Widest Canadian Current Account Surplus in Nine Quarters

August 28, 2008

The C$ 6.758 billion current account surplus in the second quarter equaled roughly 1.7% of GDP, a tenth more than I expected despite a downward revision to the first-quarter surplus, which was 20% smaller than reported initially.  This improvement reflected higher export commodity prices.  Merchandise exports actually fell pretty significantly.  The current account surplus had previously narrowed from 1.4% of GDP in 2006 to 0.9% of GDP in 2007 and merely 0.2% of GDP in the final quarter of last year.  In 2Q08, a goods trade surplus of C$ 16.44 bln offset larger defiicts in services (C$ 5.89 billion), net investment payments (C$ 3.39 billion and transfers (C$ 0.4 billion).  The subsequent downturn in commodity prices is likely to result in a smaller surplus in 3Q08.



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