Canada’s trade deficit balloons as exports fall

Canada’s trade deficit ballooned in July as almost all categories of exports fell, while imports continued to rise, government figures showed.

The trade deficit came in at $2.7 billion in July from a revised $1.8 billion in June, Statistics Canada said. Exports dropped 0.7% as volumes and prices declined, while imports rose 2%, it said.

Economists had been expecting the deficit to narrow to about $800 million.

The figures reflect the sharp slowdown in demand south of the border as the economic recovery falters. Finance Minister Jim Flaherty recently said the problems in the U.S. economy were a concern.

Exports to the U.S., Canada’s biggest trading partner fell 2.2%, while imports gained 2.9%. That shrank the trade surplus with the U.S. to $1.2 billion in July from $2.4 billion in June, Statistics Canada said.

Exports to countries other than the U.S. improved, gaining 3.7% mainly on higher shipments to the European Union, it said.