Canada's net foreign asset position in Q1 increased by C$212.0B to C$1.1T, the highest level since Q4 2021; changes in market prices led to C$196.8B increase in Canada's net foreign asset position: Statistics Canada

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OTTAWA , June 13, 2023 (press release) –

Canada's net foreign asset position increased by $212.0 billion to reach $1,103.7 billion at the end of the first quarter, the highest level since the fourth quarter of 2021, as global equity markets registered gains in the first quarter of 2023. This marked the second consecutive significant quarterly gain.

Over the first quarter, the US stock market grew by 7.0%. Meanwhile, the European stock market rose by 13.7%, and the Canadian stock market grew by 3.7%. This resulted in higher levels for both Canada's international assets and liabilities in the form of equity instruments. However, the revaluation effect due to stock market performance was much larger on assets, as foreign market prices were up by more than Canadian market prices and because equities accounted for a larger share of total assets (67.1%) than of liabilities (43.8%). Overall, changes in market prices increased Canada's net foreign asset position by $196.8 billion.

Chart 1: Canada's net international investment position

While relatively modest, the revaluation effect from fluctuations in exchange rates (+$17.9 billion) supported the overall increase in Canada's net foreign asset position. Over the first quarter, the Canadian dollar lost 2.4% against the British pound and 1.7% against the euro, but its value remained almost unchanged against the US dollar. At the end of the first quarter, 96.4% of Canada's international assets were denominated in foreign currencies compared with 39.6% of its international liabilities.

Chart 2: Contributors to the change in the net international investment position

Canada's international assets increase
Canada's international assets were up by $278.3 billion (+3.7%) to $7,744.9 billion at the end of the first quarter. The upward revaluation attributable to market price changes (+$293.9 billion) led the growth. Strong direct investments abroad, mainly from merger and acquisition transactions, also contributed to the increase. Substantial sales of foreign equity securities by Canadian investors, mostly US shares, moderated the overall gains in the quarter.

On the other side of the ledger, Canada's international liabilities were up by $66.3 billion (+1.0%) to $6,641.3 billion. The increase mainly resulted from an upward revaluation due to fluctuations in market prices (+$97.1 billion). Financial transactions (-$11.2 billion), mainly a reduction in the form of loans, partially offset the increase.

Chart 3: Canada's international assets and liabilities

Canada's gross external debt rises
Canada's gross external debt edged up (+$2.8 billion) at the end of the first quarter, reaching $3,587.8 billion. As a percentage of gross domestic product, Canada's gross external debt decreased to 127.5% at the end of the first quarter from 128.7% at the end of the fourth quarter of 2022. At the end of the first quarter of 2023, the financial sector (62.2%) contributed to the highest proportion of Canada's gross external debt, followed by the government sector (16.9%).

Chart 4: Canada's gross external debt as a percentage of gross domestic product

Note to readers
Definitions
The international investment position is the value and composition of Canada's assets and liabilities to the rest of the world.

Canada's net international investment position is the difference between Canada's assets and liabilities to the rest of the world. An excess of international liabilities over international assets can be referred to as Canada's net foreign debt. An excess of international assets over international liabilities can be referred to as Canada's net foreign assets.

Foreign direct investment is presented on an asset–liability principle basis (that is, a gross basis) in the international investment position. Foreign direct investment can also be presented on a directional principle basis (that is, a net basis), as shown in supplementary foreign direct investment tables 36-10-0008-01, 36-10-0009-01 and 36-10-0659-01. The difference between the two foreign direct investment conceptual presentations resides in the classification of reverse investment such as (1) Canadian affiliates' claims on foreign parents and (2) Canadian parents' liabilities to foreign affiliates. Under the asset–liability presentation, (1) is classified as an asset and included in direct investment assets and (2) is classified as a liability and included in direct investment liabilities.

Next release
International investment position data for the second quarter will be released on September 12.

Products
The Economic accounts statistics and International trade statistics portals are available from the Subjects module of the Statistics Canada website.

The Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world through interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, the United Kingdom, Mexico, China, and Japan.

The product Canada's international trade and investment country fact sheet (Catalogue number71-607-X) is available online. This product provides easy and centralized access to Canada's international trade and investment statistics, on a country-by-country basis. It contains annual information for nearly 250 trading partners in summary form, including charts, tables and a short analysis that can also be exported in PDF format.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available.

Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

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