Oil Squeeze Widens Canada's Trade Deficit More Than Expected
Oil Squeeze Widens Canada's Trade Deficit More Than Expected
(Bloomberg) --
Canada's merchandise trade deficit widened
more than forecast as crude oil prices tumbled, evidence the
nation's economic expansion is being curbed by an energy slump.
Oil export prices dropped 15 percent in October and the
volumes shipped fell 0.9 percent, reducing total shipments
abroad for a third straight month, Statistics Canada said
Thursday from Ottawa. The trade deficit grew to C$1.17 billion
($872 million), and the September shortfall was more than
doubled after a revision to C$891 million.
The oil pinch led the Bank of Canada to pare back optimism
about lifting interest rates to neutral at its latest decision
Wednesday, and will likely dominate Prime Minister Justin
Trudeau's talks this week with provincial leaders. Earlier this
month, Alberta Premier Rachel Notley ordered oil producers to
cut output by 8.7 percent starting in January after the discount
on Western Canadian Select to U.S. benchmark prices widened to a
record $50 a barrel.
Economists at most major Canadian banks have cut economic
growth forecasts for next year because of reduced oil revenue
and investment. Some also predict Governor Stephen Poloz will
refrain from raising borrowing costs at the central bank's next
meeting in January.
Exports had climbed to a record high in July even as the
U.S. threatened to scrap the North American Free Trade
Agreement, which along with unemployment near record lows had
been building the case for tighter monetary policy.
Other Details
- Crude oil exports fell 16 percent in October, the biggest decline since February 2016
- Total exports fell 1.2 percent, with a 4.4 percent gain in automobiles helping ease the energy losses
- Imports fell 0.6 percent, the fourth decline in five months. Energy showed up here as well with a 14 percent fall in crude oil diluents brought in from the U.S. Car and light truck imports also fell 5.8 percent
- Canada's trade surplus with the U.S. narrowed to C$3.1 billion from C$4.3 billion on the month, the smallest since March
- The volume of exports, which strip out price changes, rose 1.2 percent in October. Import volumes were little changed
- The higher September trade deficit came as crude oil exports were reduced, Statistics Canada said
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