Canada’s budget was in deficit in November
2023.01.05 13:37
Canada’s budget was in deficit in November
Budrigannews.com – Statistics Canada reported on Thursday that in November, Canada had a trade deficit of C$41 million (or $30.20 million) as a result of a decline in imports driven by pharmaceuticals and other consumer goods and an increase in exports driven by energy products.
In November, analysts predicted a surplus of C$610 million, but the deficit fell short. Statscan also reduced the surplus for October from C$1.21 billion to C$130 million.
Shelly Kaushik, an economist at BMO Capital Markets, stated in a note, “Some of the deterioration came from lower prices for both exports and imports – the latter will help cool domestic inflation pressures.”
The Bank of Canada raised interest rates at an unprecedented rate last year in an effort to control inflation and bring prices under control.
November saw a 2.3% decline in exports, led by the fifth consecutive decline in shipments of energy products. According to Statistics Canada, lower coal exports to Asian nations and lower prices in November contributed to the decline. Exports were down 1.4% by volume.
Consumer goods accounted for the majority of the 2.1% decline in imports. According to Statscan, pharmaceutical and medical products fell the most, including COVID-19 treatments and vaccines. Volume-wise, imports were down 0.7%.
Stephen Brown, senior Canada economist at Capital Economics, wrote in a note that the data from Thursday present “downside risks” to the preliminary GDP estimate for November.
After expanding at the same rate in October, Statscan estimated in a preliminary estimate that the Canadian economy likely expanded by 0.1% in November.
“It could be that lower supply is to blame,” Brown stated. “As the weakness of imports coincided with the earlier COVID-19 restrictions in China, it could be.” However, the weakening of business and consumer surveys in recent months suggests that lower demand is also a factor.”
After reaching its highest intraday level since Dec. 5 at 1.3467, the Canadian dollar was trading 0.5 percent lower against the United States dollar, or 73.86 U.S. cents.
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