Canada's balance of international payments, fourth quarter 2025
Released: 2026-02-26
-$0.7 billion
Fourth quarter 2025
Canada's current account deficit (on a seasonally adjusted basis) narrowed by $4.6 billion to $0.7 billion in the fourth quarter of 2025. The narrowing of the deficit in the fourth quarter reflected a significant reduction in the trade in goods deficit, which was moderated by a decrease in the services and investment income surpluses. The fourth quarter of 2025 marked the 14th consecutive quarter in which the current account balance was in a deficit position.
In the financial account (unadjusted for seasonal variation), the foreign demand for Canadian bonds remained strong in the fourth quarter, led by an unprecedented foreign investment in federal government bonds. Meanwhile, foreign direct investment in Canada, mainly resulting from merger and acquisition activities, largely surpassed Canadian direct investment abroad.
The year 2025 was marked by trade tensions, volatility in some commodity prices, declines in interest rates and strong global stock markets performances. All these factors had significant impacts on balance of payments flows in 2025, both in the current and financial accounts.
Current account
Trade in services surplus shrinks, while trade in goods deficit narrows
The trade in goods and services balance posted a $3.1 billion deficit in the fourth quarter, a decrease of $4.4 billion from the third quarter. The trade in goods deficit narrowed by $5.0 billion to $4.5 billion over this period. While trade in services remained in a surplus, it narrowed from $2.0 billion in the third quarter to $1.4 billion in the fourth quarter.
Exports of goods post significant gains
Exports of goods increased 3.9% to $195.1 billion in the fourth quarter, led by higher exports of metal products (+23.4%), mostly gold. Exports of energy products (+1.6%) and aircraft (+5.8%) also rose in the fourth quarter. Partially offsetting these increases, exports of motor vehicles fell to their lowest levels since the fourth quarter of 2022 and forestry products declined to their lowest levels since the second quarter of 2020.
Imports of goods rose 1.2% to $199.6 billion in the fourth quarter of 2025. Electronic and electrical equipment and parts (+5.7%) and metal ores and non-metallic minerals (+18.4%) were the main contributors to the overall increase.
Services imports and exports increase
Services imports were up 1.5% to $59.5 billion in the fourth quarter, and services exports rose 0.5% to $60.9 billion. The increase in imports was the result of higher values recorded for travel services (+2.5%), transportation services (+3.0%) and commercial services (+0.7%). For exports, the increase occurred as gains in transportation services (+5.5%) and commercial services (+0.7%) were partially offset by lower exports of travel services (-1.3%), largely due to lower education-related travel services exports.
Small increases in both imports and exports of commercial services
Imports of commercial services increased 0.7% to $34.3 billion in the fourth quarter, largely due to higher payments of insurance services (+9.1%) and financial services (+3.6%) coinciding with a decrease in technical and trade-related services (-4.1%). Exports of commercial services rose 0.7% to $36.8 billion, with financial services (+2.6%) being the main contributor.
Chart 1
Current account balances
Financial account
Record foreign acquisitions of federal government bonds
Foreign investors increased their holdings of Canadian securities by $58.2 billion in the fourth quarter, with the investment activity mainly targeting the Canadian bond market (+$51.8 billion). Foreign investors acquired a record $33.6 billion of federal government bonds, while they reduced their holdings of federal government money market instruments by $17.6 billion.
Meanwhile, Canadian investors acquired $18.5 billion of foreign securities, down from a $56.1 billion investment in the third quarter. Investors added $31.7 billion of foreign equity securities to their portfolios in the fourth quarter, the largest investment since the second quarter of 2021. At the same time, Canadian investors reduced their exposure to foreign debt securities by $13.2 billion, a first divestment since the second quarter of 2020. The divestment in the fourth quarter of 2025 was driven by a record divestment of $20.5 billion in US Treasury bonds.
As a result, portfolio investment generated a net inflow of funds in the economy of $39.8 billion in the fourth quarter.
Chart 2
Foreign portfolio investment
Inward direct investment led by merger and acquisition activities
Foreign direct investment in Canada amounted to $25.1 billion in the fourth quarter. Mergers and acquisitions (+$16.3 billion), primarily originating from the United States, led the investment activity. On a sector basis, more than half of the investment occurred in the trade and transportation sector (+$13.8 billion), followed by investments in the manufacturing (+$3.5 billion) and the management of companies and enterprises (+$3.0 billion) sectors.
Canadian direct investment abroad slowed to $13.5 billion in the fourth quarter, down from $27.6 billion in the previous quarter. Earnings reinvested by Canadian parent companies in their foreign affiliates (+$20.7 billion) were moderated by a divestment in the form of shares and debt instruments. Cross-border merger and acquisition transactions generated a reduction in direct investment abroad, as direct investors sold some of their assets to non-resident investors in the quarter.
Overall, direct investment generated a net inflow of funds in the economy of $11.6 billion in the fourth quarter.
Chart 3
Foreign direct investment
Year 2025 in review
Current account deficit widens significantly as goods exports weaken
For the year 2025, the current account balance posted a $30.4 billion deficit, doubling from $15.0 billion in 2024. The widening of the deficit was largely due to the trade in goods deficit increasing from $7.2 billion in 2024 to $31.1 billion in 2025 (the largest deficit since 2020), as imports of goods increased and exports edged down. Increases in both the services and the investment income surpluses moderated the overall increase in the current account deficit in 2025.
