Canada posted its second-largest merchandise trade deficit ever in April, narrowing from a record shortfall in March as imports fell faster than exports.
The deficit of C$2.97 billion ($2.39 billion) followed a March gap that was revised to C$3.85 billion from an initial C$3.02 billion, Statistics Canada said Wednesday in Ottawa. Economists surveyed by Bloomberg forecast an April deficit of C$2.15 billion, the median of 16 forecasts.
Bank of Canada Governor Stephen Poloz predicts the economy will regain momentum after growth contracted in the first quarter, when a plunge in oil prices derailed exports and investment. The governor is expecting the positive effects of the decline in oil prices to overshadow the negative beginning in the second half of 2015, helped by an acceleration in non-energy exports.
“We’re not quite out of the woods yet,” David Tulk, chief Canada macro strategist at TD Securities, said by phone from Toronto. “If you look at non-energy exports, they kind of topped out over the past couple of months, which is discouraging.”
Non-energy exports fell 2 percent in April, as shipments of pharmaceutical products and medicine fell 28 percent to C$578 million. Forest-product exports were 5 percent lower at C$3.18 billion.
Total exports declined 0.7 percent to C$41.9 billion, the fourth straight drop to the lowest total since January 2014. Energy shipments rose 5.9 percent to C$7.30 billion, bringing the drop from a year earlier to 31.6 percent.
The Bank of Canada kept its key interest rate at 0.75 percent last week and policy makers said their projections for an improving economy remain on track. They’re counting on faster U.S. growth and the weaker Canadian dollar to help non-energy exports.
Tulk said “the jury is still out” on the durability of the U.S. economic expansion.
Canada’s currency slid as much as 0.9 percent after Wednesday’s report before trading 0.2 percent lower at C$1.2430 at 10:33 a.m. in Toronto. It’s down 6.5 percent this year.
Imports fell 2.5 percent to C$44.9 billion on declines in consumer goods, metals and minerals.
Canada’s trade surplus with the U.S. widened to C$2.42 billion in April from C$1.62 billion a month earlier. The deficit with countries other than the U.S. narrowed to C$5.39 billion from C$5.48 billion.
The volume of exports advanced 0.5 percent and import volumes fell 1.8 percent in April, Statistics Canada said. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.