Higher imports widen Canada Q2 current account gap

OTTAWA: Canada's current account deficit grew by more than half in the second quarter as imports increased and exports to the critical US market fell, Statistics Canada said on Tuesday.

The deficit increased to C$15.33 billion ($15.64 billion) billion) from a revised C$10.07 billion in the previous quarter. Markets had expected a shortfall of C$13.75 billion.

The overall balance on trade in goods slumped to a deficit of C$3.50 billion from a surplus of C$1.80 billion in the first quarter. The goods surplus with the United States dropped to C$11.12 billion from C$14.43 billion on lower exports of crude petroleum and automobiles.

The services deficit hit a new high of C$6.25 billion, in part because Canadian spending abroad outpaced spending in Canada by foreigners. Canadians also spent more money with foreign airlines than in the first quarter.

The deficit on investment income narrowed by to C$4.73 billion from C$5.17 billion as Canadian direct investors' earnings from abroad rose.

Copyright Reuters, 2011