Out of our con­trol

Fed­eral trade min­is­ter blames in­ter­na­tional mar­kets for near-record trade deficit

The Guardian (Charlottetown) - - BUSINESS - BY PETER HEN­DER­SON

In­ter­na­tional mar­kets are to blame for Canada's near-record trade deficit in May, fed­eral Trade Min­is­ter Ed Fast said Thurs­day.

“These are forces out­side of gov­ern­ment's con­trol,” he told re­porters at an eco­nomic con­fer­ence in Toronto. “They're global in na­ture.”

Sta­tis­tics Canada said Tues­day the trade deficit grew to $3.34 bil­lion in May, up from $3.0 bil­lion in April and one of the largest deficits on record.

The slide in oil prices, which have fallen by nearly half since this time last year, dis­torts the coun­try's true eco­nomic pic­ture, Fast said.

“If you ac­tu­ally fac­tor out that dra­matic drop in the price of energy, our per­for­mance is ac­tu­ally very, very sound,” he said.

Sta­tis­tics Canada data shows energy ex­ports have risen in the last two months, but Fast said higher ship­ment vol­umes can't make up for the con­tin­u­ing slump in oil prices.

As the price of oil has dropped, so too has the value of the Cana­dian dol­lar against the green­back. The loonie has fallen from nearly 95 Amer­i­can cents to less than 80 since July 2014, when the price of oil be­gan to slip.

De­spite the drop in the dol­lar, ex­port growth has re­mained be­low ex­pec­ta­tions.

Fast said com­pa­nies need to in­vest in cap­i­tal ex­pen­di­ture, in­no­va­tion and hu­man re­sources in or­der to in­sure that they re­main suc­cess­ful no mat­ter how the cur­rency fluc­tu­ates.

“I'm re­mind­ing Cana­dian com­pa­nies: in­vest in your­selves,” he said.

In re­cent days, the gov­ern­ment has been con­fronted with a num­ber of gloomy re­ports on the econ­omy, in­clud­ing poor GDP fig­ures from Sta­tis­tics Canada last week that have sparked grow­ing talk of a re­ces­sion driven by weak­ness in the min­ing and energy sec­tors.

But Fast said he be­lieves that will turn around.

“We fully an­tic­i­pate that Canada will re­turn to pos­i­tive eco­nomic growth shortly,” Fast said.

The Bank of Canada is set to make its next rate an­nounce­ment and re­lease its mon­e­tary pol­icy re­port next Wed­nes­day.

The cen­tral bank is widely ex­pected to cut its eco­nomic out­look, but what hap­pens with its key in­ter­est rate is less cer­tain.

Some observers say they be­lieve gover­nor Stephen Poloz will cut the overnight lend­ing rate of 0.75 per cent to 0.5 per cent.

CP FILE PHOTO

Fed­eral Trade Min­is­ter Ed Fast an­swers a ques­tion in the House of Com­mons in June.

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