Canada’s trade deficit narrowed slightly in August to Can$2.4 billion (US$1.8 billion), the national statistical agency said on Tuesday, October 6, as imports and exports stabilized 6 months into the novel coronavirus pandemic.
The figure, in line with forecasts, follows a Can$2.5-billion deficit in July.
But economists warned that the data signaled the recovery was slowing.
“While the deficit reading was in line with our forecast, the declines seen in two-way trade were troubling,” CIBC analyst Royce Mendes said in a research note.
“The slowdown in trade showed up earlier than we had anticipated, and the drop in export volumes suggests that the recovery’s momentum could have slowed more than anticipated in August.”
According to Statistics Canada, imports fell 1.2% to Can$47.4 billion in August, while exports decreased 1% to Can$44.9 billion. Both figures were below February pre-pandemic levels.
Lower imports of aircraft and parts contributed the most to the decline in imports, along with fewer foreign purchases of industrial machinery, the agency said.
Imports of gold, silver, and platinum were also down following several Canadian companies’ gold assets acquisitions in July.
Exports of boats as well as motor vehicles were lower too, but the latter was still almost Can$200 million higher than in February.
These decreases were partially offset by higher exports of lumber, up for a 4th consecutive month due to a recent uptick in US housing starts.
The rise in lumber exports was due to a price hike as lumber production in Canada has actually fallen due to the pandemic.
The US in September appealed a World Trade Organization ruling that favored Canada in the latest dustup over Canadian lumber sales in the US, while Ottawa warned that US duties on its softwood were “impeding economic recovery on both sides of the border.”
The Canada-US softwood lumber row has spanned 4 decades.
After 3 consecutive monthly increases, imports from the United States – Canada’s neighbor and largest trading partner – fell.
As a result, Canada’s trade surplus with the United States widened from Can$2.5 billion in July to Can$3.3 billion in August.
Lower imports from Ireland and Mexico were partially offset by higher imports from Vietnam and China.
Exports to Saudi Arabia, Britain, and Italy, meanwhile, contributed the most to a decline in exports to countries other than the US to the lowest level since November 2017. – Rappler.com
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