Canada Current Account Deficit Smallest Since 2016

Canada's current account deficit narrowed by CAD 6.3 billion in the third quarter to CAD 10.3 billion from an upwardly revised CAD 16.7 billion in the previous period and compared with market consensus of a CAD 11.5 billion shortfall. It was the smallest current account gap since the last quarter of 2016, reflecting lower deficits on goods, services and investment income.

The goods deficit decreased by CAD 4.0 billion to CAD 1.7 billion, following a CAD 5.7 billion gap in the previous quarter. Total exports of goods increased by CAD 3.4 billion to CAD 151.5 billion in the prior quarter. Main contributors were energy products (CAD +1.7 billion) on higher crude petroleum prices and metal ores and non-metallic minerals (CAD +1.2 billion), namely iron ores and concentrates. These increases were partially offset by lower sales of metal and non-metallic mineral products as both volumes and prices declined. Total imports of goods went down by CAD 0.6 billion to CAD 153.2 billion. Imports of aircraft and other transport equipment and parts fell CAD 1.4 billion with the lowest imports of aircraft in six years. Motor vehicles and parts dropped CAD 0.8 billion on lower volumes. Higher imports of electronic and electrical equipment and parts (+$0.8 billion) moderated the overall reduction in the quarter.

On the geographical basis, the goods surplus with the United States increased by CAD 3.9 billion on stronger exports. Meanwhile, the deficit with non-US countries edged down CAD 0.1 billion to CAD 16.2 billion. On a country basis, the largest increases to trade balances were with Belgium, Japan and China, while the most important declines were with Hong Kong and Switzerland.

The services deficit narrowed by CAD 0.7 billion to CAD 6.3 billion in the third quarter of 2018. The surplus on commercial services rose CAD 0.4 billion, mainly due to lower purchases of financial services. The travel deficit decreased by CAD 0.2 billion to CAD 3.6 billion as Canadian travellers reduced their spending in the United States.

The deficit on primary income, which covers investment income on international assets and liabilities and compensation of employees, declined by CAD 1.6 billion to CAD 1.7 billion. Investment income receipts on Canada's international assets went up CAD 2.1 billion to CAD 33.5 billion. Higher receipts on holdings of direct investment assets and deposits abroad by banks were the main contributors. Investment income payments on Canada's international liabilities increased by CAD 0.5 billion to CAD 34.7 billion. Interest paid to non-residents on Canadian private corporate bonds and deposits at Canadian banks were up. Lower profits earned by foreign direct investors in Canada moderated the overall increase.

Canada Current Account Deficit Smallest Since 2016

Statistics Canada | Stefanie Moya |
11/29/2018 2:01:16 PM