Trade deficit widens to $1.41B in March
Canada’s trade deficit widened to $1.41 billion in March as the novel coronavirus pandemic and low demand for oil hit the economy, and April’s shortfall will be worse, Statistics Canada said on Tuesday.
Analysts polled by Reuters had predicted a shortfall of $2 billion.
Statistics Canada revised the February deficit figure to $894 million from an initial $983 million.
“This is probably just the start of the decline,” Stephen Tapp, deputy chief economist at Export Development Canada, said in an interview.
“It’s a rough patch of data for Canadian exports that are going to be coming in. The impacts of the COVID-19 lockdowns are starting to show up in earnest now,” Tapp said, referring to the respiratory illness caused by the novel coronavirus.
The pandemic has disrupted global supply chains and forced officials to shutter non-essential businesses and urge people to stay home.
“With a full month of physical distancing policies in place in April, merchandise trade values are expected to decrease more severely next month,” StatCan said in a commentary.
Exports fell by 4.7 per cent and imports slid by 3.5 per cent in March, both the largest monthon-month declines seen since June 2018, it said.
In volume terms, March exports dropped 4.8 per cent, while imports were down 5.8 per cent.
StatCan said production stoppages in the auto manufacturing industry led to the strong declines in exports and imports of motor vehicles and parts.
Exports of passenger cars and light trucks slumped 9.8 per cent, while imports fell 6.2 per cent.
Engine and engine part shipments saw even bigger slumps, the agency said, with exports plunging 28.9 per cent and imports sliding 23.0 per cent.
Production stoppages within the automotive industry continued throughout April and into May, StatCan said, so low levels of exports and imports for these products should be expected until production restarts
Canadian exports of energy products fell 7.4 per cent in March, the third straight monthly decline, as global demand for crude oil weakened.
The declines in motor vehicle and parts exports combined with the lower demand for crude also caused a drop in Canadian exports to the United States, StatCan said.
Exports to the U.S. fell 4.9 per cent, while imports dropped 5.1 per cent.
StatCan said Canada’s trade surplus with the United States, the country’s largest trading partner, narrowed slightly to $3.9 billion in March from $4 billion in February.