Canada also increased.
Total income deficit decreases
The total income deficit narrowed by $1.6 billion in the first quarter. All components of income contributed to the reduction in the deficit, led by transfers, the deficit of which decreased due to higher receipts. The surplus of investment income also increased, mainly due to higher profits earned by Canadian direct investors on their assets abroad.
Chart 1
Current account balances
Financial account
Record foreign divestment in Canadian equity securities
Foreign portfolio investors reduced their exposure to Canadian securities by $9.4 billion in the first quarter, following three quarters of strong foreign acquisitions totalling $168.6 billion. Foreign divestments in equity and investment fund shares (-$40.6 billion) and money market instruments (-$17.4 billion) were moderated by investment in Canadian bonds (+$48.6 billion), mainly new corporate bonds denominated in US dollars.
Meanwhile, Canadian investors increased their holdings of foreign securities by $36.5 billion in the first quarter, the largest investment since the first quarter of 2024. Investors acquired both debt (+$19.3 billion) and equity (+$17.2 billion) securities in the first quarter of 2025. Within the quarter, acquisitions of debt securities mostly occurred in January, while the largest purchases of foreign shares were in February.
Chart 2
Foreign portfolio investment
Lowest Canadian direct investment abroad since 2013
Canadian direct investment abroad totalled $7.7 billion in the first quarter, the lowest quarterly investment since the second quarter of 2013. In the first quarter of 2025, earnings reinvested by Canadian parent companies in their foreign affiliates (+$22.8 billion) were mitigated by a record divestment from merger and acquisition activities (-$14.5 billion). On a sector basis, the management of companies and enterprises sector saw increases, while the finance and insurance sector and energy and mining sector saw decreases.
Foreign direct investment in Canada amounted to $28.5 billion in the first quarter, up from $20.0 billion in the previous quarter. Merger and acquisition transactions (+$11.6 billion) led the investment activity, followed by earnings reinvested by foreign parents in their Canadian affiliates (+$8.8 billion). The manufacturing sector and energy and mining sector saw the largest increases.
Chart 3
Foreign direct investment
Focus on Canada and the United States
While Canada's balance of international payments offers a comprehensive overview of all economic transactions between Canadian residents and non-residents, its components can be further broken down by region, enriching the depth and scope of the analysis. The first quarter of 2025 showed notable differences in certain areas when comparing activity between the United States and Canada's other trading partners.
Exports
• Goods and services exports to the United States increased from $179.3 billion in the fourth quarter of 2024 to $191.0 billion in the first quarter of 2025. Goods (+7.9%), commercial services (+6.5%) and transportation services (+7.5%) led this increase, while travel services exports (-14.3%) declined. At the same time, exports of goods and services to all other trading partners declined slightly.
• Of the total $212.0 billion of goods exported to all trading partners in the first quarter, $163.6 billion were directed to the United States. Motor vehicles and parts, industrial machinery and energy products, which flow primarily to the US market, drove overall export growth in the first quarter.
• Exports of services to the United States edged down 0.9% to $27.4 billion in the first quarter. Meanwhile, exports of services to non-US countries increased 0.3% to $26.6 billion.
• Lower spending by US travellers in Canada led to exports of travel services to the United States declining to $3.9 billion in the first quarter, following a record high of $4.5 billion in the fourth quarter of 2024. Meanwhile, increased spending by non-US travellers pushed exports to all other countries up 1.3% to $12.5 billion in the first quarter of 2025.
Imports
• Goods and services imports from the United States increased from $155.4 billion in the fourth quarter of 2024 to $162.3 billion in the first quarter of 2025. Imports of goods increased 5.6% to $132.3 billion, while imports of services decreased 0.4% to $30.0 billion. Imports of goods from all other trading partners rose 4.9% to $80.2 billion, while imports of services from all other trading partners was unchanged, at $24.9 billion.
• Imports of travel services from the United States declined 8.4% to $6.7 billion in the first quarter, which was the lowest level seen since the third quarter of 2022. This decrease was largely due to lower spending by Canadian travellers in the United States, as the number of these travellers decreased significantly in the first three months of 2025. Imports of travel services from non-US countries (-1.4%) declined slightly in the first quarter after reaching a record high in the fourth quarter of 2024.
Investments
• Canadian portfolio investors acquired $38.5 billion of US securities in the first quarter of 2025, while they reduced their exposure to non-US foreign securities by $2.0 billion. The investment in US securities was the highest in one year and was equally distributed between debt instruments and shares.
• Canadian direct investors withdrew a net $0.9 billion of funds from the United States in the first quarter, the first divestment since 2010. In comparison, Canadian direct investment in the United Stated amounted to $101.3 billion in 2023 and $65.7 billion in 2024.
• Foreign direct investment in Canada from the United States amounted to a net $16.3 billion in the first quarter of 2025 and represented over half of the total investment in the quarter.
For more data and insights on areas touched by the socio-economic relationship between Canada and the United States, see the Focus on Canada and the United States webpage.
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Note to readers
Definitions
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 Statistics Canada's 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 9. For more information, see Real-time data tables.
Next release
Balance of international payments data for the second quarter of 2025 will be released on August 28.
Products
The International trade statistics portal is available on Statistics Canada website.
The updated Canada and the World Statistics Hub (13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world using interactive charts and tables. It provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, Mexico, China, Japan, Belgium, Italy, the Netherlands and Spain.
The Canada's international trade and investment country fact sheet (71-607-X) is also available.
The document, Revisions to 2022 and 2023 exports of travel services, which is part of Latest Developments in the Canadian Economic Accounts (13-605-X), is available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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