Canada's trade with the United States resulted in a significant decrease of the goods surplus, from $101.3 billion in 2024 to $81.8 billion in 2025. Meanwhile, Canada's services trade deficit with the United States narrowed from $10.0 billion in 2024 to $2.2 billion in 2025.
Goods exports fall, while imports increase
Total imports of goods rose 2.8% to reach $807.1 billion in 2025. Imports of consumer goods (+$7.4 billion), metal ores and non-metallic minerals (+$6.9 billion) and electronic and electrical equipment and parts (+$5.6 billion) posted the largest increases.
Total exports of goods fell 0.2% to $776.0 billion in 2025, with exports of energy products (-$11.8 billion) posting the largest decline, mainly due to lower crude oil prices. Within the energy products category, the decline in exports of crude oil (-$13.7 billion) was partially offset by higher exports of natural gas (+$5.5 billion). Forestry products (-$4.9 billion) and chemical products (-$4.5 billion) also contributed to the decline in exports. These decreases were almost entirely offset by the increase in exports of metals and their alloys (+$16.8 billion), a category largely composed of unwrought gold, which experienced a sharp increase in prices. Excluding exports of metals, goods exports were down 3.0% in 2025.
Services exports increase more than imports in 2025
Services exports rose $8.5 billion to $240.2 billion in 2025, while imports increased by $6.3 billion to reach $236.6 billion. As a result, the trade in services surplus rose by $2.2 billion to $3.7 billion in 2025 compared with the previous year.
By category of services, commercial services drove export gains in 2025, increasing $5.5 billion to $143.9 billion, led by maintenance and repair services (+$2.0 billion) and telecommunications, computer and information services (+$1.2 billion). Exports of audio-visual services also contributed to the gain. Exports of commercial services to the United States increased 6.4% to $97.6 billion, while exports of commercial services to all other countries fell 0.9% to $46.3 billion.
Exports of transportation services (+$1.7 billion to $23.0 billion) and travel services (+$1.4 billion to $71.8 billion) also increased in 2025. Within transportation services, gains were spread across air and marine modes, and increasing travel expenditures by non-residents offset a reduction in expenditures of international students in Canada.
Commercial services also contributed to import gains in 2025, increasing $4.1 billion to $135.1 billion, led by technical and trade-related services (+$2.4 billion to $18.7 billion). However, expenditure of Canadians travelling outside of the United States (+$4.8 billion to $34.1 billion) posted the largest change in imports of services and more than offset the large decline in travel to US destinations (-$4.2 billion to $25.9 billion). Overall, travel services imports increased 0.9% to $59.9 billion. Imports of transportation services also posted gains, led by imports from countries other than the United States.
Strong Canadian investment in foreign securities
In the financial account, transactions in securities generated a net outflow of funds from the Canadian economy of $17.4 billion in 2025. Meanwhile, direct investment activity generated a net inflow of funds totalling $17.4 billion.
Canadian investors acquired $133.8 billion of foreign securities in 2025, the highest level since 2021. Investment in 2025 largely targeted US corporate securities, with acquisitions of $84.2 billion in shares and $23.9 billion in corporate bonds. Meanwhile, foreign investors acquired $116.4 billion of Canadian securities in 2025, following acquisitions totalling $193.3 billion in 2024. The demand for Canadian securities rose in the second half of 2025, with foreign acquisitions totalling $139.2 billion, more than offsetting the cumulative divestment of $22.8 billion recorded in the first half of the year. In 2025, foreign investors increased their holdings of Canadian debt securities by $135.8 billion, mainly through acquisitions of private corporate bonds (+$69.2 billion) and federal government bonds (+$45.6 billion).
Highest foreign direct investment in Canada since 2007
Foreign direct investment in Canada reached $96.8 billion in 2025, the highest level since 2007. Merger and acquisition activities amounted to a sizable $43.6 billion, a level comparable with 2024. The trade and transportation (+$23.6 billion), management of companies and enterprises (+$14.5 billion) and manufacturing (+$11.2 billion) sectors were the largest recipients of inward direct investment. Over half of the investment originated from the United States.
Canadian direct investment abroad amounted to $79.4 billion in 2025, the lowest level since 2020. Earnings reinvested by Canadian parent companies in their foreign affiliates (+$80.4 billion) accounted for the bulk of the investment abroad in 2025. Merger and acquisition activities moderated the investment activity, as Canadian sales of existing assets abroad exceeded acquisitions by $3.0 billion. On a regional basis, merger and acquisition activities resulted in a net divestment in the United States (-$11.1 billion) and a net investment (+$8.0 billion) in the rest of the world. On a sector basis, the trade and transportation (+$24.5 billion), the management of companies and enterprises (+$21.5 billion), and the manufacturing (+$9.9 billion) were the main investing sectors abroad. On a regional basis, two-thirds of the direct investment abroad was with countries other than the United States in 2025.
Note to readers
Revisions
Exceptionally last quarter, special estimates on Canadian international merchandise exports to the United States for the reference month of September were produced to compile the third quarter balance of international payments statistics. Trade relating to exports and imports of certain transport services with the United States, as well as maintenance and repair services, also had to be estimated. With the current release, these special estimates are replaced with actual data.
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 March 9. For more information, see Real-time data tables.
Next release
Balance of international payments data for the first quarter of 2026 will be released on May 28.
Products
The International trade statistics portal is available on the 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 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
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