CIBC Private Wealth
May 03, 2024
Money Wellness Education Financial literacy Economy Commentary News Weekly updateMorning Market Brief
Canada’s economy posted a trade deficit in March, its first in three months. Canada’s economy is reliant on strong trade activity to meet the demand of its consumers and the needs and profitability of businesses. Global trade activity has been relatively muted in recent quarters amid weaker demand and a focus from many countries and regions to keep production close to home.
- Canada’s economy had a trade deficit of $2.3 billion in March. This was a sharp decline from the $480 million trade surplus in February, and it was the largest trade deficit since June 2023.
- Exports from Canada dropped by 5.3% to $62.6 billion in March. A fall in shipments of energy, agricultural and metal products drove March’s decline. Conversely, aircraft exports increased over the month. Also driving the sharp fall was a pullback in gold exports. In February, exports of gold surged amid heavy demand within the global banking sector.
- Imports fell by 1.2% to $64.8 billion in March. There were lower purchases of metal products and electronics over the month. This was partially offset by a rise in purchases for motor vehicles.
- Canada ran a trade surplus with the US, its southern neighbour and largest trade partner. The US ran a trade deficit of US$69.4 billion in March, with exports falling by more than imports.
- In the fourth quarter of 2024, Canada’s economic expansion was driven in part by higher exports. Canada’s economic health is highly dependent on its trade relationship with other countries and regions around the world.
Given Canada’s small population on a relative basis, robust global demand for Canadian products can boost the performance of Canadian businesses and the economy. As a result, Canada must hold and nurture strong trade relationships with key economies around the world, particularly the US. Canada’s economic conditions are highly dependent on the economic environment prevailing south of the border. Higher exports compared to imports contributes positively to gross domestic product.
If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.