Oily trade deficit just more evidence that Canada needs to diversify exports

Amanda Lang and Peter Armstrong discuss the trade deficit

A doubling of Canada's trade deficit shows how Canada is overly reliant on oil exports to power growth

Oil widens trade deficit

7 years ago
Duration 5:11
Canada's trade deficit almost doubled in November, more evidence that we need to diversify our exports away from energy, the CBC's Amanda Lang says

Tonight's first order of business, Canada's widening trade deficit.

It can be a measure of underlying health, or sickness, in an economy. In our case, we are importing more than we export — buying more than we sell, a situation that can only be sustained with debt. Of course, a big part of the current deficit is caused by falling oil prices hurting our exports. But the bottom line for Canada is we need to see other types of exports increase.

In other words, bring on the long-awaited manufacturing export rebound.

— Amanda Lang

Canada is a big net exporter of energy. And the latest fallout of plunging oil prices is the toll on trade.

Canada's trade deficit widened from $327 million in October to $644 million in November. Total exports fell 3.5 per cent, the biggest percentage decline since January of 2012. Sales fell in nine of 11 categories, but the big headline again was energy exports.

Shipments of crude oil and bitumen dropped 9.9 per cent. That's the 6th month in a row that energy shipments have tumbled. The response from analysts was bleak: Capital Economics said this is "only the start of what could develop into a much bigger shortfall."

The Bank of Canada expects cheap crude prices to shave one-third of a point off growth in 2015. Still until oil finds its bottom — Canadian policymakers have no choice but to proceed with caution.

The CBC's Peter Armstrong and Amanda Lang discussed the issue on Wednesday night's episode of The Exchange.


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