Canada: Goods trade may have acted as a drag on growth in Q4

Data released on Wednesday, showed the Canadian trade deficit narrowed more than expected in December. According to National Bank of Canada’s analysts, Krishen Rangasamy, the data released is consistent with their call for a slowdown in GDP growth to about 0.0% in Q4 following a +1.3% print in Q3.

Key Quotes:

“In real terms, exports jumped 1.8% while imports progressed 0.6%.”

“The Canadian trade numbers came in better than expected in December thanks in large part to a rebound in exports, the latter boosted by a 9.5% surge in the energy segment. Recall that crude oil exports collapsed in November due to the rupture of the Keystone pipeline in North Dakota.”

“Turning to quarterly data, trade in goods appears to have acted as a drag on growth in Q4 as real exports (-5.5% annualized) fell at a faster pace than real imports (-4.7% annualized). A steep contraction in import volumes in the machinery equipment category in Q4 (-13.8% annualized) also bodes ill for investment spending in the last quarter of 2019.”

“A big story last year was the deterioration of diplomatic and commercial relations between Ottawa and Beijing and this was clearly reflected in the data. Indeed, Canadian goods exports to China shrank 16.0% in 2019, the steepest yearly contraction recorded since data collection began in 1998.”

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