BMO Sees Upside GDP Risk As Canada's Current Account Stays In The Red

06:02 AM EST, 11/28/2025 (MT Newswires) -- While Canada's current account deficit was smaller than expected in Q3, the fact is that it is still in the red, said Bank of Montreal (BMO).

What's different this cycle from 15-20 years ago is that the roles have reversed between trade in goods and the balance in services and income, noted the bank. In the past, Canada regularly ran merchandise trade surpluses.

This was usually countered by large deficits in all other areas, pointed out BMO. In 2025, the flip has switched.

Canada is now headed for a wide merchandise trade deficit this year, probably about $40 billion, or well over 1% of gross domestic product, stated the bank. However, the country now regularly runs surpluses on investment income and on travel -- two items that were almost always in deficit up until around 2020.

The investment income surplus is due to the nation's large stock of investments abroad -- despite the interest paid to non-residents on government debt, added BMO. The travel surplus was supported this year by the increase in domestic travel trend, as well as the weak Canadian dollar (CAD or loonie).

Statistics Canada has yet to incorporate delayed United States trade data for September, said the bank. That means Q3 estimates for goods and services will be subject to larger-than-normal revisions when that data is released.

Still, for now, the decent results suggest some upside risk to the Bank of Canada's estimate for 0.5% growth in real gross domestic product for Q3 when those figures are released at 8:30 a.m. ET on Friday, after Q2's contraction missed expectations, according to BMO.

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