Canada’s trade performance in April wasn’t great, but it was hardly a disaster.
Merchandise trade posted a small $400-million deficit after five months of surplus. That’s a reversal from a revised surplus of $200-million in March.
The deficit was largely caused by a 1.2 per cent drop in exports to most key markets, including the U.S. and Asia.
The decline is a bit misleading because export volumes continue to grow -- 0.7 per cent in April.
But one month doesn’t tell the whole story. The longer-term outlook in trade is considerably more uncertain.
Economic growth is slowing in Asia, and most notably in China. Europe: well, no need to remind people what’s going on there. And the United States, which buys more than 70 per cent of our exports, is still sputtering.
“Low prices are likely to blame,” explained National Bank economist Krishen Rangasamy. “But going forward our volumes too could struggle. We’ll be hoping for . . . better demand stateside.”
Canada’s exports are dominated by the major commodities that are priced in world markets, including oil, metals, forest products, iron ore, potash, wheat and canola. Prices of many of these commodities are already falling in anticipation of weakening global demand.
And if that trend continues, April’s trade performance may look pretty good compared to what’s coming.
Canada’s future economic performance depends heavily on the development of resources -- oil, coal and potash in the west; mining in Quebec and Ontario.
An extended period of lower commodity prices could put a damper on oil sands development and temper the excitement over billions of dollars worth of investment expected to pour into Quebec and Ontario’s mining sectors.
A sharp drop in metals prices would turn the dream of Ontario’s so-called “ring of fire” into a pile of smouldering embers. With its “Plan Nord,” Quebec too is hitching it’s future on demand for iron ore and other minerals from China and India.
So it’s not about April’s trade numbers. It’s about the next year and beyond.