Exports Rise After Two Consecutive Months of Decline

  • Canada’s merchandise imports declined by 0.2 per cent (month-on-month) in April. Meanwhile, exports rose by 2.5 per cent. Canada’s merchandise trade surplus increased from $231 million in March to $1.9 billion in April.
  • After two months of decline, exports rose by 2.5 per cent in April to reach $64.8 billion. Exports of metal and non-metallic mineral products increased by 13.6 per cent and contributed to most of the growth in exports. Further, exports of energy products and motor vehicles and parts also rose in April, increasing by 6.4 per cent and 7.4 per cent, respectively.
  • Total imports fell by 0.2 per cent to $62.9 billion. Imports of energy products decreased by 12.8 per cent and contributed to most of the decline in April—crude oil imports recorded the largest drop in this product section, falling by 20.5 per cent. On the other hand, imports of consumer goods increased by 4.0 per cent due to higher imports of pharmaceutical products.
  • Imports from the United States declined by 0.4 per cent, while exports rose by 4.4 per cent. As a result, the merchandise trade surplus with the United States widened, moving from $7.2 billion in March to $9.5 billion in April.

Key Insights

Global economic uncertainty persists as a result of inflation and ongoing geopolitical tensions. The world’s major central banks have utilized strict tightening monetary policies to curb inflation—which has proven to be stickier than anticipated, especially in Europe. Consequently, the global economy has slowed. Many other factors pose downside risks to the global economic outlook. For instance, if the ongoing Ukraine–Russia conflict intensifies, it could place inflationary pressures on raw materials. Adding to the uncertainty, OPEC+ announced that oil production cuts will carry over into 2024, which clouds the outlook for international trade.

Canadian exporters will encounter a range of competing forces over the next several months. A slowdown in the U.S. economy will be one of the biggest challenges Canadian exporters will face in the short run. Additionally, if the federal reserve decides to increase interest rates again, it risks pushing the U.S. economy into a recession—which would profoundly impact Canadian trade. Furthermore, if the interest rate differential with the U.S. widens, it may force us to import inflation. On the other hand, exporters will get some relief from a weaker Canadian dollar. Other factors that bode well for Canadian trade include China’s abandonment of its zero-COVID policy, and a resilient U.S. labour market, enabling American households to continue spending on imported goods.