Canada Set For Record Current Account Deficit

"Canadian demand is a lot more relative to the world than it was five years ago," Mr. Wolf said. "Canadians are richer and they are buying more goods and services from abroad." The switch may be abrupt for a country used to crowing about it's triple surpluses -- fiscal, trade and current account -- but will be a reflection of strength, Mr. Wolf said. The current account numbers are the broadest measure of a country's international trade, including goods, services, investment gains, travel and pretty much everything else. A big deficit would mean Canadians are consuming far more of the world's wares then they are exporting and would put Canada in a position that the U.S. has been criticized over for years. Still, a $36-billion deficit would be a record in nominal terms but at 2.2% of GDP it will still be below the 4.8% recorded in 1975, the year of Canada's largest prior deficit. It will also be lower than the United States' deficit which is forecast at 3.9% in 2009 and well below their peak of 6.2% in 2006. More importantly will be the source of the deficit. The current account deficit days of the early 1990s were driven by large government borrowings abroad. This time it will be a reflection of strong domestic demand and higher relative rates of return at home. ... http://www.financialpost.com/story.html?id=303871

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