Tuesday, May 5, 2015

Canada's Trade Deficit Up In March, Implications for Canada and Ontario GDP

Statscan has import and export numbers out for March today. Exports only increased 0.4% compared to imports rising by 2.2% leading to a $3 billion trade deficit. February's trade deficit was revised from $984 million to $2.2 billion. That's obviously not good for Canada's GDP numbers for the first quarter, especially since January and February were already weak. Canada's GDP being inline with the US's GDP growth of 0.2% seems plausible. However with Canada so dependent on energy it is conceivable that Canada's GDP for the first quarter could be even worse than the US.

The numbers for Ontario seem mixed. Statscan reports that exports for March to non-US countries were up 4.2%,  however they were down 0.9% for the US which is where most of Ontario's exports go. Which seems a little odd considering the Canadian dollar is down so much against the US dollar although that's probably due to lower energy prices. However the numbers for vehicle and car part exports were excellent, up 11.7% which is definitely good for Ontario and GDP for March (although February was an off month for vehicle production in Ontario).

So for the overall Canadian GDP, the export numbers versus the import numbers are a big drag for March and not good for the overall first quarter. For Ontario the increase in vehicle related exports is good and probably means the first quarter GDP number isn't a complete disaster, but certainly won't be good and will likely make the Ontario finance ministry's prediction of 2.7% GDP growth in Ontario for 2015 hard to reach.

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