Canada's trade deficit widens to $1.4B in March as exports and imports fall to lowest levels in years
Loonie had its worst month in five years, too
Canada's trade deficit widened to more than $1.4 billion in March, as the COVID-19 pandemic dragged down both imports and exports to their lowest levels in years.
Statistics Canada reported Tuesday that Canada exported $46.3 billion worth of goods to the world in March, the lowest level since January 2018. At the same time, imports fell to $47.7 billion, the lowest level since October 2017.
Both figures were down by almost 10 per cent from the level seen in March of last year, the data agency said.
There was less trade in a number of core Canadian products, including cars and car parts (down 14 per cent) aerospace products including planes (down 25 per cent), and crude oil (down almost eight per cent).
But physical goods weren't the only form of commerce that slowed to a crawl because of COVID-19. Statistics Canada said there was less trade in services, too, as exports of Canadian services slipped by 7.2 per cent to $10.4 billion. Meanwhile, Canada imported $11.4 billion worth of services, a decline of 11.5 per cent.
"The services trade figures reflected the steep drop in travel activity," Bank of Montreal economist Benjamin Reitzes said of the numbers. "Fewer Canadians travelled abroad and fewer people visited Canada as borders were shut."
Exports of farm, fishing and intermediate food products were one of the bright spots, mainly because a backlog of Canadian grain started to move during the month after rail blockades in February. Those exports were up by more than 12 per cent.
Economists had expected the trade gap to widen to about $2.5 billion during the month, so the gap came in slightly narrower than expected. But the numbers would have been even higher were it not for the loonie's plunge during the month. The loonie's value fell by 3.6 cents US during the month, the worst month for Canada's dollar in more than five years.
A huge chunk of Canadian trade happens in transactions priced in U.S. dollars, so were it not for the plunge in the loonie, the export collapse would have been even more pronounced. In U.S. dollar terms, Canadian exports fell by 9.2 per cent during the month. But in Canadian dollars, they were only down by 4.7 per cent.
"Look for April's trade figures to show a much deeper contraction in two-way trade," Reitzes said.