Canada's current account deficit hits record high

Fri May 29, 2009 11:38am EDT
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By Louise Egan

OTTAWA (Reuters) - The worst recession in the post-war era has pushed Canada into a record current account deficit and triggered the first annual budget deficit after an 11-year run of surpluses, reports showed on Friday.

The current account deficit reached C$9.06 billion ($8.24 billion) in the quarter as the global recession pulled Canada's goods surplus to a 31-year low, Statistics Canada said.

The deficit was the biggest since the federal statistical agency began collecting data in 1946, but it was below the C$10.5 billion shortfall forecast by analysts in a Reuters poll and therefore did nothing to slow a rally by the Canadian dollar.

It was the second straight quarter of current account deficits after nearly a decade of surpluses.

Statscan revised the fourth-quarter current account deficit to C$7.76 billion from C$7.49 billion.

"This is categorically a weak report and highlights the damage that the deteriorating trade environment has had on the Canadian accounts," said Charmaine Buskas, senior economics strategist at TD Securities.

"This is unlikely to change significantly in the near term and suggests that the days of the well-entrenched twin (current account and budget) surpluses are in the rearview mirror," she said in a note.