Canada's current account deficit widens in Q1

Canada's current account deficit widened to $17.5 billion in the first quarter of 2015 from $13.1 billion (revised from $13.9 billion) in the final quarter of 2014. The Q1 deterioration in Canada's international trade position was concentrated in the deficit of goods - specifically energy products.

Today's report is in line with international trade data released earlier this month, which highlighted how lower energy prices were weighing on export receipts through the first quarter of 2015. That said, export volumes did rise in Q1, and when combined with the slight downtick in real imports, TD Economics expects net exports to be a positive contributor to real GDP growth in Q1.

"Looking ahead, we expect to see growth in Canada's export sector to gain speed over the remainder of this year. For one, after a very weak start to the year, U.S. real GDP growth is forecast to average around 3.5% over the second half of 2015, as some transitory factors that have impeded on growth subside. This bodes well from a foreign demand perspective for Canada's export sector. What's more, we expect the Loonie to move lower as 2015 progresses. Both these factors should translate to a narrowing in the current account deficit over the second half of this year." says TD Economics 

While the collapse in oil prices stunted foreign interest in Canadian securities in 2014Q4, investor sentiment rebounded in the first quarter of 2015. And, Canadian private corporations clearly capitalized on this demand and low borrowing rates. Indeed, the sharp rise in corporate bond holdings coincided with very strong net new bonds issuance in 2015Q1.