Canadian trade deficit widens in February as imports growth surpass exports growth

06 April, 2018, 04:23 | Author: Kathy Ellis
  • Soaring US imports of industrial supplies and capital goods pushed the monthly US trade deficit up 1.6 percent to $57.6 billion seasonally adjusted

The report also showed the merchandise-trade gap with China, the world's second-biggest economy, narrowed to US$34.7 billion in February from US$35.5 billion.

The US trade deficit has stretched to its widest point in nearly a decade despite President Trump's attempts to eliminate it with an "America First" strategy.

Despite the rebound in export volumes, the trade deficit remains disappointing given the strong US economy and weak Canadian dollar, said Royce Mendes, senior economist at CIBC Economics, in an email note to clients.

Canadian trade deficit widened in February to CAD 2.7 billion from January's CAD 1.9 billion, as the rise in imports surpassed the rise in exports. The politically sensitive goods trade deficit with China fell 18.6 percent to $29.3 billion.

The goods deficit with Mexico jumped by $1 billion to $6.6 billion while it rose with Europe by $300 million to $15.3 billion.

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Acceleration in the USA economic activity and a loonie lingering below 80 United States cents might help in rebounding Canada's trade picture. Most economists say they are caused by bigger economic forces, mainly the fact that the United States consistently spends more than it produces. "In 2019, the tax legislation and budget deal will boost the federal deficit by $480 billion, boosting the trade deficit by $161 billion".

The Commerce Department said the trade deficit widened to USD57.6 billion in February from a revised USD56.7 billion in January. Still, the so-called real trade deficit is above the fourth-quarter average of $66.81 billion. Citing the underperformance on trade, IHS Market lowered its first-quarter estimate for GDP growth a tenth of a point to 1.5 percent. The economy grew at a 2.9 percent annualized rate during that period.

Overall imports in February, according to Statistics Canada, increased 1.9 percent to 48.6 billion dollar while exports edged up 0.4 percent to 45.9 billion dollar. But so did imports, which likewise gained 1.7 percent to reach $262 billion - also an all-time record.

Exports to China were unchanged in February.

Farm, fishing and intermediate food products were down 17.2 percent to 2.4 billion dollar - the largest decline on record, said the governmental statistical agency.

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