Canada’s Current Account Deficit Falls

13 March 2012 09:00am - Florence Fullalove

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Canada’s Current Account Deficit Falls

Canada’s current account deficit in 2011 dropped slightly from the record set in 2010 and is shrinking in proportion to gross domestic product suggesting the worst of the economic crisis may be over.

According to Statistics Canada the deficit for the year fell to C$48.30 billion, the second highest on record after 2010’s C$50.86 billion. The 2011 deficit represents 2.8 % of gross domestic product compared with 3.1% in 2010. It was the third consecutive annual deficit after over a decade of surpluses. 

TD Securities strategist David Tulk said, “The improvement in the goods balance is consistent with a stronger than expected growth outturn in the US economy through the end of 2011. We anticipate this momentum will carry over into 2012 and will bleed into Canadian growth.”

Exports of goods were up C$6.68 billion to C$121.47 billion, the highest since 2008 and the overall balance on trade goods in the last quarter of 2011 jumped C$3.13 billion from C$248 million.

Douglas Porter, deputy chief economist at BMO Capital Market Economics said, “The strong Canadian dollar, combined with sluggish global demand, suggests that current account deficits will persist though at least the next two years.”

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• Statistics Canada
Canada's current account deficit
• TD Securities
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• BMO Capital Markets
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