Ottawa: Canada reported Tuesday its gross domestic product shrank for a second straight quarter, meeting the definition of a technical recession, as businesses continue to scale back investment. GDP declined at a 0.5 per cent annualised pace from April to June, Statistics Canada said in Ottawa, after a first-quarter contraction of 0.8 per cent.
The question of whether the economy has entered a recession is dominating Canada’s election campaign, as opposition parties try to chip away at Prime Minister Stephen Harper’s long-held advantage on fiscal issues. Recent polls suggest a tight three-way race between Harper’s Conservatives, Tom Mulcair’s New Democratic Party and Justin Trudeau’s Liberals.
Below are excerpts from research notes and interviews, with some saying the two quarters of negative growth places Canada in R-word territory, while others say the contraction was contained to a few segments of the economy, and therefore doesn’t qualify as a recession.
* Beata Caranci, chief economist at Toronto-Dominion Bank: “It certainly fits the definition of a technical recession and we’ll have to evaluate over time whether this is going to qualify formally as a recession.” It will likely turn out to be “a relatively mild recession.”
* Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal: “While a technical recession was confirmed, its amplitude is relatively mild and there is every suggestion that it has already ended.”
* David Madani, economist at Capital Economics in Toronto: “The economy slipped into a technical recession in the first half of this year. With exports still struggling and business investment slumping in response to the fallout in the energy sector, hopes for a meaningful rebound beginning in the second half of the year look misplaced.”
* Doug Porter, chief economist at BMO Capital Markets in Toronto: “If this period is ultimately deemed to be a recession, it will be of the mildest variety and one of the strangest recessions ever — consumer spending was up in both quarters and so too was employment, far from a widespread softening in the economy.”
* Dawn Desjardins, assistant chief economist at Royal Bank of Canada in Toronto: “I wouldn’t say this is a big red light saying this economy is in recession; undeniably it slowed in the first half of the year, there is no way to sugar coat that.”
* Avery Shenfeld, chief economist at CIBC World Markets in Toronto: “While not yet a recession, since employment hasn’t declined, Canada’s first half was about as weak as advertised.”
* Derek Holt, Scotiabank’s vice-president of economics: “Small back-to-back contractions in quarterly GDP are a necessary but not sufficient condition for a recession call.”
