Statistics Canada says the country's current account deficit widened to $16 billion in the fourth quarter of 2013, as exports lagged and foreign investment fled Canada.

In figures released this morning, the agency said the deficit on international trade in goods widened $1.4 billion to $2.7 billion in the fourth quarter.

Exports declined led by a downturn in exports of crude oil, metals and mineral products.

For 2013 as a whole, with the current account deficit totals $60.7 billion, a $1.5 billion improvement from 2012. The current account has remained in a deficit position since the fourth quarter of 2008.

Capital flight from Canadian Treasuries

The fourth quarter current account deficit also reflects the flight of foreign investors from money market instruments. After the U.S. Fed began the process of tapering, announcing in December it would reduce its monthly bond-buying program to $75 billion US  in January, money began moving out of Canadian Treasury bills toward U.S. instruments.

Statistics Canada said there was a sharp $8.9 billion divestment in money market instruments, with some of that investment moving into equities and bonds. For 2013 as a whole, foreign investment in Canadian securities decelerated in 2013 to $42.8 billion, compared to $83.2 billion in 2012.

“The compositional shift in foreign portfolio holdings — away from Treasury bills and towards equities and bonds — can be tied to the prospect of higher interest rates over the medium-term and the onset of tapering by the Fed reserve,” TD Bank economist Jonathan Bendiner said in a note to investors.

He predicts there will be better results in 2014, as the lower Canadian dollar boosts exports.

“Looking ahead to 2014, despite an anticipated weather-related slowdown in 2014Q1, U.S. economic activity is expected to accelerate over the course of 2014 which should provide a boost to Canada's export sector alongside a weaker loonie,” he said.

with files from the Canadian Press