CBC reports today that, "A sharp fall in exports in December pushed Canada to its first monthly trade deficit since March 1976, Statistics Canada said Wednesday. The overall trade deficit for December was $458 million. In November, the trade surplus was $1.2 billion...The move into a deficit position was a big shock to economists, who had been forecasting a trade surplus for December of about $500 million."
WHAT'S A TRADE DEFICIT?
"A trade deficit occurs when a country imports more goods than it exports."
TRADE WITH THE US DECLINES
"Canada's trade surplus with the economically battered United States, the country's top trading partner, fell to its lowest level since December 1998. The surplus with the U.S. retreated to $3.8 billion in December from $4.6 billion in November. Exports to the United States dropped 10 per cent in December to $25.9 billion, while imports from the U.S. fell by 8.4 per cent."
SEMI-PERMANENT TRADE DEFICIT?
"One economist suggested Canadians may have to get used to trade deficits for a while."
BMO Capital Markets economist Douglas Porter says, "Canadian trade deficits may well now be a semi-permanent feature on the landscape, at least until the U.S. economy pulls out of its deep dive. Simply put, Canada’s trade position has feasted for decades on a backdrop of ravenous U.S. demand. With that appetite now on the strictest diet imaginable, our trade outlook has withered accordingly."
THE NEED TO MONITOR THIS
Given the North American Free Trade Agreement has promoted the integration of the Canadian economy into the American economy, and US President Barack Obama has warned of an accelerating rate of major unemployment in the US, the Council of Canadians will be monitoring this situation closely.
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