Canada posts current account trade deficit in Q3 November 28, 2009
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Canada posted a record trade deficit in the third quarter of 2009, according to Statistics Canada figures released Friday.
The national statistical agency said Canada produced a current account deficit of $13.1 billion for the July-to-September period, mainly because the country bought more products from other countries than Canadian companies were able to sell overseas.
“A widening in the goods deficit more than offset a marginal narrowing in the services deficit and smaller investment income shortfall,” said Dawn Desjardins, assistant chief economist for RBC Economics Research.
Canada still sold more widgets to the United States than the country’s businesses and individuals purchased from the world’s biggest economy, Statistics Canada said.
But that surplus shrank as Canada’s import bill rose in the third quarter.
“Geographically, Canada continues to record a surplus on goods trade with the United States; however, this bilateral surplus continued to narrow in the third quarter, as Canadian imports from the United States advanced at a faster pace than Canadian exports to American markets,” Statistics Canada said.
Trade balance
A country’s current account position measures its sales of goods and services to foreigners and money inflows to the domestic economy compared to the same country’s purchases of goods and services from other nations and investment outflows to foreigners.
In the third quarter, Canada sold $90 billion in goods outside the country while purchasing $94 billion in foreign products. That resulted in a deficit in this category of $4 billion.
Canada also posted a $5.6-billion deficit on the service side of the trade ledger in the three-month period.
By contrast, Canada received $8.5 billion in repatriated profits and interest payments on foreign investments in the period versus the $8.1 billion in interest and earnings sent outside of the country.
The country’s deficit trade, which appeared in the third quarter, can act to reduce the value of the Canadian dollar. That is because more Canadians will be switching their dollars for other currencies in order to buy foreign goods and services.
The rise in imports purchases also can slow economic growth, said RCB.
“The rapid rise in imports in the third quarter points to the trade sector acting as a significant drag on the pace of GDP growth. RBC estimates that net exports trimmed 4.2 percentage points from the quarterly economic growth rate,” said Desjardins.
Rising exports narrow Canada’s trade deficit November 14, 2009
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Higher exports to the EU helped narrow Canada’s trade deficit to $927 million in September, Statistics Canada said Friday.(Jason R Zalasky/Associated Press)
Canada’s exports were 3.5 per cent higher in September, narrowing the trade deficit to $927 million from $2 billion.
Statistics Canada says exports rose by $1 billion to $30.3 billion in September, as volumes increased 4.5 per cent. Imports were largely unchanged, edging down 0.1 per cent to $31.2 billion.
Exports have been on a downward trend since July 2008 and reached a low point in May 2009 before increasing in three of the past four months.
Automotive products, industrial goods and materials, and machinery and equipment were the main sources of growth for exports. Energy products mitigated the gains.
Higher exports to the European Union were largely responsible for the overall increase in exports.
“The big story in this report was Canada?s diversification away from the United States,” BMO economist Benjamin Reitzes said.
Exports to the EU and other OECD countries jumped 34 per cent and 15 per cent respectively, he noted. “As U.S. consumption is likely to lag the global recovery, a shift towards other markets will be a key to Canadian exporters? success,” he said.
Exports to the United States increased 0.5 per cent while imports grew 1.7 per cent. As a result, Canada’s trade surplus with its largest trading partner shrank to $2.1 billion in September from $2.3 billion in August.
“With the U.S. still Canada?s largest customer, trade deficits are likely to persist,” Reitzes said.
U.S. trade deficit grows 18.2% November 14, 2009
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Rising oil prices widened the U.S. deficit in September, the Commerce Department reported Friday.
The value of imports surpassed those of exports by $36.5 billion US, a rise of 18.2 per cent and the most in nearly a year.
Boeing manufacturing plantAircraft, autos and industrial machinery helped the U.S. to increase exports in September(The Boeing Company)
Still, exports were up 2.9 per cent to $132 billion, their fifth monthly increase. The biggest gains were in sales of autos, aircraft and industrial machinery.
Imports rose 5.8 per cent to $168.4 billion, pushed up by a 20.1 per cent increase in oil prices, which rose to their highest levels in nearly a year.
That benefited Canada, the No. 1 supplier of U.S. petroleum imports, with sales of two million barrels a day to the U.S.
The trade deficit for the first nine months of this year now totals $366 billion. That’s about half its level for all of last year.
The deficit with China rose 9.2 per cent to $22.1 billion, the highest imbalance in 10 months.
OPSEU proposes tax hike to cut deficit November 6, 2009
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Public-sector unions are warning Premier Dalton McGuinty not to try to force their members to bear the brunt of the costs of eliminating Ontario’s record $24.7-billion deficit.
