Data released on Tuesday showed the Canadian trade deficit widened in March but less than expected.  According to Jocelyn Paquet, an analyst at the National Bank of Canada, the impact of the coronavirus was clearly visible in the report as both nominal exports and imports recorded steep monthly declines. 

Key Quotes:

“Exports totaled just C$46.3 billion in March (-8.8% y/y), the lowest level since January 2018. Imports, meanwhile, dropped to a 29-month low of C$47.7 billion (-9.9% y/y). 

“Turning to quarterly data, trade in goods appears not to have contributed much to Q1 growth as real exports (-9.4% annualized) shrank almost as fast as real imports (-11.0% annualized, the worst since 2009).

“A steep contraction in import volumes in the machinery equipment (-16.5% annualized) and consumer goods (-16.4% annualized, the steepest since 2008) categories bodes ill for investment spending and household consumption in the first quarter of 2020. This is consistent with our call for a 11.7% annualized drop in GDP in Q1.”