CIBC Says Canada's Q2 Current Account Deficit Widening Sharply Isn't A Surprise

09:05 AM EDT, 08/28/2025 (MT Newswires) -- Canada's current account deficit widened sharply in Q2, although that wasn't a surprise given the imposition of United States tariffs during the quarter and the front-running activity that had bolstered exports in Q1, said CIBC after Thursday's data.

The $21.2 billion deficit in Q2 was somewhat wider than the consensus expectation of $19.3 billion and contrasted with a $1.3 billion shortfall in Q1, noted the bank.

The $19.6 billion shortfall in goods trade was roughly in line with the monthly data and confirms that net trade will be a "significant" drag on quarterly GDP on Friday, stated CIBC.

However, trade in services was broadly balanced, which was better than the deficit signaled by monthly data. A wider deficit for secondary income also contributed to the larger overall shortfall in Q2.

Following the wild swings in recent months/quarter, the bank expects trade flows to settle down again in the second half of the year, with the current account deficit narrowing again but remaining wider than it was in 2024.

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