On Thursday, McGuinty suggested the government was looking at unpaid days off for nurses, teachers and other public-sector workers to help eliminate the deficit, and said they had been “sheltered” from the worst effects of the global recession.
“We don’t agree with that assessment at all,” said Randy Robinson of the Ontario Public Sector Employees Union, which represents 125,000 workers, including 45,000 direct civil servants.
“Mr. McGuinty has suggested that he’s the guy who will make the tough decisions and the tough decision he’ll make is to make public employees pay,” said Robinson.
“Actually, that’s the easy decision. The real tough decision that he doesn’t want to make, and he seems afraid to grapple with, is the notion that everybody in the province has a responsibility to deal with this crisis.”
The fairest way to do that, said Robinson, is to impose a small income tax increase on everyone.
The Registered Nurses Association of Ontario also disagreed that its members had been “sheltered” from the impacts of the global recession, and said the province should consider running a deficit longer than planned rather than cut public services.
“If we start to shrink even more the hours of patient care, we will pay both in complications which will keep patients in hospital longer, and we will pay with more sick time for nurses, which leads to more overtime and absenteeism,” said RNAO executive director Doris Grinspun.
Nurses have been treated more respectfully under the Liberals than the previous Conservative government of Mike Harris, who once compared them with anachronistic hula hoops, added Grinspun, who said she wasn’t surprised McGuinty singled out nurses and teachers.
“These are two groups that he has put a lot of energy in helping to recover from the mess that the previous government created,” she said.
“But he will be naive to think that that’s a good policy initiative.”
Dalton Days could send grads south: RNAO
McGuinty’s musings could send the wrong message to nursing graduates, especially when the United States is facing a severe shortage of registered nurses, added Grinspun.
“All he needs to do is send this type of signal and the new grads will move south again,” she warned.
“How smart is that from a taxpayer’s perspective?”
Both OPSEU and RNAO said they agreed the public sector had a role to play in helping eliminate the deficit, and both unions promised to work with the government on the issue.
“Public employees are willing to pay their share, if the entire economy is paying its share as well,” said Robinson.
Finance Minister Dwight Duncan said Thursday he would soon start talks with public-sector unions on how to eliminate the deficit.
However, Duncan said it was too early to talk about so-called Dalton Days, unpaid days off similar to the hugely unpopular “Rae Days” announced by NDP Premier Bob Rae in his 1993 social contract.
“We do have to get back to balance over a period of time and look at every aspect of government, including wages and benefits,” he said.
“Once we’ve had a chance to make a good assessment of things, we will have clear announcements in the budget next year.”
The New Democrats have said the government should abandon its plan for corporate tax cuts rather than try to balance its books on the backs of public servants.
The Canadian Press, 2009
Federal deficit hits nearly $6B in July October 3, 2009
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Spending by the federal government outpaced revenue by $5.8 billion in July, the Finance Department reported Friday.
A year ago, the government had a surplus of $2.2 billion.
Finance Minister Jim Flaherty projected a deficit of $34 billion in the federal budget in January. It’s now expected reach $56 billion. (Tom Hanson/Canadian Press)
The department said revenue fell by $3.4 billion, or 15.4 per cent, in July as the recession and unemployment hit the incomes of individuals and businesses, and as some tax breaks took effect.
Spending rose $5.1 billion from 2008 with the federal bailout of the auto sector, Ottawa’s two-year, $46.6 billion stimulus spending and higher Employment Insurance payouts.
Lower interest rates also meant reduced interest income.
Ottawa released estimates in September predicting a deficit of $56 billion this year, up from the previous projection of $50 billion.
The government expects annual deficits extending out to 2014-15. The Conservative government has said it does not plan to raise taxes in order to return to a surplus.
With files from The Canadian Press (more…)
Ontario deficit $2.5B worse than expected September 26, 2009
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Ontario’s deficit for the last fiscal year was $2.5 billion higher than expected, driven by a 48 per cent drop in corporate tax revenue.
The provincial budget in March forecast a deficit of $3.9 billion in the 2008-09 fiscal year ended March 31, 2009.
But according to financial statements released Friday afternoon by the government, the deficit for the year stands at $6.4 billion.
Corporate tax revenues for the year totalled $6.7 billion, the statements show. In 2008, the government had pegged that number at $12.3 billion.
‘Difficult choices ahead’
“As I’ve indicated in the past when we had numbers, we were very careful to say that there is enormous volatility in the economy,” Finance Minister Dwight Duncan told CBC News. “Corporate taxes are historically the most volatile tax, and that volatility has come through.”
Duncan also hinted that the government’s projections for next year’s deficit may go up. In March, he forecast a $14.1-billion deficit in 2009-2010.
