Canada posted a narrower-than expected trade deficit of $983-million in February as exports rose on a surge in aircraft shipments and imports declined on lower demand for crude oil, official data showed on Friday.
Analysts polled by Reuters had forecast a shortfall of $1.87-billion. Statistics Canada revised the January deficit figure to $1.66-billion from an initial $1.47-billion.
“It’s a positive headline surprise for February,” said Stephen Tapp, deputy chief economist at Export Development Canada in an interview, but cautioned it was unlikely to continue.
“This reflects the start of the COVID-19 impacts in China and spreading throughout the world, but it’s certainly going to get worse before it gets better,” Mr. Tapp added.
The Bank of Canada cut its overnight interest rate by half a percentage point, to 0.25 per cent, for the third time in a month on Friday as officials try to shield the Canadian economy from the impact of the coronavirus outbreak.
Statistics Canada has said repeatedly it is monitoring for the possible impacts of the coronavirus outbreak on Canada’s economic data, including on the trade front, which the agency says could be significantly affected.
However, the coronavirus outbreak, which causes the respiratory illness COVID-19, did not appear to have a major impact on the February data, Statscan said on Thursday, despite reduced trade with China.
Imports from China, the agency said, fell for a second consecutive month, dropping 6.8 per cent, largely on lower shipments of items including computers, cellphones and clothing. Exports to China also declined, down 6.4 per cent, notably on lower exports of lobster and crab.
Meanwhile, Statscan said the value of overall Canadian exports rose 0.5 per cent in February, largely on higher shipments of private jets, with eight of the 11 product sections tracked by Statscan posting increases. Exports of aircraft rose 46.8 per cent in February, reaching their highest level in five years.
Imports fell by 0.8 per cent, largely on lower crude oil imports, with declines observed in seven of the 11 product sections. Statscan said imports of energy products fell 16 per cent, with lower crude oil from the United States contributed to the most to the February decrease.
Canada’s trade surplus with the U.S., it’s largest trading partner, widened to $3.75-billion from $3.40-billion in January, Statscan noted.
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