Canada Current Account Deficit Narrows in Q1
In the first quarter of 2025, Canada's current account deficit decreased to CAD 2.1 billion, showing an improvement from the adjusted deficit of CAD 3.6 billion recorded in the previous quarter and falling below the market's anticipated CAD 3.25 billion gap. This improvement was primarily due to an increase in the investment income surplus, which grew to CAD 1.8 billion from CAD 1.4 billion, largely as a result of Canadian direct investors realizing higher profits overseas. However, the goods trade deficit increased to CAD 0.47 billion from CAD 0.33 billion, and the services deficit inched up slightly to CAD 0.89 billion from CAD 0.85 billion. During the same period, foreign investors purchased a significant CAD 48.6 billion worth of Canadian bonds. Meanwhile, direct investment in Canada saw a boost, climbing to CAD 28.2 billion from CAD 21.8 billion in the final quarter of 2024. Conversely, Canada experienced an unprecedented level of foreign divestment, with investors withdrawing CAD 9.4 billion from Canadian securities, which included CAD 40.6 billion from equities and investment funds and CAD 17.4 billion from money market instruments.
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