Canada current account deficit jumps more than expected

Thu Aug 30, 2012 11:19am EDT
 
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By David Ljunggren

OTTAWA (Reuters) - Canada's current account deficit jumped by a bigger-than-expected 57.8 percent in the second quarter, hurt by the country's deteriorating trade performance, a trend analysts said could undermine the Canadian dollar.

Statistics Canada, citing lower exports of energy and a higher level of imports, said on Thursday that the deficit grew to C$16.02 billion ($16.18 billion) from a revised C$10.15 billion in this year's first quarter. It was the largest quarterly deficit in nearly two years.

Analysts had been expecting a deficit of C$15.30 billion in the current account, which measures the flow of goods, services and investments in and out of the country.

The deficit on trade in goods in the second quarter was C$3.60 billion, following three quarters of surpluses, as crude petroleum exports to the United States fell and imports rose.

The overall services deficit edged down to C$6.22 billion from C$6.44 billion, while the deficit on investment income grew to C$5.53 billion from C$5.38 billion as profits earned by Canadians on their direct investment abroad declined.

LONG-TERM CONCERN FOR C$

The data had little immediate impact on the Canadian dollar, which had weakened against the U.S. dollar early on Thursday due to uncertainty over central bank action to stimulate the global economy.

But analysts said the prospect of more current account deficits to come was a potential long-term negative for the currency.   Continued...