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Canada’s travel deficit reaches record high

In 2006, Canada’s travel deficit hit an all-time high of $7.2 billion.




March 1, 2007

Canadians spent a record $23.7 billion travelling outside of Canada in 2006, while foreigners spent a little less in Canada compared to a year ago – leaving Canada with its biggest travel deficit ever.

Spending by Canadians in both the United States and other countries climbed to record levels, Statistics Canada said in its annual tally of spending by Canadians travelling outside the country and spending by foreign visitors in Canada.

The deficit – the difference between the two – continued, a steady climb in recent years, jumping by a further $1.4 billion to $7.2 billion.

“The burgeoning deficit was the result of record spending abroad,” Statistics Canada said, noting that spending by Canadians outside the country rose by 6.2% from its previous high reached just a year earlier.

While the surge in foreign travel by Canadians has been good for Canada’s major airlines, which have reported that they carried a record load of passengers in 2006, it is not good for the domestic tourism industry. Neither is it good for the Canadian economy as a whole, as it results in more money flowing out of the country than into it.

Foreigners in Canada spent $16.4 billion in the country in 2006 – a slight decline from the previous year. While there has been little change in foreign spending in Canada since 2001, spending by Canadians soared by 28%.

Canada’s travel deficit with the United States hit a 13-year high of $4.5 billion in 2006, up $1 billion from a year earlier, and nearly 10 times the $544-million low reached just three years earlier. The increase was on account of record spending by Canadians in the United States and lower spending by US visitors in Canada.

Canadian spending in the US climbed by 6.3% to reach an all-time high of $13.2 billion – reflecting a 7.6% surge in Canadian visits to the US to 16 million, the highest level since 1993.

Meanwhile, US visitors spent $8.7 billion in Canada, an eight-year-low and down by 2.9% from 2005. This reflected in part a 4.3% fall in overnight or longer visits from the US to 13.8 million, the fewest since 1997.

Also cutting into spending by Americans visiting Canada has been a seven-year slide in same-day visits to Canada to a record low of 13.7 million, down by 12.5% from 2005.

Though spending on same-day trips accounts for only about one-ninth of total spending by American visitors, the drop in same-day trips has been so steep as to have an impact on overall spending.

The Canadian dollar, which has been climbing steadily against the US dollar since 2003, rose further by 6.8% in 2006 to an average 88.2 cents US, the highest level since the late 1970s.

Canada’s travel deficit with other countries also increased by $368 million to a record $2.8 billion in 2006, the sixth straight annual increase in the travel spending shortfall with countries other than the United States.



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