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December: Trade Deficit Narrows Sharply

ByThe National Bank of Canada
Published 03/01/2012, 05:18 AM
Updated 05/14/2017, 06:45 AM
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FACTS: The Institut de la statistique du Québec reports that Quebec’s trade deficit fell $1.3 billion in December to $427 million (top chart). The value of exports rose $702 million (+12.8%) to $6.2 billion. Most of the gain was in exports of complete aircraft with engines (+594.2 million). Imports fell $632 million (−8.7%). Slightly more than a quarter of the decline was in crude oil. In constant dollars, the trade deficit narrowed $1.3 billion to $0.7 billion. Exports increased $868 million (+17.3%) to $5.9 billion. Imports decreased $414 million (+5.9%) to $6.6 billion. Export prices fell 3.8% and import prices fell 3.0%.

OPINION: The December data were skewed by exceptionally high exports of complete aircraft. More indicative is the trend of quarterly total volume exports relative to those of Canada as a whole. By this measure Quebec has come back in strength (middle chart). As a result, the province’s volume exports grew 3.5% in 2011, not much less than Canada’s (+4.0%). It is true that Quebec’s fourth quarter was probably buoyed by exports of complete aircraft at a pace that is unlikely to be maintained. However, we think Quebec volume exports will grow more than 5% in 2012. Meanwhile, the sharp reduction of Quebec’s constant-dollar trade deficit as a result of the Q4 export strength (bottom chart) means that international trade contributed to economic growth in the quarter.
Quebec Nominal trade balance
International merchandise exports
Quebec Volume trade balance

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