Canada posts 1st monthly trade deficit since 1976
A sharp fall in exports in December pushed Canada to its first monthly trade deficit since March 1976, Statistics Canada said Wednesday.
The overall trade deficit for December was $458 million. In November, the trade surplus was $1.2 billion.
"You will know that these trade numbers are conditioned by a couple of factors, obviously the weakness in world trade markets and the sudden drop in the value of Canadian exports," Prime Minister Stephen Harper said during question period on Wednesday.
"We do expect the change in the value of the Canadian dollar to help that situation, but, in the meantime, we and all governments of the G20 are trying to stimulate the world economy through a series of coordinated measures that we're taking here in Canada and elsewhere."
The move into a deficit position was a big shock to economists, who had been forecasting a trade surplus for December of about $500 million.
Canadian exports in December dropped 9.7 per cent — the largest one-month percentage decline since October 1982 — to $35.3 billion as volumes and prices for goods shipped out of the country both fell.
Imports for December fell 5.7 per cent to $35.8 billion.
A trade deficit occurs when a country imports more goods than it exports.
Canada's trade surplus with the economically battered United States, the country's top trading partner, fell to its lowest level since December 1998.
The surplus with the U.S. retreated to $3.8 billion in December from $4.6 billion in November.
Exports to the United States dropped 10 per cent in December to $25.9 billion, while imports from the U.S. fell by 8.4 per cent.
Canada's trade deficit with countries other than the United States grew to $4.2 billion in December, from $3.4 billion in November, as exports declined nine per cent while imports fell one per cent.
One economist suggested Canadians may have to get used to trade deficits for a while.
"Canadian trade deficits may well now be a semi-permanent feature on the landscape, at least until the U.S. economy pulls out of its deep dive," said BMO Capital Markets economist Douglas Porter.
"Simply put, Canada’s trade position has feasted for decades on a backdrop of ravenous U.S. demand. With that appetite now on the strictest diet imaginable, our trade outlook has withered accordingly," Porter said.