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In the wake of disappointing trade data, Scotiabank’s second-quarter Canadian GDP forecast dropped.

Statistics Canada published data for April, which revealed an unexpected decline in the trade balance and a slowing in merchandise export growth.

Following the release, Scotiabank’s forecasting model slashed its estimate for second-quarter GDP growth from an initial estimate of 4.7% (quarter over quarter) down to 3.86%, “with more downside risk possible,” it reported in a research note.

“Following on a disappointing start to the year, when GDP expanded by 3.1% [quarter over quarter] in Q1 2022, with industry-level GDP prints coming in deceptively robust throughout the quarter before being revised away, the Q2-2022 starts with a disappointing print,” Scotiabank said.

Export volumes fell sharply, down 2.1%, it noted, although higher prices supported export revenues.

“The weakness in the volume of trade … was relatively widespread,” it said, noting that six out of 11 sectors registered declines, led by minerals; energy; and farm, fishing and food products.

On the services side, StatsCan also noted that imports rose 5.5% in April “in large part due to the revival of tourism.”

“It is likely that the trade deficit in the service category will continue to expand as international travel normalizes despite continuing global shocks,” it said.