Canada's current account deficit narrows
Net loss on trade, other payments in Q1 was smallest in a year
Canada's current account deficit in the first quarter narrowed to $7.8 billion from $10.2 billion, Statistics Canada reported Friday, underlining the growing strength of the economy.
The current account measures exports, and imports of goods and services, as well as cross-border payment flows — such as interest payments and dividends — and government payments such as foreign aid.
Among other things, it's a measure of how fast Canadians' net debt to the rest of the world is expanding or shrinking.
Canadian global exports of goods — especially with the U.S. — rose faster than imports, with the country exporting $1.7 billion more than it brought in. That number increased from a surplus of $0.4 billion the last three months of 2009, following two quarters of deficits.
The deficit in services fell by $500 million, largely due to the Vancouver Winter Olympics, which attracted visitors from outside the country and kept Canadians spending their money here as well.
Spending by non-residents visiting Canada — which is counted as an export in services — rose five per cent, and the number of visitors from overseas increased by 5.8 per cent.
Deficit smallest in a year
The current account deficit in the first quarter was the smallest in a year, as the global economy recovered and trade with the rest of the world picked up. The deficit for all of 2009 was $43.5 billion.
Economists look at the current account, government debt, and Canadians' personal debt to get a total picture of how much the country is living beyond its means.
"The gap [in the current account] is still expected to come in close to $35 billion this year," said BMO Capital Markets economist Doug Porter in a commentary.
"The deficit is certainly manageable, but remains a huge switch from the 10-year string of surpluses from 1999-2008," he said.
The value of energy exports rose almost $2 billion, both because of higher prices and higher volumes. Half of the growth was a 25 per cent increase in natural gas exports.