National balance sheet accounts

Fourth quarter 2004

Growth in national net worth accelerated

National net worth reached $4.3 trillion by the end of the fourth quarter, or $132,500 per capita. Growth in national net worth strengthened to 1.4% in the fourth quarter from the third quarter (+0.3%). The increase resulted from stronger growth in economy-wide non-financial assets (national wealth) as well as from a reduction in net foreign debt, which had increased strongly in the third quarter.

Growth in national net worth accelerated

National wealth grew 1.2%, almost matching growth in the third quarter (+1.3%). Increased residential real estate values accounted for more than half of the increase in national wealth as they had in the third quarter.

Canada's net international indebtedness (what we owe non-residents less what non-residents owe us) fell in the fourth quarter following a strong increase in the third quarter.

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Increase in household net worth driven by equities

Growth in household net worth accelerated to 2.0% in the fourth quarter, following 0.9% growth in the third quarter.

Gains in share holdings accounted for almost two-thirds of the increase in financial assets of the personal sector. Increases in household residential real estate continued, but at a slower pace than in the third quarter.

Household borrowing in the quarter was led by continued demand for mortgage credit, reflecting the ongoing strength in the housing market and encouraged by the decline in the five-year mortgage rate. The ratio of household debt (mortgage and consumer credit) to net worth edged down to 17.9% in the quarter, remaining at a relatively low level. However, growth in total household debt outpaced that of personal disposable income, resulting in a debt-income ratio (seasonally-adjusted) of 105.8 percent, up from 105.1 percent in the third quarter.

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Corporate leverage continues to slide

In most quarters since 2000, corporations have generated more funds from internal operations than they required to finance non-financial capital investment. As a result of this string of surpluses, the corporate sector has been a net lender to the rest of the economy. Corporations have also used these funds to restructure their balance sheets, largely through paying down debt. For non-financial private corporations, this was facilitated in the fourth quarter by a weaker demand for borrowed funds. The ratio of debt to equity (book value) continued its downward trend, reaching a new low in the fourth quarter as it has done in each quarter over the last three years.

Corporate debt-to-equity continued to edge down

Government debt-to-GDP at twenty year low

Government net debt (financial assets minus liabilities, on a book value basis) edged down, as the government sector maintained its surplus position in the fourth quarter. Net debt as a percentage of GDP fell for the sixth consecutive quarter and has reached levels last seen twenty years ago.

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Annual review, 2004

National balance sheet improves, outpacing growth in 2003

National net worth grew 6.3% in 2004. National wealth, the sum of non-financial assets, grew by 5.7%. This, combined with a decrease in net foreign debt, resulted in an improvement from the 5.3% growth of 2003 in national net worth.

Increases in residential real estate assets accounted for about two thirds of the increase in the value of non-financial assets. Accumulation of plant and equipment assets, largely by the corporate sector, was the next largest contribution to this increase.

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Growth in natural resources largely due to price increases

A broader measure of national wealth, including natural resources, rose 6.1% in 2004 compared with 7.0% in 2003. The value of selected natural resource assets—timber, energy and mineral resources—rose 10.6% to $860 billion in 2004, following an 18% increase in 2003.

The value of energy reserves, which accounts for more than half of resource wealth, was up 14.6%. High oil prices led to significant increases in the value of crude oil and crude bitumen assets that more than offset a decline in the value of natural gas. In addition, the value of selected metal stocks was up almost 40% due to high metal prices.

Note to readers

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Statistical tables

• National balance sheet, market value
• Credit market summary table

Information on methods and data quality available in the Integrated Meta Data Base: 1806.