balls on scale

After three straight quarterly surpluses, Canada’s balance of payments returned to deficit in the fourth quarter of 2021. But the economy finished the year in surplus for the first time since the financial crisis, Statistics Canada reports.

In Q4, the current account swung from a $0.8 billion surplus to a $0.8 billion deficit, StatsCan said.

“The slight deficit position mainly reflected a deterioration of the investment income balance, which posted its first deficit in over two years,” the agency reported.

StatsCan noted that “record foreign investment in Canadian securities was the main contributor to the inflow of funds in the economy” in the fourth quarter.

Yet direct investment abroad surged in the quarter due to merger and acquisitions activity, which resulted in direct investment abroad exceeding direct investment in Canada by $43.1 billion — the highest level on record, the agency said.

Trade in goods and services recorded its third quarterly surplus of the year, with a $2.4-billion surplus in the fourth quarter. Higher energy prices boosted the value of goods exports, and goods imports rose too.

For 2021, the StatsCan said the current account balance managed a surplus of $1.6 billion, which marks the first surplus since 2008.

“The trade in goods balance went from a $39.8-billion deficit in 2020 to a $5.2-billion surplus in 2021,” it noted, and the services deficit narrowed to just $1.3 billion.

“Look for ongoing commodity price strength to support goods trade in the early part of 2022,” said Bank of Montreal in a research note.