Canada's current account deficit narrowed to $0.7 billion in the fourth quarter of 2025, a notable decrease of $4.6 billion from the previous quarter. According to Statistics Canada, this improvement reflects a significant reduction in the trade in goods deficit, although it was partially offset by decreases in the surpluses for services and investment income. Despite this progress, the fourth quarter marked the 14th consecutive quarter in which Canada's current account balance remained in a deficit position.
The trade in goods deficit decreased by $5.0 billion, reaching $4.5 billion in Q4. Exports of goods saw a 3.9% increase, driven primarily by higher exports of metal products, particularly gold. Conversely, imports of goods rose by 1.2%, with electronic and electrical equipment and parts, along with metal ores and non-metallic minerals, being the main drivers. Meanwhile, the surplus in trade of services decreased from $2.0 billion to $1.4 billion.
For the entirety of 2025, Canada's current account deficit totaled $30.4 billion, doubling from the $15.0 billion deficit recorded in 2024. This increase was largely attributed to a widening trade in goods deficit, which ballooned from $7.2 billion in 2024 to $31.1 billion in 2025. Despite this, foreign direct investment in Canada remained strong, reaching $96.8 billion, the highest level since 2007. The trade and transportation, management of companies and enterprises, and manufacturing sectors were the primary recipients of this investment, with over half originating from the United States.
Canadian investors decreased their exposure to foreign debt securities by $13.2 billion in the fourth quarter, marking the first time Canadians have divested from foreign debt securities since the second quarter of 2020. This was influenced by a record divestment of $20.5 billion from U. S. Treasury bonds. Simultaneously, foreign investors acquired a record $33.6 billion in Canadian federal government bonds. While trade between Canada and the U. S. cooled, trade with other countries expanded strongly.
