Despite posting a lower than expected trade deficit in February, analysts caution the likelihood Canada’s GDP rebounding in the near-term remains unlikely.
Statistics Canada reported April 2 exports jumped 0.4% in February at the same time imports declined 0.7%, leaving the country with a trade deficit of $984 million.
Export volumes fell by 3% to $43.5 billion in February, while import volumes dropped 1.7% to $44.5 billion.
“Notwithstanding the improvement in the nominal trade balance, the declines in both import and export volumes don’t bode well for a potential rebound in February GDP,” CIBC economist Nick Exarhos said in a note to investors.
While the statistics agency originally reported January’s trade deficit to be $2.5 billion, it revised those estimates to $1.5 billion following new administrative and survey data.
“The improvement in the trade balance in February relative to January largely reflected an outsized jump in export prices. Controlling for the effect of prices, the real trade balance actually deteriorated in February with lower export volumes outpacing a decline in imports,” RBC economist Nathan Janzen said in an investors’ note.
While imports from countries other than the U.S. went up 0.3% to $14.7 billion, American imports declined 1.2% to $29.8 billion in February.
TD Economics economist Dina Ignjatovic said in note to investors the February trade numbers were a "welcome surprise" but added economic activity in the first quarter is likely to be flat before improving later in the year.
"Ongoing strength in the U.S. economy and a weaker loonie should boost demand for Canadian-made goods. We expect exports to be a key driver of growth in the coming months, helping to offset some of the weakness brought on by lower oil prices."
