(Peter Hall – EDC)
We used to take surpluses for granted. But one key feature of post-crisis Canada was the emergence of a persistent trade deficit. In general, the word ‘deficit’ scares us, and in most cases, it should. But in this case, the red ink speaks of the resilience of Canadian domestic demand in the face of global collapse. More recently, the tables are turning, and the ink is getting blacker. Is this just a temporary shift, or is something bigger going on?
From a balanced position at the beginning of the 1980’s, Canada enjoyed a trade surplus for most of the decade. The 1990-91 recession threw us into deficit, albeit a mild one, where we stayed for a half-decade through the jobless recovery. What followed was a three-year spurt in the surplus, a two-year pause and then a full-blown rally that came to a crashing halt in 2009. This roller-coaster ride has taken the surplus as high as 7% of GDP and the deficit as large as 3% of GDP in the past 15 years. Read more here.