- Benjamin Reitzes, BMO Capital Markets senior economist
Canada's merchandise trade gap widened in November, as exports declined the most since January 2012 amid falling oil prices, Statistics Canada said. Exports dropped 3.5%, while imports were down 2.7%, resulting in a $644 million deficit for the reported month, whereas analysts had predicted a smaller gap of $200 million. Moreover, October's data was revised to show a $327 million deficit from a $99 million surplus reported initially. Canada's exports dropped to $43.3 billion, the lowest dollar value since April 2014, largely due to a decline in energy products. The energy exports decreased 7.8%, the sixth consecutive monthly decrease, with crude oil and crude bitumen tumbling the most due to lower prices and volumes. Economists predict that the current slide in oil prices is going to significantly impact Canada's exports and thus the country's trade balance. Exports to the US, which accounted for 75.9% of total Canadian exports in November, declined by 2.6%, while imports fell by 2.1%. As a result, the trade surplus with the US shrank to C$2.94 billion compared with C$3.18 billion in October.
In December the Bank of Canada pointed that the nation's exports head towards recovery, with help from the stronger US economy. Better exports have already contributed to business investment and employment, which indicates self-sustaining growth.
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