OTTAWA (Reuters) - Canada posted a wider-than-expected trade deficit of C$1.47 billion ($1.10 billion) in January, largely on lower exports of motor vehicles and parts, official data showed on Friday.
Analysts polled by Reuters had forecast a shortfall of C$830 million. Statscan revised the December deficit up to C$732 million from an initial C$370 million.
The value of exports fell by 2.0% in January, the largest decline reported since the 5.6% decline in June 2019, to C$48.14 billion, with 9 of the 11 product sections tracked by Statscan posting declines. Imports dropped by 0.5%, with declines seen in six of the 11 product sections.
Canada’s central bank slashed a key interest rate on Wednesday by half a percentage point, the most in more than a decade, as it worked to try and protect Canada’s economy from a coronavirus outbreak and said it was prepared to ease further if needed. Money markets anticipate another rate cut in April[BOCWATCH]
Statscan said on Friday it was monitoring the possible impacts of the coronavirus outbreak on Canada’s international trade data, particularly with China, where the agency said “substantial decreases in exports and imports with China” had already been observed in January.
Canadian monthly exports to China declined 7.8% in January, with lower exports of gold, potash and wood pulp reported, the agency said, while imports fell 12.1%, mainly on lower cellphone imports.
Meanwhile, Statscan said overall exports of motor vehicles and parts saw the largest decline in January, falling 4.1% on lower exports of passenger cars and trucks. Temporary shutdowns at certain assembly plants and the recent closure of an Ontario-based General Motors plant contributed to the decline.
Canadian exports to the United States dropped 1.7%, mainly because of the lower passenger car and truck shipments. As a result, Canada’s trade surplus with the United States narrowed to C$3.56 billion in January, the smallest surplus since February 2019.
Imports of consumer goods fell 6.3% on the month, largely due to a 26.1% decline in pharmaceutical imports, notably on lower shipments of antiviral and cancer treatment drugs, the agency added.
Reporting by Kelsey Johnson in Ottawa; Editing by Dale Smith and Chizu Nomiyama