Canada’s exports have fallen for a second month, widening its trade deficit from CAD 2.7 billion to CAD 3.7 million in June.
The Conference Board of Canada reports widespread forest fires have significantly impacted Canadian exports.
For June, merchandise imports decreased by 0.5%, whilst exports fell by 2.2%.
The Conference Board of Canadia is a not-for-profit think tank researching and analysing economic trends, organisational performance and public policy issues.
It has attributed Canada’s worsening trade position to the “worst wildfire season on record,” which has stunted the nation’s net export growth.
“Wildfires occur each year, but the scale and intensity of the wildfires this year resulted in the worst-ever wildfire season.”
“As a result, the merchandise trade surplus with the US narrowed from USD 7.7 billion in May to USD 7.4 billion in June.”
In reaction to the wildfire, major Canadian oil and gas producers suspended operations, causing a significant decrease in oil production.
According to the Conference Board of Canada, this amounted to over 120,000 daily barrels.
At the same time, the forestry sector shut down sawmills, resulting in delays in producing forest products.
“Considering that Canada is a significant exporter of mineral fuels and forestry products, the wildfires have the potential to impede export growth in the coming months.”
The BC Port Strikes cost the Canadian economy CAD 500m per day
Not mentioned in the report was the impact of strike action across 30 British Columbia shipping ports.
The strikes reportedly cost the Canadian economy CAD 500 million per day, with Canadians seeing skyrocketing prices of goods due to disrupted supply routes.
The strike took a heavy toll on the port terminals of Vancouver and Prince Rupert, among the world’s busiest ports for forest products.
Wood Central reported that forestry products, pulp and logs, constituted 80% of container shipments at Port Metro Vancouver.
For 13 days, the containers were left unattended at the port – causing havoc for Asian pulp suppliers.
Canfor, one of the world’s largest forest companies, has been hit hard by the strike with “a constrained logistics network in British Columbia”, leading to difficulties in supply.
The global economy is losing momentum
Another kind of fire – inflation – is being tamed by monetary policies, creating an economic drag on demand for Canadian goods.
The board notes that the global economy is losing momentum.
“Major central banks worldwide have implemented tightening monetary policies aimed at controlling inflation,” they said.
“Higher borrowing costs have slowly worked their way throughout the global economy, which has softened global demand.”
Geopolitical tensions will continue to shape the global economic landscape with additional uncertainty due to rising tensions between the US and China and Russia’s ongoing invasion of Ukraine.
“Moreover, the BRICS nations (Brazil, Russia, India and China) are actively seeking to reduce reliance on the US dollar and promote their economic interests by proposing the creation of a new gold-backed currency. Such a move could exacerbate geopolitical divisions.”
