MNI DATA IMPACT: Canada Dec. Trade Gap Smallest in 7M on Oil>

By Greg Quinn and Anahita Alinejad

     Ottawa (MNI) - Canada's trade deficit shrank in December on a 

rebound in oil exports, helping make the overall deficit for 2019 the 

smallest in five years.

     The deficit narrowed to C$370 million from C$1.2 billion in 

November, Statistics Canada said Wednesday from Ottawa. The MNI 

economist median was a C$680 million deficit. 

     The 2019 deficit of C$18.3 billion was the smallest since 2014, the 

last time Canada reported a surplus. That improvement masked significant 

weakness in Canadian demand for U.S. products and a record deficit 

against other nations.

     Canada's C$51.6 billion annual trade surplus with the U.S. was the 

highest since 2008, though that was led by falling Canadian imports 

rather than strength in exports south of the border. Canada's deficit 

with non-U.S. nations reached record C$69.8 billion. 

     The improvements in the headline trade figures provide a boost to 

short-term GDP, while leaving open the question of whether trade 

tensions are taking Canada into a prolonged slowdown that led the BOC to 

consider cutting interest rates. Governor Stephen Poloz said last month 

consumer demand may be slowing and a potential hidden source of strength 

could have been rising Canadian purchases from U.S. websites. 

     Consumer goods imports rose 4% in December from November, but those 

were led by pharmaceutical products rather than retail-style purchases 

from providers like Amazon.

     Some of the strength in December exports was also from one-time 

forces -- the return of oil exports after repairs to a damaged Keystone 

pipeline and metals shipments following a CN Rail strike. Exports rose 

for the first time in four months with a 1.9% gain. Exports rose 6.4% 

from a year earlier. Excluding energy, exports rose just 0.3% in 

December. 

     Imports climbed 0.2% on the month, though they are down 3.2% from a 

year earlier, Statistics Canada reported. 

     The agency also said export growth slowed in 2019, with the 1.7% 

gain lagging the 2018 pace of 6.3% and 2017's 5.4%. Import growth was 

also slower at 1% in 2019 compared with 5.7% in 2018 and 4.9% in 2017. 

     Canada's trade and diplomatic tensions with China over the arrest 

of a Huawei official on a U.S. extradition warrant and the company's 

potential exclusion from building a 5G network are also dragging on 

trade. Exports to China dropped 16% last year, the first decline since 

2014. 

--MNI Ottawa Bureau; +1-613-314-9647; greg.quinn@marketnews.com

[TOPICS: M$C$$$,MACDS$,MAUDR$]