OTTAWA (Reuters) - Canada’s current account deficit narrowed in the fourth quarter as the country posted a smaller shortfall in the trade of goods after three consecutive quarters of increases, data from Statistics Canada showed on Thursday.
The C$16.35 billion ($12.72 billion) current account gap was smaller than economists’ forecasts for a deficit of C$17.80 billion. The third quarter was downwardly revised to show a deficit of C$18.59 billion from the initially reported C$19.35 billion shortfall.
For 2017 overall, Canada saw a current account gap of C$63.93 billion, smaller than the previous year’s C$65.37 billion gap.
Despite the improvement in the current account gap for the fourth quarter, it still accounts for about 3 percent of gross domestic product, which should restrict any longer-term upside for the Canadian dollar, said Robert Kavcic, senior economist at BMO Capital Markets.
The international trade deficit in goods shrank to C$7.16 billion in the fourth quarter as Canada’s trade surplus with the United States increased to C$10.47 billion.
Canada’s goods deficit with countries other than its neighbor to the south widened to a record C$17.63 billion due to wider trade gaps with the European Union and China, though that was tempered by smaller deficits with Japan and Mexico.
But direct investment in Canada for the year fell to C$33.8 billion on a non-adjusted basis, the lowest level since 2010 as cross-border mergers and acquisitions prompted a withdrawal of funds from Canada for the first time since 2007.
Reporting by Leah Schnurr; Editing by Frances Kerry and Jonathan Oatis