Canada’s Second-Quarter Current Account Deficit WidensGreg Quinn
Canada’s current account deficit widened in the second quarter as imports of automobiles rose and exports of crude oil declined.
The deficit of C$14.6 billion (C$13.9 billion) from April to June compares with a revised C$13.4 billion shortfall in the first quarter, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg forecast a C$14.8 billion deficit according to the median of 15 responses.
Exporters have struggled to rebuild orders lost in the global financial crisis amid weak foreign demand and with Canada’s currency trades near parity with the U.S. dollar. Those drags may ease later this year allowing the current-account deficit to narrow, said Benjamin Reitzes, a senior economist at BMO Capital Markets in Toronto.
“We are looking for the U.S. economy to pick up steam through the rest of this year and through 2014, which along with a weaker loonie, points to a narrowing current account deficit for Canada,” Reitzes wrote in a note to clients.
The loonie, as Canada’s currency is known, was 0.1 percent weaker at C$1.0494 per U.S. dollar at 9:49 a.m. in Toronto after the U.S. Commerce Department in Washington said gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent.
Canada’s deficit in goods widened to C$3.10 billion in the second quarter from C$1.95 billion in the prior three months, today’s report showed.
Imports of motor vehicles and parts rose C$700 million, leading the C$1.4 billion increase in goods payments to C$121.3 billion. For exports, energy products such as crude oil fell by C$800 million. This reduced the increase in receipts to C$200 million to a total of C$118.2 billion.
The current-account deficits that began in 2008 during the global financial crisis will continue for at least another year, and equal 2.5 percent of the country’s gross domestic product in the third quarter of 2014, according to a Bloomberg economist survey.