Canada beats trade surplus forecast on record gold exports
OTTAWA — Canada recorded a bigger-thanexpected trade surplus of C$1.39 billion (US$1.03 billion) in February as a record level of unwrought gold helped exports outpace the rise in imports, data showed on Thursday.
Analysts polled by Reuters had forecast a C$800 million surplus in the month. The trade balance in January was upwardly revised to C$608 million from a surplus of C$496 million initially reported.
Total exports rose 5.8 per cent to C$66.62 billion ($49.43 billion), marking the fastest growth since August, while imports increased 4.6 per cent to their highest level since June, Statistics Canada said.
The jump in exports was primarily led by a sharp rise in outward shipments of unwrought gold. Excluding that product category, total exports were up 2.8 per cent.
Increased high-value shipments of refined gold, as well as transfers of gold assets in the banking sector, also were observed in February, Statscan said.
“This was a golden month for exports,” said Stuart Bergman, chief economist at Export Development Canada, adding that Canada benefited from a high level of gold purchases across the globe, especially in the U.K. and Switzerland due to heightened geopolitical risks.
Central banks also seem to be building up their gold reserves, he said.
In volume terms, total exports rose 6.2 per cent.
The merchandise trade report showed further signs of economic resurgence after a stumble in the second half of 2023. Economic growth rebounded more robustly than expected in January, and gross domestic product likely expanded 0.4 per cent in February, data released last week showed.
The international trade data bolsters expectations that Canada’s GDP will once again post solid growth in February, easing pressure on the central bank for any immediate interest rate cut, economists said.
The economy is now on track to exceed the Bank of Canada’s forecast for the first quarter.
The central bank has kept its key interest rate at more than a two-decade high of 5 per cent to cool elevated inflation. While that policy stance has crimped consumer spending, it has not taken the steam out of the economy, allaying fears last year of a recession.
The BOC will update its growth forecasts and issue its next monetary policy decision on April 10.
The Canadian dollar was trading 0.34 per cent stronger at 1.3482 to the U.S. dollar by mid morning.
Growth in imports in February was led by the electronic and electrical equipment and parts product group, which increased to a record level. There was an increase in imports of highvalue data processing units, generally used for the development of complex cloud computing systems, from the U.S.
Imports of consumer goods were also up, with the clothing, footwear and accessories category posting the largest increase.
By volume, total imports increased 4.1 per cent.
Overall, nine of the 11 export product sections rose in the month, while all import product sections, except metal and non-metallic mineral products, were up.