“It’ll depend on whether or not what we have seen up until March of this year continues on and it also depends on how quickly government revenues get restored to where they were,” said Duncan, when asked about a possible change in that projected figure.
“One thing we know is that both growth in employment and growth in government revenues tend to lag growth in the economy. That’s been the experience after every major downturn in the last generation.”
The Ministry of Finance has predicted Ontario’s GDP will contract by 2.5 per cent for 2009 before growing by 2.3 per cent the following year.
The government has some “difficult choices ahead,” Duncan said, adding he would elaborate during his fall statement, expected in October.
He would not say if the government would stick to its plan to eliminate deficits by fiscal year 2015-2016.
Opposition questions Liberal credibility
The Progressive Conservatives said “it was no surprise” the Liberals waited until Friday afternoon to release the public accounts.
“Premier Dalton McGuinty has lost all credibility when it comes to managing the province’s finances,” said Opposition finance critic Norm Miller.
“We fell faster and harder than other provinces in this recession.”
The New Democrats charged that the government was always playing politics with its budget forecasts and should agree to set up an independent budget office like the federal government’s.
“Ontarians should expect an impartial budget document, not one clouded by partisan political spin like we’ve gotten from the McGuinty government,” said NDP Leader Andrea Horwath.
“Each and every update out of the mouths of the premier and the finance minister was rosy. It turns out their spin was far from the truth,” she said.
The province’s debt grew this fiscal year by $14.7 billion, which included some accounting practice changes, to $113.2 billion, according to the documents.
But Duncan touted his government’s management of finances, saying spending growth was brought to its lowest level in eight years.
Total spending for the year stood at $96.9 billion, an increase of 0.37 per cent from the previous fiscal year.
With files from The Canadian Press (more…)
U.S. deficit tops $1 trillion July 15, 2009
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The U.S. government’s annual budget deficit passed $1 trillion US in June, hitting a record high, the Treasury Department said Monday.
The June deficit of $94.3 billion pushed the total to nearly $1.1 trillion in the first nine months of the budget year. U.S. budgets run from Oct. 1 to Sept. 30.
“These are mind-boggling numbers,” said Sung Won Sohn, an economist at the Smith School of Business at California State University.
The deficit has grown because of:
Spending to fight the recession.Falling tax revenue.Spending on the wars in Iraq and Afghanistan.
Concern about the U.S. deficit and the national debt is one of the factors in the drop of the U.S. dollar against other currencies.
President Barack Obama has said the government will reduce the annual deficit when the recession ends.
With files from The Associated Press (more…)
Opposition demands PM fire Flaherty over ballooning deficit May 31, 2009
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Finance Minister Jim Flaherty, left, tables the federal budget in the House of Commons in January as Prime Minister Stephen Harper looks on. (Tom Hanson/Canadian Press)Prime Minister Stephen Harper faced calls from opposition MPs on Wednesday to fire his finance minister after Jim Flaherty acknowledged this week that Canada’s deficit will balloon to more than $50 billion this fiscal year.
Flaherty announced Tuesday the deficit will rise by more than $16 billion in 2009-10 from the $34 billion he forecast in January’s budget.
During Wednesday’s question period, Liberal Leader Michael Ignatieff lampooned Flaherty’s statements six weeks ago that his forecasts were “on track” and called his handling of the global recession “incompetence on a historic scale.”
Liberal Leader Michael Ignatieff stands during question period in the House of Commons.(Sean Kilpatrick/Canadian Press) “What is at stake here is the credibility of the government of Canada and the credibility of the minister of finance,” Ignatieff told the House.
“His projections are out the window again, leaving Canadians with the largest deficit in history — and no economic stimulus to show for it.”
Outside the Commons, Ignatieff said the public accounts of Canada are “in freefall, and they can’t tell where the bottom is.”
“He [Flaherty] has to go because there isn’t a businessman, there isn’t an investor, there isn’t a bank president in the country, there isn’t a foreign leader who can believe the government of Canada on its public finances,” he said.
January’s federal budget predicted five years of deficits with a shortfall of $64 billion over the next two years — a figure that will now climb to more than $80 billion.
Just two months before that, the Conservative government was touting years of surpluses in its fall economic update.
PM accuses leaders of hypocrisy
NDP Leader Jack Layton told the House that the government, backed by the Liberals, has “beaten all the records of bad economic performances” while infrastructure money isn’t getting out the door.
During question period, Bloc Québécois Leader Gilles Duceppe said the prime minister and Flaherty denied the existence of the economic crisis during the election.
He suggested they either didn’t see the crisis coming, or hid it from the public to get re-elected.
