The 3 Week Diet System

Thursday, May 28, 2015

Canada's Current Account Deficit Widens

May 28:

OTTAWA--Canada's current-account deficit widened to the second-largest on record in the first quarter, as the country's trade in goods sustained a sizable hit from oil-price rout.
The current-account deficit increased to a seasonally adjusted 17.47 billion Canadian dollars ($14.02 billion), Statistics Canada said on Thursday.
The consensus call was for a shortfall of C$18.6 billion, according to economists at Royal Bank of Canada. The largest shortfall on record was C$19.65 billion in the third quarter of 2010.

The current account is the broadest indicator of trade in goods and services, and a deficit suggests a country is importing more capital and goods and services that it exports. Canada's current account benefited from a decadelong commodity-price boom until 2008 but has since been in a deficit position.
The country's economy hit a rough patch recently due to the drop in oil prices, given that crude oil is its largest export. The crude-price swoon is expected to weigh heavily on overall Canadian incomes, as the lower price fetched for crude would impact on Canada's terms of trade, or the difference between the value of exports versus imports.
Canada's current-account deficit is roughly 3.5% of the country's gross domestic product, "or too wide to be viewed as sustainable," said Benjamin Reitzes, economist at BMO Capital Markets. He added this "should be as bad as" Canada's current-account deficit gets, as higher energy prices and firming U.S. demand drives a rebound in economic growth in the second quarter.
In the January-to-March period, Canada posted a C$7.25 billion deficit in the trade of goods--the biggest on record--up from a shortfall of C$2.03 billion in the previous quarter. The change was due to lower energy exports, as crude prices fell 32% from the fourth quarter. Partly offsetting the decline in energy exports were increased sales of food products and consumer goods.
The deficit in the trade of services--which represents over two-thirds of GDP--was largely unchanged in the first quarter, at C$5.64 billion.
Foreign investment in Canadian securities rose by C$37.57 billion in the first quarter, led by a record purchase of Canadian bonds.
Foreign direct investment slowed to C$6.67 billion.
The Bank of Canada has said Canadian growth essentially stalled in the first quarter. Statistics Canada will release GDP data for the period on Friday.


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