The travails of a long-struggling oil sector have hamstrung the capacity of exports to help out the Canadian economy, and a latest setback might have clouded the possibility of a speedier recovery.
In a report by David Ljunggren of Reuters, a Friday (June 3) announcement by Statistics Canada revealed that Canada hit a $2.94 billion shortfall in April, marking its 20th consecutive federal deficit and exceeding previous estimates of a $2.45 billion loss.
CIBC Capital Markets economist Nick Exarhos said that they initially projected a 0.3 per cent growth in the economy in April, after a 0.2 per cent shrinkage in March.
“The volume increase in exports was slightly underwhelming and I think we will be downgrading what we are expecting out of April gross domestic product,” Exarhos told Reuters.
Despite the underperformance, U.S.-bound natural gas export volume still grew by 0.5 per cent, with a 1.1 per cent increase in prices.
However, the shortfall meant that Canada’s trade surplus shrank to $1.57 billion, reportedly the lowest level it has plunged to since December 1993.
Oil continues to be a major factor in analysts’ estimates and calculations, as exports are expected to decline in May due to the closure of oil sands facilities in north Alberta, owing to the massive Fort McMurray wildfire that has left the region wanting for jobs and purchasing power.
Exarhos said that exports might improve and the exchange rate might lower further this year, as a U.S. Federal Reserve interest rate hike at least once in 2016 remains possible.