There is no doubt that the Coronavirus (COVID-19) pandemic has had a dramatic impact on global trade. Therefore, it was welcome news when Statistics Canada reported positive economic data and that Canada’s trade deficit has rebounded sharply.
May’s solid export numbers indicate that the Canadian economy appears to be picking up again. The gains were widespread, as 9 of the 11 broad product categories were higher compared to April. Leading the way on a dollar-value basis were exports of motor vehicles and parts, which were up by $922 million (12.4 per cent), reaching their highest level in two years.
Exports to the U.S. were up by 3.7 per cent compared to April, a dollar-value increase of more than $1.4 billion, and accounted for about 60% of May’s export growth. In spite of the growing trade tensions with China, exports were up by 4.6 per cent ($101 million). However, 2020 to date, sales to China are 5.3% lower than they were through the first five months of last year.
Also recorded were strong export gains to Saudi Arabia ($480 million), Japan ($167 million), South Korea ($166 million), The Netherlands ($143 million) and Switzerland ($115 million).
Canada’s imports were also up, but only by just under 1%. The surge in exports, combined with modest import growth, caused Canada’s monthly trade deficit to swing into surplus territory for just the second time since late 2016.
Overall trade activity has resumed, as COVID-19 related restrictions have eased and this latest trade data points to a good-sized rebound for Q3. However, the durability of the recovery remains an open question.
The big question is what comes next? Until a vaccine or effective treatment is widely available, it is expected the path to recovery will be gradual with lingering challenges for all areas of the economy, including international trade.
For more information, contact Chris Barnard, Vice President – Projects & Market Development.