Canada’s merchandise trade balance in December turned to a deficit after six consecutive monthly surpluses as imports of consumer goods surged and oil prices dropped, according to data released by Statistics Canada on Tuesday.
Import and export values reached record highs last year because of higher prices of consumer goods and industrial products like semiconductor chips and energy. When adjusted for inflation, exports last year remained well below their level in 2019, before the pandemic.
In December, total imports rose by 3.7% as imports from countries other than the United States reached a record while exports fell by 0.9%.
After a year of supply chain disruptions, imports of electronics increased by 16.2% in December, driven mostly by the shipments of smartphones. But this only partly offset last year’s decline in imports, which were down by 5.4% compared to 2019.
Pharmaceutical products exports increased by 16.5%, continuing the gains from November as vast quantities of COVID-19 medications were packaged in Canada and then exported.
Energy exports dropped for the first time in eight months because of the decrease in crude oil prices from November. Even then, energy exports rose by an impressive 82.8% on a yearly basis, the largest product sector increase.
The outlook for energy exports this year remains strong. Geopolitical tensions and uncertainty in Libya, Kazakhstan and, most important, Ukraine-Russia led to an increase in the price of oil amid surging demand, which will result in a net gain for Canada.
The truck convoy that has been staged in protest of vaccine mandates might affect transborder trade in January and February. The number of drivers missing from the road, though, is small compared to the overall number of drivers in Canada. As a result, we expect the impact on overall trade to be small and localized because of the border blockade rather than because of a lack of workers.
In addition, we might see trade affected by the omicron variant in January as some warehouse workers and drivers had to quarantine, but the effect is expected to be short-lived as well.
