Canada's current account deficit narrows

Canada's current account deficitin the first quarter narrowed to $7.8 billion from $10.2 billion, Statistics Canada reported Friday, underlining the growing strength of the economy.

The current account measures exports, and imports of goods and services, as well as cross-border payment flows such as interest payments and dividends and government payments such as foreign aid.

Among other things, it's a measure of how fast Canadians' net debt to the rest of the world is expanding or shrinking.

Canadian global exports of goods especially with the U.S. rose faster than imports, with the country exporting $1.7 billion more than it brought in. That number increased from a surplus of $0.4 billion the last three months of 2009, following two quarters of deficits.

The deficit in services fell by$500 million, largely due to the Vancouver Winter Olympics, which attracted visitors from outside the country and kept Canadians spending their money here as well.

Spending by non-residents visiting Canada which is counted as an export in services rosefive per cent, and the number of visitors from overseas increased by 5.8 per cent.

Deficit smallest in a year

The current account deficit in the first quarter was the smallest in a year, asthe global economy recovered and trade with the rest of the world picked up. The deficit for all of 2009 was $43.5 billion.

Economists look at the current account, government debt, and Canadians' personal debt to get a total picture of how much the country is living beyond its means.

"The gap [in the current account] is still expected to come in close to $35 billion this year," said BMO Capital Markets economist Doug Porter in a commentary.

"The deficit is certainly manageable, but remains a huge switch from the 10-year string of surpluses from 1999-2008," he said.

The value of energy exports rose almost $2 billion, both because of higher prices and higher volumes. Half of the growth was a 25 per cent increase in natural gas exports.