Current account deficit higher in 2022: StatsCan

By James Langton | February 27, 2023 | Last updated on February 27, 2023
2 min read
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Canada’s current account deficit rose in the fourth quarter, according to new data from Statistics Canada.

The deficit increased to $10.6 billion in the fourth quarter, up $2.2 billion from the previous quarter, pushing the annual deficit to $10.8 billion, the national statistical agency reported.

“The higher deficit mainly reflected a deterioration of the investment income balance, while the goods and services deficit narrowed slightly,” StatsCan said.

While the deficit increased on both a quarterly and annual basis, “the deficit is a manageable share of GDP, and we expect it to remain so in the coming quarters,” said BMO Economics, in a research note.

Both imports and exports declined in the fourth quarter, which resulted in the goods and services deficit narrowing to $2.8 billion, down by $0.4 billion from the previous quarter.

Exports were down by $4.0 billion, led by a decline in energy exports as prices continued to trend lower. Imports also dropped by $3.2 billion, with consumer goods (namely pharmaceuticals) leading the way.

Canada’s goods surplus with the U.S. declined in the fourth quarter, as did the deficit with non-U.S. countries, which StatsCan said was primarily due to “a lower trade deficit with China.”

The services deficit also fell by $1.2 billion in the fourth quarter to $4.5 billion, it reported.

At the same time, StatsCan said the investment income deficit rose by $2.7 billion to $5.3 billion in the fourth quarter, as profits earned by foreign investors in Canada increased, and Canadian investors’ earnings abroad were down.

Amid rising global interest rates, the income generated on loans, deposits and debt securities “were up significantly in the quarter,” StatsCan said, noting that foreign investors hold more of these assets in Canada than Canadian investors have in foreign markets.

In the fourth quarter, foreign investors added $21.9 billion worth of Canadian bonds and $20.1 billion in money market instruments. Canadian investors acquired $10.6 billion in foreign securities in the fourth quarter, StatsCan said.

“We pedalled our bonds to all corners of the globe, with last year’s net sales into the U.S., the U.K., continental Europe and key emerging countries more than offsetting Japanese divestment,” said National Bank Financial Inc. (NBF) in a research note.

Foreign investor interest in Canadian debt is particularly welcome at a time when the Bank of Canada is pulling back its asset purchases, NBF said.

“Foreign investor exposure is not without its risks, but non-resident demand helps clear Canada’s net bond supply at a lower yield and/or tighter spread than would otherwise be the case,” it said. “It’s a timely source of demand given that our own central bank has started shedding its [government] bond holdings.”

“One hopes the apparent foreign appetite for Canadian debt is maintained in 2023, which represents the peak year for [quantitative tightening] at the [Bank of Canada],” it said.

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.