The prime minister countered that Canada’s deficit is affordable and small in comparison to deficits brought in by other G8 governments, while it also helps communities, industries at risk and the unemployed.
Harper said Canada was responding to the recession “from a position of fiscal strength” and accused opposition leaders of hypocrisy.
“They’re demanding we spend more money and on the other hand they say, ‘Don’t run a deficit,’” he told the House.
Flaherty himself told the House that expanding the deficit to stimulate the economy and increase employment insurance benefits is “the right thing to do for Canadians.”
But the three opposition parties have accused the Conservative government of failing to get stimulus money into the economy in the 120 days since the budget was tabled.
The Liberals, NDP and Bloc have also demanded the government expand the threshold of EI benefit qualification, arguing those hurt most by the recession aren’t able to get help.
Federal officials reveal $2.2B deficit for fiscal year May 30, 2009
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A $3.6-billion deficit in March sent the federal government $2.2 billion into the red for the 2008-09 fiscal year, officials said Friday.
The latest reading on the status of the government’s coffers comes just days after Finance Minister Jim Flaherty said the deficit for the current 2009-10 fiscal year is projected to hit more than $50 billion.
For the 2007-08 fiscal year, the government ran a surplus of $11.4 billion.
In its monthly fiscal monitor released Friday, the Finance Department said the government slipped into the hole in March as its budgetary revenues fell $3.1 billion, or 14.4 per cent, from March 2008, due to declines in tax revenues.
For the full 2008-09 fiscal year, the government’s revenues decreased by $9.2 billion, or 3.8 per cent, mainly due to lower corporate income tax and goods and services tax revenues.
Corporate income tax revenue was down $11.1 billion, or 27.2 per cent, year-over-year due to lower business profits and the impact of tax reductions. GST revenues dropped by $4.4 billion, or 15 per cent, reflecting the one-percentage-point reduction in the GST on Jan. 1, 2008.
Government program expenses grew by $6.8 billion, or 3.5 per cent, due to higher transfer payments. That included a $2 billion increase in employment insurance benefits as more people lost their jobs due to the recession.
Public debt charges were down $2.3 billion from last year, due to lower interest rates.
After delivering the news that the government’s deficit projection for the current fiscal year will go from $33.7 billion to more than $50 billion, Flaherty will provide an update to the House of Commons about the government’s finances in June.
‘I’m busy doing my job’, Flaherty says of recession, $50B deficit May 28, 2009
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The $50-billion deficit Canada is facing this fiscal year is necessary to help Canadians weather the worst economic recession since the Second World War, Finance Minister Jim Flaherty said Thursday, rejecting calls from the opposition to resign.
“I’m busy doing my job. There’s a global recession going on,” Flaherty told CBC News.
Flaherty announced Tuesday the deficit will rise by more than $16 billion in 2009-10 from the $34 billion he forecast in January’s budget.
The announcement prompted calls from the opposition on Wednesday for him to step down. Liberal Leader Michael Ignatieff called Flaherty’s handling of the global recession “incompetence on a historic scale.”
Flaherty said Thursday the projected deficit only represents about 3.3 per cent of Canada’s gross domestic product. That pales compared to the 10 per cent and greater deficits Japan, the United Kingdom and the United States are facing, Flaherty said.
“None of these economists, I can tell you, predicted this recession. And none of these economists predicted the depth of this recession. I have to deal with the reality of it — not the speculation surrounding it — and that’s what we’re doing,” he said.
‘Right thing to do’
The Conservative government is being responsive to the needs of Canadians with respect to unemployment and preserving jobs in the auto sector, Flaherty said.
“These are expensive — billions of dollars — and that’s why we have an additional deficit. But it’s the right thing to do.”
More than half of the additional spending is aimed at preserving the ailing auto industry, he said.
“But that’s saving an industry and that’s saving thousands of jobs in our country during a recession. I hope the opposition will recognize that’s the right thing to do actually.”
Can afford to do more: Flaherty
Flaherty said recent reports from the International Monetary Fund indicate Canada can afford to take more action to address the recession.
The finance minister also maintained Canada is still on track to be out of a deficit position by 2013.
“As the economy recovers, as we run surpluses, we’ll use that money to pay off the deficits we’re going to incur,” he said.
January’s federal budget predicted five years of deficits with a shortfall of $64 billion over the next two years — a figure that will now climb to more than $80 billion.
Just two months before that, the Conservative government was touting years of surpluses in its fall economic update.
The three opposition parties have accused the Conservative government of failing to get stimulus money into the economy in the 120 days since the budget was tabled.
The Liberals, NDP and Bloc Québécois have also demanded the government expand the threshold of EI benefit qualification, arguing those hurt most by the recession aren’t able to get help.
