Canada returns to trade deficit position in March as imports surge
Canada’s trade balance shifted back to a deficit in March following two consecutive months of surplus as imports jumped significantly while exports edged up slightly, Statistics Canada said
by Julie Gordon – Reuters
Canada’s trade deficit with the world was C$1.1 billion ($892.21 million) in March. Analysts polled by Reuters had predicted a surplus of C$700 million after a revised C$1.42 surplus in February.
Imports rose 5.5% to their highest level since May 2019, driven by energy imports, though all 11 sectors posted increases, Statistics Canada said. Exports edged up 0.3%, mostly on motor vehicles and parts, offset by falling energy exports.
“April will likely be pretty volatile given the restrictions, but higher commodity prices should provide ongoing support to Canada’s trade balance”
Much of the shift in energy imports and exports was due to a rebalancing from February, when power outages in Texas crippled the U.S. oil and gas industry leading to a surge in Canadian energy exports to that country.
“We had some pretty big movements last time around and these are offsetting movements,” said Peter Hall, chief economist at Export Development Canada.
Hall noted that the broad gain in imports indicates that Canada’s industrial machine is gearing up for a surge of demand from the United States, where a large stimulus package is bolstering consumer spending.
“This is arming ourselves for stronger growth, that’s what the import surge seems to be indicating here. The exports will follow, but there is a bit of lag here,” Hall said.
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