Canada posts record high trade deficit in March

Statistics Canada on Wednesday released March trade deficit data which showed Canada's trade deficit in March widened to a record C$3.41 billion ($2.69 billion) as exports sank for a second month on weak demand from the crucial U.S. market. The previous month’s data were also revised to show a larger deficit of C$2.47 billion, compared with the earlier estimate of a C$1.91 billion shortfall.

Canada is already struggling to deal with the prolonged effects of an oil price slump and the dismal trade balance data casts doubts on the strength of the recovery under way in the resource-reliant economy.

“This is a simply horrible report,” said Bank of Nova Scotia economist Derek Holt, adding that export volumes are down to levels last seen in November.

Exports declined 4.8% in March, after a steeper 6.6% fall in the previous month. On a volume basis exports fell 2.9% in March. Exports to U.S. fell by 6.3 percent while imports dropped by 4.8 percent. As a result, Canada's trade surplus with the United States dropped to a 22-year low of C$1.53 billion, down from C$2.12 billion in February.

"I wouldn't say this is time to push the panic button but it's time to be alert. This is something that is coming to us squarely from the United States," said Peter Hall, chief economist at Export Development Canada.

The Bank of Canada said on April 20 it could take Canada more than three years to recover from the oil price shock. The central bank is relying on a transition to non-energy exports to help drive the economy.