Canada's balance of international payments, second quarter 2026
Released: 2026-08-27
$8.8 billion
Second quarter 2026
Canada's current account balance (on a seasonally adjusted basis) went from a deficit of $8.3 billion in the first quarter to a surplus of $8.8 billion in the second quarter. This was the first current account surplus since the second quarter of 2022 (+$3.5 billion) and the largest since the fourth quarter of 2005 (+$12.5 billion). In the second quarter of 2026, strong gains in goods exports moved the trade in goods balance from a deficit to a large surplus and were the main contributor in the shift of the current account balance to a surplus.
The significant increase in exports of goods was led by energy products, although exports for most product sections rose in the second quarter. Imports of goods increased as well, but at a slower pace than exports.
In the financial account (unadjusted for seasonal variation), transactions in the form of loans led the net lending activity to non-residents in the second quarter. Meanwhile, portfolio and direct investment activity both generated a net inflow of funds in the economy. Unprecedented foreign investment in Canadian government bonds combined with weak direct investment abroad relative to direct investment in Canada contributed to the net inflow of funds in the second quarter.
Current account
Largest goods surplus since 2008
The trade in goods balance went from a deficit of $6.4 billion in the first quarter to a surplus of $12.2 billion in the second quarter. This was the largest surplus since the third quarter of 2008.
Exports of goods rose 13.1% to $232.1 billion in the second quarter of 2026, significantly higher than the previous record high of $209.0 billion recorded in the first quarter of 2025. The main contributor to the increase in the second quarter of 2026 was exports of energy products (+27.4%), particularly crude oil and bitumen, as prices increased amid international production and supply uncertainty due to the conflict in Iran. Exports of crude oil and bitumen reached a record high of $44.8 billion in the second quarter, pushing exports of overall energy products to its own record high of $60.6 billion. Exports of motor vehicles and parts (+19.3%) also rose significantly in the second quarter as auto production in Canada increased. Despite this increase, exports of motor vehicles and parts remained below the quarterly average for 2023 and 2024.
In the second quarter of 2026, imports of goods were up 3.9% to reach $220.0 billion, which was also a record high. Higher imports of chemical products (+20.2%), electronic and electrical equipment and parts (+11.2%), and motor vehicles and parts (+7.6%) were partially offset by lower imports of metal and non-metallic mineral products (-13.6%).
Services surplus narrows
Canada's international trade in services surplus narrowed from $472.1 million in the first quarter to $26.3 million in the second quarter. Imports of services rose 1.7% to $62.0 billion, while exports were up 1.0% to $62.0 billion.
Commercial services was the main contributor to the increase in both imports and exports of services in the second quarter. Imports of commercial services rose 2.8% to $35.1 billion, on higher imports of financial services (+9.5%) and management services (+4.6%). Exports of commercial services grew at a slightly lower rate, up 1.7% to reach $37.2 billion, as higher exports of management services (+3.8%), advertising services (+16.7%), royalties (+6.5%) and research and development services (+4.3%) all contributed to growth.
The travel services surplus narrowed from $2.6 billion in the first quarter to $2.4 billion in the second quarter, as exports of education-related travel services declined and imports of personal travel services increased.
Investment income surplus continues to narrow
The investment income surplus, the difference between income earned on international financial assets and paid on international liabilities, narrowed from $1.0 billion in the first quarter to $0.5 billion in the second quarter. This marks the third consecutive quarterly decrease in the investment income surplus. The decrease in the second quarter was largely due to an increase in the portfolio investment income deficit, led by higher interest payments made to non-resident holders of Canadian bonds.
Chart 1
Current account balances
Financial account
Record foreign investment in Canadian government bonds
Foreign investors increased their holdings of Canadian securities by $100.6 billion in the second quarter. Foreign investment in Canadian debt securities reached $110.2 billion, the highest level on record, led by record foreign acquisitions of government bonds totalling $80.8 billion. While increasing their exposure to the Canadian debt market, foreign investors reduced their holdings of Canadian shares by $9.6 billion, a second consecutive quarter of divestment.
Canadian investment in foreign securities reached $45.6 billion in the second quarter. The activity was mainly driven by purchases of $35.5 billion of foreign shares, led by strong acquisitions of US equity securities of $37.8 billion. Investors also added $10.0 billion of foreign debt securities to their portfolios in the second quarter. Meanwhile, Canadian investors divested from US government bonds (-$14.4 billion) for a third consecutive quarter.
As a result, portfolio investment generated a net inflow of funds in the economy of $55.1 billion in the second quarter, the highest net inflow of funds since the first quarter of 2022.
Chart 2
Foreign portfolio investment
Direct investment abroad slows
Canadian direct investment abroad slowed to $17.1 billion in the second quarter of 2026, down significantly from $43.6 billion in the previous quarter. Earnings reinvested by Canadian parent companies in their foreign affiliates (+$24.5 billion) accounted for most of the activity in the second quarter while merger and acquisition transactions slowed to $2.1 billion compared with $9.7 billion in the first quarter. On a sector basis, most of the direct investment abroad in the second quarter was in the trade and transportation sector (+$5.6 billion), the energy and mining sector (+$5.3 billion) and the management of companies and enterprises sector (+$3.2 billion). Countries other than the United States accounted for nearly three-quarters of the activity.
Foreign direct investment in Canada amounted to $25.9 billion in the second quarter, up from $18.8 billion in the first quarter. Earnings reinvested in Canadian affiliates by their foreign parents (+$12.4 billion) contributed the most to the activity in the second quarter. Meanwhile, merger and acquisition activities amounted to $2.0 billion, down from $12.1 billion in the first quarter. On a sector basis, more than half of the total direct investment in the second quarter was in the manufacturing sector (+$7.0 billion) and the finance and insurance sector (+$6.6 billion). The majority of foreign direct investment in Canada originated from the United States, the United Kingdom and the Netherlands.
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 September 8. For more information, see Real-time data tables.
Next release
Balance of international payments data for the third quarter of 2026 will be released on November 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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