Statistics Canada
www.statcan.gc.ca
Common menu bar links
Canada's international investment position
Archived Content
Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats on the "Contact Us" page.
Canada's net international investment position improved in the first quarter of 2008, largely reflecting both a pickup in Canadian direct investment abroad as well as the effect of a depreciating domestic currency (especially against non-US currencies) on Canadian holdings of foreign securities.
Gains in Canada's international assets were twice those of its international liabilities. Canada's international assets increased to $1,280.9 billion, up $96.5 billion from the end of 2007. On the other side of the ledger, foreign holdings of Canadian liabilities rose more moderately by $56.7 billion to $1,366.1 billion.
Note to readersCanada's international investment position presents the value and composition of its foreign assets and liabilities owed to the rest of the world. Canada's net international investment position is the difference between these foreign assets and liabilities. Canada is a net debtor nation, meaning that our international liabilities are greater than our assets. This excess of international liabilities over assets can be referred to as Canada's net international liabilities or Canada's net foreign debt. Currency valuation The value of assets and liabilities denominated in foreign currency are converted to Canadian dollars at the end of each period for which a balance sheet is calculated. Most of Canada's foreign assets are denominated in foreign currencies, while less than half of our international liabilities are in foreign currencies. When the Canadian dollar is appreciating in value, the restatement of the value of these assets and liabilities in Canadian dollars lowers the recorded value. The opposite is true when the Canadian dollar is depreciating. |
As a result, net foreign debt declined substantially to $85.2 billion. This represented 5.4% of Canada's gross domestic product, down sharply from 8.0% in the fourth quarter of 2007.
Canada's net direct investment position widens
Direct investment abroad by Canadian firms rose by $36.9 billion to $551.4 billion in the first quarter of 2008. This 7.2% increase was almost evenly split between transactions and the impact of the depreciation of the Canadian dollar. Canadian direct investors made sizable acquisitions of foreign firms and also injected significant funds into existing foreign affiliates in the quarter. On the other hand, foreign direct investment in Canada grew more modestly (+$9.7 billion), as the activity of the fourth quarter of 2007 was not sustained.
Foreign direct investment flows into Canada slowed significantly from the acquisitions-driven pace of previous quarters, while Canadian direct investment abroad continued to strengthen. This, along with the depreciation of the Canadian dollar, resulted in the first widening in the net direct investment position (the difference between direct investment abroad and direct investment in Canada) since the end of 2006.
Marked increases in the value of both portfolio assets and liabilities
There was a marked increase in the value of Canadian portfolio investment assets abroad, which reached $379.6 billion at the end of the first quarter of 2008. Even though transactions on foreign securities were up modestly in the first quarter of 2008 (+$3.3 billion), the devaluation of the Canadian dollar added another $21.3 billion to the position. Investment in foreign stocks recorded the largest gains, closing the quarter at $227.4 billion.
Canadian portfolio liabilities to the rest of the world recorded the largest increase in more than six years. Canadian bonds fuelled this gain with $9.7 billion worth of transactions and a weakening Canadian dollar, which added $11.5 billion to the portion of Canadian bonds issued in foreign currencies. At the end of the first quarter, Canadian portfolio securities held by non-residents stood at $506.9 billion, up $20.2 billion from a quarter earlier.
Other investment items also record significant changes
Other domestic assets rose sharply, mostly as a result of transactions in deposits and currency devaluation. Canadian deposits abroad were up 12.6% during the quarter. Other domestic liabilities also rebounded during the quarter, almost entirely from a strong increase in deposits in Canada by non-residents.
Net international indebtedness with portfolio investment at market value largely unchanged
Canada's overall net international investment position can also be calculated with assets and liabilities of tradable securities valued at market prices. Although it edged up in the first quarter of 2008, net foreign debt was much lower by this measure, sitting at $22.2 billion. This gap reflected the differing composition between international portfolio assets and liabilities. A much larger portion of Canadian holdings of foreign securities is placed in stocks, and these have a correspondingly larger impact when they are stated at market value.
Available on CANSIM: tables 376-0037, 376-0039 to 376-0041, 376-0055 to 376-0057 and 376-0059.
Definitions, data sources and methods: survey number 1537.
The first quarter 2008 issue of Canada's International Investment Position (67-202-XWE, free) will soon be available.
For more information, contact Client Services (613-951-1855; infobalance@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Komal Bobal (613-951-6645) or Christian Lajule (613-951-2062), Balance of Payments Division.
Table(s).
