Current account deficit grows on lower energy, food exports

By Mark Burgess | August 31, 2023 | Last updated on August 31, 2023
2 min read

Canada’s current account deficit grew by $3.5 billion in the second quarter to $6.6 billion as lower exports of energy, fishing and food products led to the first trade deficit in goods for more than two years.

Both imports and exports of goods declined in the quarter, Statistics Canada reported on Thursday. Exports of goods were down 3.9% to $185.9 billion, owing to lower energy prices and lower demand for wheat and canola, the agency said. Imports of goods edged down 0.3% to $192.0 billion.

The services trade deficit narrowed by $1.3 billion to $3.0 billion in the quarter as travel moved to a $200-million surplus and export of management services increased.

Canada’s investment income surplus grew by $2.2 billion in the second quarter as Canadians earned more interest payments on foreign loans and deposits than foreign investors received in Canada.

In a report on Thursday, BMO attributed the growing deficit to lower commodity prices in recent quarters.

“Looking ahead, the rebound in commodity prices should support the current account balance in the third quarter, though a broader economic slowdown will weigh on trade volumes in the second half of the year,” the report said.

BMO said the current account deficit of $6.6 billion remains manageable at approximately 0.9% of GDP.

Foreign investors acquired $54.7 billion in Canadian bonds in the second quarter, far more than the $8.4-billion investment in the first quarter, while continuing to pull money from Canadian stocks.

“Non-resident investors increased their exposure to both Canadian bonds and money market instruments in the second quarter, but withdrew $18.2 billion of funds from the Canadian equity market,” StatsCan said. “This activity followed a divestment of $17.3 billion in Canadian equities in the first quarter.”

After divesting $23.4 billion of foreign securities in Q1, Canadian investors added $14.6 billion in the latest quarter. Most of the additions came in foreign debt ($11.5 billion), StatsCan said.

Foreign direct investment, meanwhile, totalled $12.2 billion in the quarter, the lowest level since the fourth quarter of 2020 as merger and acquisition activity dropped.

Direct investment abroad slowed to $11.3 billion in the second quarter, StatsCan said, after hitting $56.6 billion in the first quarter.

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Mark Burgess

Mark has been the managing editor of since 2017. He has been covering business and politics for more than a decade. Email him at