Canada's balance of international payments, first quarter 2026
Released: 2026-05-28
-$7.2 billion
First quarter 2026
Canada's current account deficit (on a seasonally adjusted basis) widened by $6.2 billion to $7.2 billion in the first quarter. This widening of the deficit reflected a reduction in the investment income surplus, as well as an increase in the trade in goods deficit. The first quarter of 2026 marked the 15th consecutive quarter in which the current account balance was in a deficit position.
While the growth in good imports was mainly in metal and non-metallic mineral products in the first quarter, increases in goods exports continued for a narrow set of commodities, namely crude oil, natural gas and gold. Meanwhile, exports of autos and forestry fell to levels last seen in 2021 and 2020.
In the first quarter of 2026, in the financial account (unadjusted for seasonal variation), inflows of funds from abroad to finance the current account deficit came largely from foreign investment in Canadian bonds. While Canadian investors continued to decrease their exposure to US government debt instruments, foreign investors increased their holdings of Canadian government and corporate bonds by a record amount in the first quarter. Meanwhile, the direct investment activity generated a net outflow of funds totalling $17.2 billion, as direct investment abroad rose in the quarter, following a net inflow in the previous quarter.
Current account
Investment income surplus shrinks
The investment income surplus, the difference between income earned on international financial assets and paid on international liabilities, narrowed by $4.9 billion to $2.5 billion in the first quarter. This was largely due to a decrease in the direct investment income surplus. Profits earned by foreign direct investors on their assets in Canada, led by the energy and mining sector, increased more in the first quarter than those earned by Canadian direct investors on their assets abroad.
Imports of goods increase more than exports
The trade in goods deficit widened by $3.3 billion to $7.7 billion in the first quarter, as imports rose at a faster rate than exports. Imports of goods were up 5.5% to reach a record high of $211.0 billion in the first quarter. The main contributor to this increase was higher imports of metal and non-metallic mineral products (+38.3%), largely gold, as prices for precious metals increased significantly in the quarter.
Exports of goods rose 3.9% to $203.3 billion in the first quarter, following a similarly sized increase in the fourth quarter or 2025. Energy products (+16.1%), largely crude oil, and metal and non-metallic mineral products (+11.2%), largely gold, led the increase in exports in the first quarter of 2026. Exports of motor vehicles declined 10.7% to reach $19.1 billion in the first quarter, their lowest level since the second quarter of 2020.
The composition of Canada's trade in goods deficit has changed significantly in recent years. In the first quarter of 2026, the trade surplus in energy products reached its highest quarterly level on record since 2022, at $36.5 billion, while the trade balance in autos posted a record-high deficit. Quarterly energy exports reached their second-highest value on record, more than twice the value of motor vehicles and 4.6 times higher than forestry product exports.
Services surplus increase led by the growth in exports of financial services
Canada's international trade in services surplus increased $0.8 billion to $1.3 billion in the first quarter. Overall, exports of services increased by 1.2% to $61.6 billion, while imports of services edged down by 0.1% to $60.3 billion.
Commercial services mainly contributed to the growth in exports in the first quarter. Financial services exports increased 10.0% to $6.2 billion, as gross trading volumes of cross-border transactions in securities rose significantly during the quarter.
After recording highs in the fourth quarter of 2025, travel services imports declined in the first quarter of 2026. Canadians' travel expenditure in the United States continued to decline, while travel expenditure in all other countries remained robust, resting just shy of the previous quarter's record-high level. Higher imports of both transportation and commercial services moderated the overall decline in services imports.
Chart 1
Current account balances
Financial account
Record foreign investment in Canadian bonds
Foreign investors increased their holdings of Canadian securities by $57.8 billion in the first quarter. Foreign investment in Canadian bonds reached an unprecedented $78.6 billion, led by foreign acquisitions of federal government and private corporate bonds. The investment in private corporate bonds was mainly in foreign currency instruments issued by Canadian chartered banks. At the same time, foreign investors reduced their holdings of both Canadian short-term debt securities (-$13.9 billion) and shares (-$7.0 billion).
Canadian investment in foreign securities reached $40.5 billion in the first quarter, up from $18.5 billion in the previous quarter. Canadian investors purchased $36.9 billion of foreign stocks, led by a record acquisition of US equity securities (+$40.3 billion), most of which were large capitalization technology shares. The purchase activity was mainly concentrated in February. In addition, Canadian investors added $3.6 billion of foreign debt securities to their portfolios in the first quarter, despite a reduction of $18.5 billion in their holdings of US government debt securities, a second consecutive quarter of sizable divestment in these instruments.
As a result, portfolio investment generated a net inflow of funds in the economy of $17.3 billion in the first quarter.
Chart 2
Foreign portfolio investment
Canadian direct investment abroad increases
Canadian direct investment abroad reached $39.2 billion in the first quarter, following an investment amounting to $12.6 billion in the previous quarter. Earnings reinvested by Canadian parent companies in their foreign affiliates (+$23.5 billion) and merger and acquisition transactions (+$8.5 billion) were the main contributors to the investment activity. On a sector basis, most of the direct investment abroad was in the finance and insurance sector (+$11.7 billion), the management of companies and enterprises sector (+$9.8 billion) and the trade and transportation sector (+$7.5 billion). More than half of the total direct investment abroad was directed to the United States.
Foreign direct investment in Canada amounted to $22.0 billion in the first quarter. Mergers and acquisitions (+$12.1 billion), primarily originating from the United States, led the investment activity. Earnings reinvested in Canadian affiliates by their foreign parents contributed to $10.0 billion of the total. On a sector basis, most of the overall direct investment was in the energy and mining sector (+$14.7 billion).
Chart 3
Foreign direct investment
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 Seasonal adjustment: Concepts and interpretation.
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 8. For more information, see Real-time data tables.
Next release
Balance of international payments data for the second quarter of 2026 will be released on August 27.
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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