Canada’s merchandise trade deficit with the world narrowed from $1.7 billion in January to $983 million in February, according to new data released Thursday by Statistics Canada.
The federal agency said exports rose 0.5 per cent in February, because of higher exports of aircraft, while imports were down 0.8 per cent, in part due to a decrease in crude oil imports.
Total exports rose to $48.3 billion.
“Moderating the overall export increase, energy products fell 7.0 per cent in February. Crude oil exports (-6.5 per cent) led the decline as lower prices more than offset an increase in volumes. Exports of refined petroleum products (-15.0 per cet) were also down in February, in part because of lower prices,” said the federal agency.
Total imports fell to $49.3 billion in February, the lowest level in the past two years.
“Imports of energy products fell 16.0 per cent in February, following a high observed in January. Crude oil imports were the largest contributor to the decline, offsetting the January increase. Lower shipments of crude oil from the United States contributed the most to the February decrease,” said StatsCan.
“Today’s international trade release only provides a glimpse of the COVID-19 and oil price shock impacts. Overall exports were up, but exports to countries other than the United States were down 5.3 per cent. It is also important to note that both sides of the ledger were disproportionately impacted by a spike in the volatile aircraft category. Today’s data release, therefore, doesn’t alter our view that the Canadian economy was on a weak footing heading into the COVID-19 outbreak,” said Omar Abdelrahman, Economist with TD Economics.
“Indeed, COVID-19-related disruptions in February were mostly centered in China and neighboring countries in Asia where Canada has relatively lower trade exposure. The outlook for trade will likely deteriorate markedly in March and April as the “sudden stop” in economic activity and related supply-chain disruptions spread to more countries – namely the U.S., Canada’s largest trading partner.”
He said the commodity price shock will also change Canada’s trade landscape in the quarters ahead.
“The nosedive in oil prices will impact Canada’s nominal exports and its terms of trade, which will weigh on national income. A lower Canadian dollar should be mildly supportive for exports. Unfortunately, disruptions to global trade due to COVID-19 containment efforts will likely temper the impacts of the recent depreciation in the Canadian dollar,” said Abdelrahman.
