Current account deficit widens in Q3: StatsCan

By James Langton | November 30, 2020 | Last updated on November 30, 2020
2 min read

Canada’s current account deficit edged higher in the third quarter, according to the latest data from Statistics Canada.

The national statistical agency reported that the current account deficit grew by about $500 million in the third quarter to $7.5 billion.

The increased current account deficit represents roughly 1.3% of GDP, BMO Economics said, adding that at that level, the shortfall “shouldn’t pose a major headwind for the loonie.”

The deficit from trade in goods and services expanded by $700 million in Q3 to $8.2 billion, StatsCan noted.

The goods trade led the way, with its deficit growing by $600 million to $8.8 billion.

Both imports and exports rose “significantly” in the quarter, StatsCan said, but they remain below pre-pandemic levels.

At the same time, trade in services remained in surplus, which BMO noted “marks the first surplus in almost 40 years, thanks to the travel deficit being wiped away with borders closed due to the pandemic.”

StatsCan said that while ongoing travel restrictions impacted travel services, commercial services trade has “remained relatively strong since the start of the pandemic,” as many services can still be provided remotely.

While the trade deficit grew in Q3, StatsCan also reported that Canada’s investment income surplus increased by $400 million in the quarter to $2.6 billion.

“Profits earned by Canadian investors on their direct investment abroad were up by $1.6 billion. This was moderated by lower interests earned by Canadian banks on their activities abroad,” it said.

At the same time, portfolio flows and direct investment activity both generated a net outflow of funds from the economy in the third quarter.

“For these two types of investment, there were more acquisitions of foreign assets by Canadian investors than acquisitions of Canadian assets by foreign investors in the quarter. Meanwhile, cross-border mergers and acquisitions slowed to very low levels,” StatsCan reported.

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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.