Canada's current account deficit widened to the second largest gap on record in the third quarter, at $18.9 billion, Statistics Canada says.
The current account deficit measures how much Canada owes the rest of the world after adding up the total value all transactions – both exports and imports — in goods, services and investment income flows.
The deficit increased by $500 million on a seasonally adjusted basis, amid declining exports of oil and other goods.
The agency says total exports of goods were down $3.7 billion to $112.7 billion, marking a third consecutive quarterly drop.
Exports of energy products were down $1.6 billion, on lower volumes of crude petroleum and refined petroleum products and there were also drops in exports of consumer goods and industrial chemical products.
High dollar continuing challenge
Imports declined $2.5 billion in the third quarter, following a high set in the previous quarter. Motor vehicles and parts imports fell $700 million and energy products declined $500 million.
The overall balance on trade in goods posted a $4.8 billion deficit in the third quarter, following a $3.6 billion deficit in the previous quarter.
Canadian direct investment abroad rose to $19.1 billion, driven by an increase in mergers and acquisitions. That compared with $2.1 billion in the previous quarter.
The wider deficit was no surprise, TD Economist Leslie Preston said in a report, given that "we had already seen a very weak quarter for goods trade, and tomorrow's GDP report is likely to show the impact of that in a mediocre 0.7 per cent growth tally."
"Canadian exporters continue to face the challenge of a high Canadian dollar on top of a softer global growth backdrop," Preston said.
The picture should improve in the second half of next year, she said, as the U.S. economy gains momentum, lifting demand for Canadian exports.