Surge in Gold Exports Boosts Canada's Trade Surplus to Record High

Sharp Increase in Exports Propels Trade Balance to Widest Margin Since October

Apr 4, 2024 - 09:37
Apr 4, 2024 - 09:38
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Surge in Gold Exports Boosts Canada's Trade Surplus to Record High
Surge in Gold Exports Boosts Canada's Trade Surplus to Record High

According to Statistics Canada's report released in Ottawa on Thursday, the country's trade surplus widened to C$1.39 billion ($1 billion) in February, marking a substantial increase from C$608 million in the previous month. Economists had anticipated a surplus of C$680 million for February.

The surge in total exports by 5.8% during the month, the largest percentage increase since August 2023, contributed significantly to the widening surplus. Meanwhile, total imports also saw growth, rising by 4.6%. In terms of volume, exports climbed by 6.2%, while imports increased by 4.1%.

The noteworthy expansion in exports was primarily driven by a sharp rise in unwrought gold exports. Increased shipments of refined gold and transfers of gold assets within the banking sector played a significant role in this surge, coinciding with a rise in the market price of gold at the end of February.

Excluding unwrought gold exports, overall exports still registered a solid growth of 2.8%. Notably, exports of farm, fishing, and food products witnessed a robust increase of 9.7% in February, the highest percentage rise observed since July 2023. Additionally, shipments of motor vehicles and parts rose by 3.8%.

On the import front, the figures reached their highest level since June 2023. Imports of electronic and electrical equipment and parts surged by 9.7% to a record C$7.6 billion, primarily driven by imports of high-value data processing units from the US.

Imports of consumer goods saw a notable uptick of 3.3%, with clothing, footwear, and accessories witnessing the most significant increase. Moreover, imports of energy products surged by 10.2%, led by an increase in crude oil imports.

The surge in trade volumes bodes well for broader economic activity, according to Benjamin Reitzes, rates and macro strategist at the Bank of Montreal. He noted that the strength seen in the flash estimate of February GDP and the likely acceleration in Q1 GDP growth are partly explained by this report.

Katherine Judge, economist at the Canadian Imperial Bank of Commerce, highlighted that the increase in the surplus this quarter indicates that net trade is driving growth, underscoring the positive momentum in Canada's trade dynamics.

Also Read: Gold Surges to New Heights Near $2,200 as US Jobs Data Spurs Rate Cut Expectations

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