Canada’s seasonally adjusted deficit narrowed by $1.4 billion in the first quarter to reach $2.1 billion, according to a Statistics Canada release Thursday.
This narrowing reflected a lower total income deficit, the statistical agency said. The trade in goods and services deficit widened slightly from the fourth quarter of 2024 to reach $1.4 billion.
The trade in goods deficit grew by $0.1 billion to $0.5 billion in the first quarter. Both exports and imports posted large gains amid economic uncertainty surrounding the announcements and implementation of tariffs on some goods traded between Canada and the United States.
The trade in services deficit was essentially unchanged at $0.9 billion, as a narrowing transportation services deficit and an increased travel surplus were offset by a decrease in the commercial services surplus.
In the financial account (unadjusted for seasonal variation), inflows of funds from abroad in the first quarter of 2025 came primarily from direct investment. At the same time, portfolio transactions led to a net outflow of funds from the Canadian economy of $45.9 billion, led by a record foreign divestment in Canadian shares.
Foreign investors reduced their exposure to Canadian securities by $9.4 billion in the first quarter. Foreign divestments in equity and investment fund shares (-$40.6 billion) and money market instruments (-$17.4 billion) were moderated by investment in Canadian bonds ($48.6 billion), mainly new corporate bonds denominated in U.S. dollars.
Meanwhile, Canadian direct investment abroad totalled $7.7 billion in the first quarter, the lowest quarterly investment since the second quarter of 2013.