Search

Trade Surplus Widens with Export Growth

Canadian Economics

By: David Ristovski

  • Canada’s merchandise exports were up 5.8 per cent (month-over-month) in February. Meanwhile, imports rose by 4.6 per cent. As a result, Canada’s merchandise trade surplus widened from $608 million in January to $1.4 billion in February.
  • Exports rose to $66.6 billion in February. Exports of metal and non-metallic mineral products rose 31.1 per cent, reaching a record $9.4 billion, with most of the growth coming from a sharp rise in exports of unwrought gold. Excluding the product group for unwrought gold, exports rose by a more modest 2.8 per cent. Other notable gains were recorded in the motor vehicle and farm, fishing and intermediate food products, which rose by 3.8 per cent and 9.7 per cent, respectively. Overall, 9 of 11 product sections increased. In volume terms, exports were up 6.2 per cent.
  • Imports increased to $65.2 billion in February, the highest level since June 2023. Increases were observed in all product sections except for imports of metal and non-metallic mineral products, which fell by 0.6 per cent. Notable increases were recorded in energy (+10.2 per cent), electronic and electrical equipment and parts (+9.7 per cent), and consumer goods (+3.3 per cent). In volume terms, imports rose 4.1 per cent.
  • Canadian exports to the U.S. were up 3.3 per cent. Meanwhile, imports from the United States increased by 3.4 per cent. As a result, the merchandise trade surplus with the United States widened from $8.8 billion in January to $9.1 billion in February.

Insights

Weaker domestic demand will dampen the outlook for imports. Higher rates will continue to exert pressure on both consumers and businesses until the Bank of Canada starts to lower rates. Our recent consumer and business confidence surveys have finally turned around, but the indices still fall short of optimistic levels. Consequently, weak domestic demand and subdued business investments are expected to persist, which will hinder import growth this year.

Strong export growth will be short-lived, as growth will likely moderate this year. The U.S. economy is expected to cool over the next several months which will weigh on Canadian exporters. We are anticipating that the underlying weakness in exports this year will come from non-energy exports, as energy exports are expected to post reasonable gains. However, we do expect that exports will outpace imports this year, which will lead to a widening trade balance. There are risks, such as weaker global economic activity and ongoing geopolitical tensions, that could dampen the outlook on Canadian trade.

For a more detailed analysis of our trade outlook, check out our latest Canadian Five-Year Outlook.

Related Insights

See More Insights

Comments