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13-214-XIE
National balance sheet accounts
Second quarter 2003

Note to readers

The national balance sheet accounts are statements of the balance sheets of all of the various sectors of the economy. They consist of the non-financial assets owned in the various sectors of the economy and of financial claims outstanding. National wealth is the sum of non-financial assets – produced assets, land surrounding structures and agricultural land – in all sectors of the economy. National net worth is wealth less net foreign liabilities (i.e., what is owed to non-residents less what they owe to us – Canada's net international investment position); alternatively, it is the sum of the net worth of persons, corporations and governments.

Quarterly series run from the first quarter of 1990. At this point, only selected series are available on a seasonally-adjusted basis. However additional seasonally adjusted data will be provided over the course of the year. The text refers to data unadjusted for seasonal variation unless otherwise specified.

Users are advised that data for Canadian foreign investment in marketable securities (foreign investment) for certain institutional investors’ sectors, in particular in recent years, may differ from those reported in other Statistics Canada surveys. This difference is related to the increased gap between the book value of Canadian asset-holders marketable foreign equity securities on the one hand, and the underlying book values of the foreign firms whose shares are being held and traded on the other. This situation will persist for the next few quarters, as the National Balance Sheet Accounts will continue to follow the International Investment Position concept for valuation of Canadian foreign investment in equity securities. However, this issue will be resolved as both accounts move to a common market valuation for tradable securities.

An annual measure of national wealth that includes selected natural resources is also available (CANSIM table 378-0005).

National net worth stood at $3.9 trillion or $121, 900 per capita by the end of the second quarter of 2003.


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Gain in national net worth tied to slower growth in net foreign debt

National net worth advanced at a faster pace (+1.3%) in the second quarter of 2003, the result of a smaller increase in the nation’s net foreign liability – what Canadians owe to non-residents less what they owe to us. The rise in net foreign debt was again related to the appreciation of the Canadian dollar which had a larger impact on Canada’s foreign currency denominated assets than on foreign currency-denominated liabilities.

Chart: National net worth


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Wealth advances at a slower pace, in line with a weaker economy

National wealth – the economy’s non-financial assets, such as houses, automobiles, land, as well as business inventories and fixed capital – reached $4.1 trillion. On a seasonally adjusted basis, growth slowed from 1.7% in the first quarter to 1.5% in the second quarter, in line with a weakened economy. Changes in non-financial assets reflected domestic spending as well as revaluations due to fluctuations in prices. The extended housing boom continued to support the growth in wealth. Gains in the value of residential real estate reflected both the impact of sustained demand in the resale market and continued high levels of construction activity. Business capital and consumer durable goods grew at a slower pace in the quarter. Inventory stocks declined.


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Debt growth dampened by stronger Canadian currency

Total credit market debt (short-term paper, loans, mortgages and bonds) edged up in the second quarter, driven by higher seasonal demand for funds in the household sector, but significantly curtailed by the impact of an appreciating Canadian dollar for the second consecutive quarter. Liabilities denominated in foreign currencies declined in both the corporate and government sectors.


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Corporate financial positions strengthened further

Lower capital spending coupled with strong undistributed earnings allowed the corporate sector to further expand a significant corporate surplus in the second quarter. This, along with reduction of foreign currency-denominated debt, allowed firms to continue to restructure their balance sheets.

Among non-financial private corporations, the debt-to-equity ratio continued to plummet in the second quarter. This ratio has reached levels not seen since the 1970’s. The reduction in leverage in the second quarter was largely the result of earnings combined with a modest demand for funds and the effect of an appreciating dollar. In addition, businesses replaced loans and short-term paper liabilities with bond issues in the second quarter, further extending the downward trend in the ratio of short-term debt to long-term debt. This partly resulted in the growth of current assets continuing to outpace that of current liabilities, with liquidity for these corporations increasing steadily since the second quarter of 2000.


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Government net debt declined

Government net debt declined in the second quarter. At the federal level this largely reflected a reduced demand for funds, arising from the surplus recorded in the quarter. The decline at the provincial government level was principally related a reduction in gross debt – specifically to the drop in foreign currency denominated liabilities. The increase in the net asset position of social security funds further supported the decline in government sector net debt.

Government sector net debt fell further relative to gross domestic product (seasonally adjusted), making for the sixth consecutive quarter of decline in this ratio.


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Household net worth advance driven by real estate

Household net worth advanced at a faster pace than in the previous two quarters, led by strong gains in the value of residential real estate, but was partly offset by a sharp rise in debt. This was a continuation of the trend set in 2002, and reflected the boom in the housing market.

The ratio of consumer credit and mortgage debt to personal disposable income rose to a new high of 100.1% (seasonally adjusted), as income growth slowed and borrowing advanced in the quarter.

Financial asset growth in the personal sector continued to be constrained by declines in pension and mutual fund assets reflecting, in part, the fall in value of foreign currency-denominated assets of these institutional investors over the last two quarters.

National balance sheet accounts1

  First quarter 2002 Second quarter 2002 Third quarter 2002 Fourth quarter 2002 First quarter 2003 Second quarter 2003 2001 2002
National net worth
not seasonally adjusted
National wealth 3,814 3,880 3,921 3,968 4,026 4,087 3,747 3,968
… … … … … … 5.3 5.9
Net foreign debt -212 -215 -204 -184 -215 -227 -189 -184
… … … … … … … …
National net worth 3,602 3,665 3,717 3,784 3,810 3,860 3,558 3,784
… … … … … … 5.9 6.4
National net worth per capita (dollars) 115,000 116,700 118,100 120,100 120,700 121,900 113,900 120,100
… … … … … … 4.8 5.4
                 
Net worth:
seasonally adjusted
Personal sector 3,408 3,492 3,496 3,560 3,599 3,652 3,379 3,560
0.9 2.5 0.1 1.8 1.1 1.5 … …
+ Corporate sector 430 400 429 431 419 407 408 431
5.4 -7.0 7.3 0.5 -2.8 -2.9 … …
+ Government sector -229 -222 -211 -207 -201 -193 -229 -207
… … … … … … … …
= National net worth 3,609 3,670 3,713 3,784 3,817 3,866 3,558 3,784
1.4 1.7 1.2 1.9 0.9 1.3 … …
1 The first line is the series itself expressed in billions of dollars. The second line, italicized, is the period to period percentage change.
... Not applicable

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Date Modified: 2003-09-29 Important Notices