Canada Current Account Deficit at Nearly 6-Year High

Canada current account gap widened 19.7 percent to CAD 19.862 billion in the three months to June of 2016 from the previous period. It is the biggest deficit since the third quarter of 2010 as the goods shortfall reached a record high, mainly due to lower motor vehicle sales.

The deficit on trade in goods expanded CAD 4.8 billion to a record CAD 11.3 billion. This was the third straight quarterly increase. Overall, exports of goods decreased CAD 6.6 billion to CAD 123.6 billion: sales of motor vehicles and parts were down CAD 2.3 billion on lower prices and volumes. Exports of consumer goods declined CAD 1.7 billion on lower volumes. In contrast, exports of energy products increased CAD 0.7 billion, as higher prices for crude oil and crude bitumen more than offset the decline in volumes exported. Total imports of goods decreased CAD 1.8 billion to CAD 134.8 billion. The largest reduction was in consumer goods, down CAD 1.0 billion on lower prices. Industrial machinery, equipment and parts also contributed to the decline, down CAD 0.9 billion as a result of lower prices and volumes. Moderating this decrease, energy products advanced CAD 1.2 billion, mostly on higher prices. Aircraft and other transportation equipment and parts gained CAD 0.8 billion, all on higher volumes.

On a geographical basis, the goods surplus with the United States declined CAD 2.5 billion to CAD 5.1 billion, mostly on lower exports. The deficit with non-US countries rose CAD 2.3 billion to CAD 16.4 billion, the largest contributors being the United Kingdom and, to a lesser extent, Japan and Algeria.

In contrast, the overall deficit in services narrowed CAD 0.3 billion to CAD 5.1 billion in the second quarter, the lowest deficit since the end of 2011. The investment income deficit was also reduced by CAD 0.6 billion to CAD 2.9 billion, as receipts rose more than payments. The gap in transactions on secondary income narrowed by CAD 0.7 billion. This largely reflected higher transfer receipts by Canadian insurance companies on reinsurance services provided by foreign insurers, following the Fort McMurray wildfire.

Canada Current Account Deficit at Nearly 6-Year High

Statistics Canada | Joana Taborda |
8/30/2016 1:43:08 PM