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National net worth reached $4.2 trillion by the end of the second quarter, or $131,100 per capita.
Growth in net worth accelerated
National net worth grew 2.7% in the second quarter, the largest increase in over three years. The increase in national net worth resulted from a sharp reduction in net foreign debt and stronger growth in national wealth.
National net worth
Canadians’ net indebtedness to non-residents continued to fall in the second quarter as Canadians increased both their direct and portfolio investment assets abroad by more than their liabilities to non-residents. The gain in Canadian direct investment was driven by the acquisition of a large U.S. firm.
The acceleration in growth of national wealth from 1.1% in the first quarter to 1.9% in the second quarter (1.7% seasonally adjusted) contributed to the gain in net worth. Despite an easing of domestic spending, price increases and investment in residential real estate assets largely accounted for the increase in wealth.
Household net worth outpaced debt
Household’s net worth at market value grew at a faster rate than the previous quarter in both non-financial assets and net financial assets (total financial assets less total financial liabilities). While demand for funds grew in the quarter, the ratio of household debt to net worth declined with a strong increase in net worth (+3.0%). Households had $103.0 in debt (consumer credit and mortgages) for every $100 of their disposable income, against a backdrop of stable interest rates.
Corporations’ finances continued to improve
For more than four years on a quarterly basis, corporations have generated more funds from their internal operations than has been required for non-financial capital acquisition. Due to this record string of surpluses, corporations have been a net supplier of funds to the rest of the economy and have substantially restructured their balance sheets. As a result, corporate debt to equity continued its downward trend, reaching a new low in the second quarter.
Corporate leverage continued to slide
Government net debt declined
Net government debt on a book value basis declined (total government financial assets minus total government financial liabilities) reflecting a surplus position in the second quarter. Net government debt has fallen in eight of the last ten quarters. Net government debt as a percentage of GDP continued to fall and has now reached levels last seen in the mid 1980s.
National balance sheet accounts 1
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