Trade Deficit Narrows as Exports Increase

trade deficit

CBJ — Canada’s trade deficit narrowed sharply to just $135 million in March as exports surged to a new high on shipments of energy products, an early sign the first quarter ended strongly.

Statistics Canada says the value of exports jumped by 3.8% $46.98 billion as volumes increased by 2.5% and prices grew by 1.3%.

Analysts had forecast a shortfall of $800 million. Statscan revised February’s deficit to $1.08 billion from an initial $972 million.

The Canadian economy stalled in February after a healthy start to the year, data showed last week.

Energy products rose 7%, pushed up by higher natural gas flows to the United States and a spike in exports of coal to Asia that coincided with a slowdown in Australian production caused by a cyclone.

Imports grew 1.7% to $47.11 billion on higher inward flows of metal and non-metallic mineral products, particularly unwrought gold from Japan. Volumes slipped by 0.2% while prices advanced by 1.9%.

The Bank of Canada recently lowered its export growth forecast to 2.5% over the next three months from around 3.0% in January due to the additional drag on global investment from uncertainty over U.S. trade policy.

Shortly afterwards, the U.S. administration slapped tariffs on Canadian exports of softwood lumber and complained about Canada’s dairy sector, helping to sink the Canadian dollar to 14-month lows.

Exports to the United States, which accounted for 73% of all Canadian exports in March, edged up by 0.1% while imports increased by 2.0%. As a result, Canada’s trade surplus with the United States slipped to $3.97 billion from $4.51 billion in February.