OTTAWA - The recent surge in Canada's international travel deficit subsided in the first quarter of 2008 due to a significant drop in Canadian travel spending in the United States.

The deficit -- the difference between spending by Canadian residents abroad and spending by foreigners in the country -- fell to about $3.1 billion in the first quarter, down $295 million from the record high set in the fourth quarter of 2007.

The deficit increased by $744 million in the third quarter and $620 million in the fourth quarter of 2007, fuelled by a significant increase in cross-border shopping by Canadians in the United States.

Canadians spent about $7.2 billion outside the country in the first quarter of 2008, down 4.6 per cent from the record high reached in the fourth quarter of 2007.

Inbound, foreign travellers spent about $4.1 billion in Canada in the first quarter, down 1.2 per cent from the fourth quarter of 2007 -- the lowest level in two years.

Canadians, meanwhile, set a record for overnight trips abroad last year, surpassing the 25-million mark for the first time, while Americans took fewer trips to Canada and spent less.

Canadians took about 25.2 million overnight trips in 2007, spending a record $22.5 billion in the process.

Of these trips, a record high 7.4 million, or 29 per cent, were to destinations other than the United States, a 9.9 per cent gain from 2006. Canadians spent a record $10.9 billion on these trips.

Overnight travel to the United States, which comprised the remaining 71 per cent of trips abroad, rose to its highest level since 1992.

Travel increased to every overseas region in 2007, except South America and Oceania, which recorded negligible declines.

On a regional basis, European countries were still the most popular destinations, accounting for over 4.2 million overnight country visits in 2007. The Caribbean countries were second, with more than 1.8 million.

Overnight travel from the United States to Canada fell 3.5 per cent to only 13.4 million trips. U.S. tourists spent about $7.1 billion, down three per cent.