Canada Current Account Deficit Narrows in Q1

2025-05-29 12:58 By Isabela Couto 1 min. read

Canada’s current account deficit narrowed to CAD 2.1 billion in Q1 2025, down from a revised CAD 3.6 billion in Q4 and below market expectations of a CAD 3.25 billion gap.

The investment income surplus rose to CAD 1.8 billion, driven by stronger earnings from Canadian direct investments abroad.

However, the goods deficit widened to CAD 0.5 billion from CAD 0.4 billion, as both exports and imports increased amid uncertainty over new tariffs between Canada and the U.S.

The services deficit also inched up to CAD 0.89 billion.

Foreign investors purchased CAD 48.6 billion in Canadian bonds, while direct investment in Canada climbed to CAD 28.2 billion.

Meanwhile, Canada saw record foreign divestment, with a net outflow of CAD 9.4 billion, including CAD 40.6 billion from equities and funds and CAD 17.4 billion from money market instruments.



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Canada’s current account deficit narrowed to CAD 2.1 billion in Q1 2025, down from a revised CAD 3.6 billion in Q4 and below market expectations of a CAD 3.25 billion gap. The investment income surplus rose to CAD 1.8 billion, driven by stronger earnings from Canadian direct investments abroad. However, the goods deficit widened to CAD 0.5 billion from CAD 0.4 billion, as both exports and imports increased amid uncertainty over new tariffs between Canada and the U.S. The services deficit also inched up to CAD 0.89 billion. Foreign investors purchased CAD 48.6 billion in Canadian bonds, while direct investment in Canada climbed to CAD 28.2 billion. Meanwhile, Canada saw record foreign divestment, with a net outflow of CAD 9.4 billion, including CAD 40.6 billion from equities and funds and CAD 17.4 billion from money market instruments.
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