Canada's Trade Tumbles: Widening Deficit Raises Concerns

Canada's trade deficit unexpectedly widened in January to $3.65 billion as exports, particularly of motor vehicles and parts, fell sharply. The drop contrasts with a forecasted $900 million deficit and marks the largest decline since April last year. Improved energy exports partially offset the decline.

Canada's trade deficit expanded significantly in January, driven by a sharp decline in exports of motor vehicles and parts. Statistics Canada reported a deficit of $3.65 billion, significantly higher than the $1.3 billion recorded in December.

The decline came despite analysts forecasting a deficit of $900 million. Exports plunged by 4.7%, marking the most substantial fall since April of the previous year. Motor vehicle exports hit the lowest levels since September 2021, largely due to production stoppages.

Conversely, energy exports rose by 4.1%, helping to mitigate broader declines. Economists predict future trade improvements if crude oil prices rise amid Middle East tensions. Meanwhile, the Canadian dollar rose slightly, trading at 73.53 U.S. cents.

(With inputs from agencies.)