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Canadian Trade Plummets Amid Global Shutdowns: April Losses Set New Record

The Port of Halifax. Photo: Halifax Port Authority.

BLOOMBERG, JUNE 4, 2020

By Shelly Hagan for Bloomberg – Canadian exports and imports plunged by the most ever in April amid a shutdown of global trade.

Shipments of goods abroad plunged 30% during the month, more than offsetting a 25% drop in imports. The nation’s trade deficit widened to C$3.3 billion ($2.4 billion), from C$1.5 billion in March, Statistics Canada said Thursday in Ottawa. The median estimate of economists surveyed by Bloomberg had called for a C$3 billion shortfall.

The report illustrates the extent to which global trade has collapsed because of pandemic-related lockdowns and travel restrictions. In Canada’s case, the economy is facing a double whammy from the Covid-19 outbreak and tanking oil prices. Combined imports and exports at C$68.6 billion were the lowest in one month since 2010.

A major factor was the near complete shutdown of car production in North America due to the pandemic, with no new vehicles manufactured in Canada in April. Exports in the sector dropped to C$1.1 billion, from C$6.4 billion in March, and consisted mostly of products shipped out of inventory or used vehicles, the statistics agency said.

“While some factories and retailers began to reopen in May, it’s likely to take until the June data to see any material signs of rebounding economic activity,” CIBC economist Royce Mendes said in a report.

Graph

Trade with the U.S. — Canada’s largest trading partner — fell by C$23.4 billion, representing more than 90% of the decrease in Canada’s April activity. Canada’s auto and energy sectors are heavily integrated with the U.S. producers and the impact of Covid-19 on these industries accounted for most of the decline observed in trade between the two countries.

Energy exports dropped 44% in April, as the value of crude oil shipments fell 55% on lower prices and lower volumes due to weaker global demand.

In volume terms, total exports were down 20% in April, with imports falling 25%.

— With assistance by Erik Hertzberg

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