Crude-Price Collapse Drives Canadian Trade Gap to Record High
(Bloomberg) -- Canada’s trade deficit widened to the largest on record in December, almost entirely due to a collapse in crude oil prices.
The nation posted a C$4.6 billion ($3.4 billion) shortfall on the month, more than double the C$2 billion November trade gap, Statistics Canada said Wednesday from Ottawa. The deficit far exceeds the C$2.1 billion median estimate in a Bloomberg survey of economists.
Exports fell 3.8 percent, but excluding energy products they were essentially unchanged, the agency said. Imports were up 1.6 percent.
It was the fifth consecutive monthly decline in exports since a record level set in July. Canadian crude prices have rebounded this year and the trade figures follow sluggish gross domestic product data released last week, showing economic growth stalled at the end of 2018.
Policy makers at the Bank of Canada, who are due to set interest rates later Wednesday morning, will likely view the slowdown as a temporary setback driven by transitory weakness in oil.
Crude prices plunged late last year amid pipeline shortages and a supply glut, leading the province of Alberta to mandate a cut in production. Crude exports fell 28.7 percent to C$3.3 billion, the biggest drop since December of 2008. Despite five consecutive monthly drops, crude export values finished the year up 19.7 percent compared to 2017.
Total export prices declined 2.4 percent while volumes fell 1.4 percent. Exports of metal and non-metallic mineral products also contributed to the decline, mainly on slumping gold exports to the U.K. and Hong Kong, Statistics Canada said.
Exports of aircraft and other transportation equipment offset the overall decline, rising 16 percent to C$2.4 billion, the agency said.
Exports to the U.S. -- Canada’s largest trading partner -- were down 3.6 percent, mostly due to crude, while American imports fell 2.4 percent. That left Canada’s trade surplus with its neighbor to the south at C$1.8 billion in December, down from C$2.2 billion a month earlier.
Imports from countries other than the U.S. rose to a record C$19 billion, led by imports from Brazil, China and Russia. Exports to China also rose, despite ongoing trade tensions between the nations after the arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou.
Canada finished 2018 with total imports and exports rising from the previous year. Annual imports were up 5.7 percent to C$607.1 billion, while annual exports rose 6.5 percent to C$585.4 billion. Canada’s total annual trade deficit narrowed to C$21.7 billion, from C$24.6 billion a year earlier.
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