Strong gold shipments lift exports while diversification gathers pace; U.S. share of total exports drops to 67.4 per cent
Canada’s trade picture improved at the end of the year, with the merchandise trade deficit narrowing sharply in December as exports gained momentum and shipments to non-U.S. markets hit record levels.
Data released by Statistics Canada showed the trade deficit fell to $1.31 billion in December, significantly lower than the revised $2.59 billion gap recorded in November and better than economists’ expectations of around $2 billion.
The improvement was driven largely by a jump in exports, which rose 2.6 per cent to $65.63 billion. Metals and non-metallic mineral products were the main contributors, surging 18 per cent during the month. Exports of unwrought gold alone climbed more than 37 per cent, helped by elevated global prices. In volume terms, overall exports rose 1.4 per cent.
However, the data also revealed that export growth was narrowly concentrated. Excluding metals and non-metallic mineral products, total exports edged down 0.2 per cent.
Imports grew at a slower pace, rising 0.6 per cent to $66.93 billion. Gains were recorded across six of 11 product categories, led by gold, passenger vehicles and energy products.
Shift in trade patterns
A notable development was the continued decline in Canada’s reliance on the United States as its primary export destination. Although exports to the U.S. increased 1.1 per cent in December, the country accounted for just over 67.4 per cent of Canada’s total exports down from 76.2 per cent a year earlier.
The share is now at its lowest level on record, excluding two months during the pandemic in 2020. By comparison, the U.S. share stood at 68.4 per cent in November and 67.5 per cent in October.
Meanwhile, exports to countries other than the United States reached an all-time high in December, underscoring Canada’s gradual diversification of trade flows. Gold shipments to the United Kingdom were a key driver of the increase.
Imports from the U.S. rose 3.5 per cent, narrowing Canada’s trade surplus with its southern neighbour to $5.7 billion from $6.5 billion in November. At the same time, imports from non-U.S. countries declined 3 per cent, bringing Canada’s trade deficit with the rest of the world down to $7 billion from $9 billion.
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