A large increase in the investment income deficit in the fourth quarter took a big bite out of Canada’s current account surplus with the rest of the world.

The current account covers transactions on goods, services, investment income and current transfers.

Statistics Canada said today that the surplus came in at $3 billion on a seasonally adjusted basis, way below the $6.1 billion that economists were expecting and down $2.8 billion from the previous quarter.

The government agency noted this was the lowest surplus in more than three years, as the deficit on investment income increased $3.8 billion to $5.7 billion, more than offsetting an improved performance for goods.

For all of 2006, the current account surplus fell to $24.3 billion, down $7.5 billion from the 2005 record.

StatsCan said transactions in exports and interest income are examples of receipts, while imports and interest expense are payments. The balance from these transactions determines if Canada’s current account is in surplus or deficit.