OTTAWA
,
June 12, 2024
(press release)
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Canada's net foreign asset position, the difference between its international financial assets and international liabilities, increased by $309.5 billion from the end of the fourth quarter of 2023 to reach $1,990.2 billion at the end of the first quarter of 2024. The growth mainly reflected the stronger performance of foreign stock markets relative to the Canadian stock market, which increased the value of Canada's international assets in equity instruments by more than its international liabilities. Chart 1: Canada's net international investment position The upward revaluation due to market price changes added $229.9 billion to Canada's net international investment position by the end of the first quarter. Global stock markets posted a strong performance in the first quarter, with the US stock market (+10.2%), the European stock market (+12.4%) and the Japanese stock market (+20.6%) all trending up. Meanwhile, the Canadian stock market grew by 5.8%. International assets are more concentrated in equities (69.7% at the end of the first quarter) than are international liabilities (42.8%) and consequently are more impacted by stock market fluctuations. The revaluation effect from fluctuations in exchange rates (+$76.9 billion) increased the value of assets by more than the value of liabilities, further contributing to the overall increase in Canada's net foreign asset position. Over the first quarter, the Canadian dollar depreciated by 2.4% against the US dollar and by 1.6% against the British pound. At the end of the quarter, 97.2% of Canada's international assets were denominated in foreign currencies compared with 41.5% of its international liabilities. Chart 2: Contributors to the change in the net international investment position On a geographical basis, Canada's net foreign asset position with the United States reached $1,531.6 billion at the end of the first quarter, an increase of $267.1 billion since the end of 2023. Meanwhile, Canada's net foreign asset position with the rest of the world was up by $42.4 billion to $458.7 billion at the end of the first quarter of 2024. Chart 3: Canada's net international investment position, by region Canada's international assets continue to increase strongly On the other side of the ledger, Canada's international liabilities were up $99.1 billion (+1.3%) to $7,513.5 billion at the end of the first quarter. The increase mainly resulted from higher market prices (+$140.6 billion) and, to a lesser extent, the upward revaluation effect due to the weaker Canadian dollar (+$49.7 billion). At the end of the first quarter, 69.9% of Canada's international assets were held by firms from the financial sector. In comparison, the international liabilities of these firms represented 50.5% of Canada's total international liabilities. As a result, the financial sector was by far the largest contributor to Canada's net asset position with the rest of the world at the end of the first quarter. On the other hand, non-financial corporations and the government sector both posted a net foreign liability position, meaning that the value of foreign assets they hold is less than the value of liabilities they owe to foreign creditors. Chart 4: Canada's international assets and liabilities Canada's gross external debt declines The gross external debt of the financial sector stood at $2,493.2 billion at the end of the first quarter, a decline of $54.8 billion, following a significant increase of $163.0 billion in the previous quarter. Meanwhile, the gross external debt of non-financial corporations grew by $31.7 billion (+7.0%) to reach $483.7 billion at the end of the first quarter and the government sector grew by $11.6 billion (+1.8%) to $672.6 billion. Canada's gross external debt represented 140.3% of its gross domestic product at the end of the first quarter. Chart 5: Canada's gross external debt as a percentage of gross domestic product Note to readers 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 Products 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 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.
Canada's international assets rose by $408.6 billion (+4.5%) to reach $9,503.8 billion at the end of the first quarter, following the record increase of the previous quarter which was marked by substantial price appreciation and acquisition activity. The revaluation effects caused by market price changes (+$370.5 billion) and by exchange rate fluctuations (+$126.6 billion) both contributed to the increase. This growth was nonetheless mitigated by divestments (-$66.9 billion), mostly in the form of loans as well as currency and deposits.
Canada's gross external debt, or the value of Canadian debt instruments held by foreign investors, decreased by $10.8 billion (-0.3%) to $4,144.9 billion at the end of the first quarter. The overall decline reflected a reduction in short-term instruments moderated by an increase in long-term instruments.
Definitions
The international investment position is the value and composition of Canada's assets and liabilities to the rest of the world.
International investment position data for the second quarter of 2024 will be released on September 11, 2024.
The Economic accounts statistics and International trade statistics portals are available from the Subjects module of the Statistics Canada website.
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