Canada's Trade Deficit Shrinks Amid Export Surge

Canada's merchandise trade deficit narrowed in December, with exports rising faster than imports. The share of exports to the US reached a historic low, though outbound shipments increased. Economic momentum was driven by metals and mineral exports, notably unwrought gold. Imports also saw gains, especially from passenger vehicles and energy products.

In a significant economic shift, Canada witnessed a narrowing of its international merchandise trade deficit in December. The reduction was primarily due to a robust increase in exports, which outpaced the growth in imports, data from Statistics Canada revealed on Thursday.

Exports surged by 2.6% to reach C$65.63 billion, led by a remarkable 18% increase in metals and non-metallic mineral exports, including a substantial 37% rise in unwrought gold shipments. However, the share of exports to the United States, Canada's largest trading partner, hit a record low, dropping to just over 67.4% of total exports, excluding the COVID-19 pandemic months.

Imports rose modestly by 0.6%, driven by gains in gold, passenger vehicles, and energy products. Despite this, Canada's trade balance with the US saw its surplus narrow to C$5.7 billion. Meanwhile, exports to other countries reached an all-time high, though imports from non-US countries decreased by 3%.