Service exports and imports tumble in March
A reduction in service exports and imports of this magnitude has not happened since the current data series began in 2007.
By ATB Economics 6 May 2020 1 min read
From engineering advice to plane fares, there is a robust trade in services between Canada and other countries.
In 2019, Canadians sold $133 billion worth of services to international buyers and purchased $153 billion worth of services from international sellers. Provincial level data are not available.
With the COVID-19 pandemic in play, the trade in international services took a major hit in March. The value of seasonally adjusted service exports (receipts) fell by 7.2 per cent compared to February while service imports (payments) dropped by 11.5 per cent.
A reduction in seasonally adjusted service exports and imports of this magnitude has not happened since the current data series began in 2007. The next largest monthly drop in exports took place in January 2009 when they fell by 3.8 per cent. For imports, it was May 2009 when they fell by 4.2 per cent. In both cases, it was the Great Recession of the late 2000 that helped drive down the international trade in services.
This time around, the pullback is explained by the efforts to contain COVID-19. Travel restrictions and more people choosing not to leave the country cut deeply into transportation and travel services spending. When combined, travel and transportation service exports plunged 19.4 per cent in March compared to February while imports fell by 24.7 per cent.
Commercial service exports and imports grew modestly in March by 0.9 per cent and 2.2 per cent, respectively. Government service exports were flat while imports edged up by 0.9 per cent.
According to Statistics Canada, “It is expected that April will show another reduction in both exports and imports of [the transportation and travel services] categories as the travel restrictions and the subsequent declines in travellers only came into force in Canada in the middle of the month of March.”