By Akhil Shah

OTTAWA (MNI) – Canada’s run of eight straight monthly deficits in
world goods trade is expected to have narrowed slightly once again in
November of last year, when Statistics Canada’s publishes its monthly
report Thursday.

November’s goods trade deficit is expected to be only C$100 million
smaller than the C$1.7 billion shortage posted in October.

Economists surveyed by Market News International expect the deficit
to come in at C$1.6 billion, the eighth consecutive monthly deficit in
the aftermath of global recession. During the latter half of last year,
net exports fell sharply, particularly on reduced U.S. demand for
Canadian goods, as well as a rise in imports due to the strengthening of
the Canadian dollar.

In October, the trade deficit contracted by almost C$600 million to
C$1.7 billion as exports grew by 3.1% while imports increased 1.2%.
Douglas Porter, deputy chief economist at the Bank of Montreal (BMO),
expects exports to advance 1% and “only slightly outpace imports,
shaving the deficit modestly to C$1.6 billion,” in November.

“Stronger U.S. consumer spending and the upturn in commodity
prices, play a small role in helping support exports in November,”
Porter wrote in a research note.

Francis Fong, economist at the Toronto Dominion Bank (TD), on the
other hand sees the trade deficit widening to C$1.9 billion. “Going
forward, on a trend basis, we would expect imports to continue improving
given that our (Canadian) economic recovery is fairly well entrenched
and the Canadian consumers are doing well.”

From a slightly long term perspective, “the extra stimulus going
into the U.S. economy with the President Obama administration’s recent
proposal to extend the Bush administration’s taxation cuts, is expected
to lift U.S. demand fairly substantially over the next little while,
which in turn would boost Canadian exports,” Fong said.

He added that, “The appreciating Canadian dollar will be a limiting
factor on export growth, but once the U.S. demand recovers it will be
the major driver of the export growth for Canada.”

Emanuella Enenajor, economist at the Canadian Imperial Bank of
Commerce (CIBC), expects the trade deficit to narrow to C$1.5 billion;
“a modest improvement from the previous month and little bit better than
the consensus,” Enenajor said.

“Recovery in natural gas prices in November are expected to reverse
the huge drag in energy exports seen in October,” Enenajor said. “Firmer
precious metal prices will also likely boost industrial goods and
materials exports higher,” she said.

“Imports of machinery and equipment are expected to continue
showing strength in November’s report,” Enenajor said.

** Market News International Ottawa **

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