OTTAWA - CANADA posted a C$458 million (S$553 million) trade deficit in December, its first shortfall since March 1976, as both imports and exports fell off, Statistics Canada said on Wednesday.

This compares with a C$1.2 billion trade surplus in November, the government agency said in a statement.

Exports dropped 9.7 per cent to C$35.3 billion, as both prices and volumes declined amid a global economic downturn.

'This marked the largest month-over-month percentage decrease since October 1982,' the agency said.

Overall, exports have been dropping since July 2008, and declines were widespread across most sectors.

Imports also declined, falling 5.7 per cent to C$35.8 billion, reflecting mostly volume reductions in machinery and equipment, automotive products, and industrial goods and materials.

Trade in agricultural and fishing products in contrast has generally risen throughout 2008.

Exports to the United States, Canada's biggest trading partner, dropped 10 per cent to C$25.9 billion. Imports from the United States also fell 8.4 per cent.

Thus Canada's trade balance with the United States fell to C$3.8 billion - its lowest level since December 1998.

'These are concerning numbers,' said Trade Minister Stockwell Day.

'When we see a drop in exports like this certainly it just magnifies the reasons why we can't have any country fall backwards into protectionist activity, (and) start slamming doors on trade.'

Mr Day said also he worries that if the US and Chinese economies dive deeper, demand for Canadian materials will further fall off too.

Canada entered a recession at the end of 2008. Based on the economic research firm accepted as the arbiter of business cycles, the US entered recession a year earlier. -- AFP