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Canada’s Trade Surplus Widens in January, But the Devil is in the Details When Assessing Implications for Growth

March 07, 2017

“Canada’s trade surplus widened in January, but the more interesting story is what happened to export and import volumes. A rise in the volume of exports will contribute to growth in the first quarter. Meanwhile, the sharp rise in the volume of imports may act as a drag on the accounting for economic growth. But depending on how the imports are used, it might be ultimately positive for future readings on consumer sales and business investment. Time will tell,”
—Craig Alexander, Senior Vice-President and Chief Economist, The Conference Board of Canada.


  • Canada’s merchandise trade surplus expanded in January, rising from $447 million at the end of 2016 to $807 million in the first month of this year. This marks a third consecutive surplus. The increase reflected rising exports and a slight pullback in imports. While the headline performance is favourable, the details on the volume of exports and imports are more challenging to interpret.
  • The value of exports rose 0.5 percent in January. However, lower prices meant that the volume of exports (which matter more for the tracking on economic growth) advanced a solid 1.0 per cent. While the export news for the month was positive, exports were only 1.8 per cent higher from a year earlier—acting as a reminder that exports were a source of disappoint in 2016. The Conference Board expects exports to be a larger contributor to growth in 2017.
  • Imports slipped 0.3 per cent lower in January. Again, prices were a big part of the story. Prices fell 2.7 percent in the month, which meant that the volume of imports rose 2.5 per cent in January.
  • With the growth in the volume of imports exceeding that of exports, the net result is unfavourable for the tracking of Canadian growth; but, this assessment depends on how the imports will ultimately be used. Statistics Canada reported that the increased volume of imports was concentrated in motor vehicles and parts, energy products, and electronics and electrical equipment. The imported finished motor vehicles may show up in future consumer spending. The auto parts might show up in future domestic production, which will go into domestic sales or into exports. The increased imports of electronic and electrical equipment might translate into business investment in machinery and equipment, which is badly needed, or might be inputs to domestic production. 


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Photo of Craig Alexander Craig Alexander
Senior Vice-President and Chief Economist

Craig Alexander brings over 19 years of experience in the private sector as an economic and financial forecaster to the position of Senior Vice President and Chief Economist. He oversees the Board’s macro-economic outlook products, custom economic and tourism research.

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