As imports of goods increased and exports edged down, Canada’s current account deficit narrowed by $4.6 billion to $0.7 billion (on a seasonally adjusted basis) in the fourth quarter of 2025, compared to the previous quarter, Statistics Canada said Thursday.
This marked the 14th consecutive quarter where the current account balance was in a deficit.
The trade in goods deficit amounted to $4.5 billion, down from $9.5 billion in the third quarter, while trade in services was down to a $1.4-billion surplus, from a $2 billion surplus.
Goods exports increased 3.9% to $195 billion on a quarterly basis, led by metal products (mostly gold), partially offset by falling motor vehicle and forestry product exports. Goods imports rose 1.2% to $200 billion, mainly driven by electronic and electrical equipment and parts and metal ores and non-metallic minerals.
Meanwhile, services imports were up 1.5% to $60 billion in the fourth quarter, mainly from higher values for travel, transportation and commercial services. Services exports rose 0.5% to $61 billion, with gains in transportation and commercial services partially offset by lower exports of travel services.
Canadian securities holdings
Foreign investors increased their holdings of Canadian securities by $58.2 billion in the fourth quarter, mainly in the Canadian bond market. Meanwhile, Canadian investors acquired $18.5 billion of foreign securities, down from a $56.1-billion investment in the third quarter.
Canadian investors reduced their exposure to foreign debt securities by $13.2 billion quarter over quarter, driven by a record divestment of $20.5 billion from U.S. Treasury bonds. This was the first time Canadians divested from foreign debt securities since the second quarter of 2020.
Foreign investors acquired a record $33.6 billion of Canadian federal government bonds, while they reduced their holdings of federal government money-market instruments by $17.6 billion.
In all, portfolio investment generated a net inflow of $39.8 billion in the Canadian economy in the fourth quarter.
For the year 2025, foreign direct investment in Canada reached $96.8 billion, the highest level since 2007. The main recipients of inward direct investment were the trade and transportation ($23.6 billion), management of companies and enterprises ($14.5 billion), and manufacturing ($11.2 billion) sectors. More than half of the investment originated from the U.S.
At the same time, Canadian direct investment abroad of $79.4 billion was at the lowest level since 2020. Canadian sales of existing assets abroad exceeded acquisitions by $3 billion. Merger and acquisition activities resulted in a net divestment of $11.1 billion from the U.S. and $8 billion from the rest of the world, the national statistical agency reported.