Canada Current Account Deficit Narrows in Q3

Canada’s current account deficit narrowed by C$11.9 billion to C$9.7 billion in Q3 2025. The goods and services deficit fell from C$19.1 billion in Q2 to C$10.6 billion. Goods exports rose 1.8% to C$186.0 billion after a 12.6% drop in the previous quarter, while goods imports fell 2.0% to C$197.1 billion, marking a second straight decline. The services balance moved from a C$0.7 billion deficit to a C$0.5 billion surplus, supported by a larger commercial services surplus and a smaller transportation deficit. The investment income surplus widened by C$2.9 billion to C$7.0 billion amid higher direct investment income.

Canada’s current account deficit widened by C$19.8 billion in Q2 2025 to a record C$21.2 billion, driven by a sharp deterioration in the goods trade balance. The goods deficit rose by C$19.1 billion to an unprecedented C$19.6 billion, as exports dropped 13.1% to C$182.2 billion, the lowest since late 2021, pressured by US tariffs and a stronger Canadian dollar. Imports fell 4.0% to C$201.8 billion. In services, the balance shifted to a small surplus of C$0.1 billion, with declines in both exports and imports. Foreign portfolio investors divested C$16.8 billion in Canadian securities, the largest since 2007, while Canadian investors bought C$26.8 billion in foreign assets.

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.