The end of 2018 brought mixed news to Canada’s economy, as some business sectors reported better than expected growth while others are facing a slowdown. Complicating the situation were many controversies involving the Canada, US and China.
Canada’s arrest of Huawei CFO Meng Wanzhou brought to a head several underlying issues between the US and China, with consequences that continue to unfold. Canada’s economy could suffer if the situation escalates further, as the country imports a vast number of goods from China including computers, broadcasting equipment and phones. As the second biggest importer of goods from Canada, China also purchases goods such as wood pulp, oilseeds, auto parts and soybeans valued at approximately $20.5 billion each year.
In other news, the fall in oil prices has been a primary cause of Canada’s recent economic slowdown. Exports are down in eight of 11 sectors, and stabilization efforts have not been enough to fully prop up the economy during this period. The current streak of 4 consecutive months of falling export numbers make this the longest negative export growth period since 2015, while the energy sector also declined by 1.4% in November.
These figures have led to an increase in the country’s trade deficit. In November the deficit was raised to $2.06 billion, up from $851 million in October. The value of chemical, plastic and rubber exports fell by 7.5%, with an even more significant 26.4% decline for shipments of lubricants and other refinery petroleum products.
The import sector also fell 0.5% in November. Imports of auto vehicles and auto parts decreased 2.8%, due to the extended period of low demand for cars and trucks. Metal ores and non-metallic minerals importation dropped 18.6% in November as well, as declines continue in the wake of September’s record high.
“It’s really not a great news month,” Export Development Canada chief economist, Peter Hall, said. “Purchasing managers in the United States remain upbeat but for some reason they’re not buying those key inputs to the industrial process. So we’re scratching our heads a little bit on that one.”
From a wider economic perspective, such gloomy months are bound to occur once in a while, even in a generally healthy economic system. Oil prices are notoriously fickle, and this turbulent political moment around the world has caused disruptions in several regions. Canada’s ability to rebound in 2019 will depend on its ability to get a handle on its current political and economic situations. Doing so will reassure investors and consumers alike, as the country’s leadership steers the ship in the right direction for a new period of growth in the months ahead.