11 February 2009

Plunge in exports spurs first trade deficit in 30 years

The following article is excerpted from the 11 February 2009 edition of “globeandmail.com”.

Canada has recorded its first trade deficit in more than 30 years, with drops in both exports and imports driving the trade balance to negative $458-million in December.

It's the first trade deficit since March, 1976, as the stagnation in global trade meant exports fell at a faster pace than imports in the month….

Analysts had been expecting the slimmest of trade surpluses for Canada, forecasting $500-million in December compared to $1.2-billion in November.

The small deficit contrasts starkly with the $5-billion monthly surpluses recorded regularly last year.

Exports dropped an astonishing 9.7 per cent to $35.3-billion in December, the largest monthly decrease in percentage terms since October, 1982, Statscan said. …

Imports also dropped, down 5.7 per cent from a month earlier to $35.8-billion, mainly because of fewer purchases of machinery and equipment, automobiles and industrial goods. Imports remain above year-ago levels, but the decline in December reverses the trend after three consecutive monthly increases.

Canada had a trade surplus with the United States, but it was smaller in December than in November. Exports to the United States fell 10 per cent, led by a slump in crude oil sales. Imports fell 8.4 per cent, leaving Canada with a $3.8-billion surplus for the month. That's down from $4.6-billion in November, and the lowest level since December, 1998, Statscan said….

As for imports, machinery and equipment purchases fell 5.7 per cent, partly offset by a 26.7 per cent increase in imports in the aircraft sector.

Imports in the auto sector posted their third consecutive monthly decline, falling 9.8 per cent. The main driver was a drop in imports of car parts, which fell 17 per cent as manufacturers scaled back production.

The unexpectedly weak Canadian trade data adds to an already gloomy picture of global trade. The United States and China both posted unsettling trade numbers on Tuesday, too….