OTTAWA: The Canadian economy shrank again in the second quarter, putting the country in recession for the first time since the financial crisis, with a plunge in oil prices taking a toll as business investment fell and inventory accumulation slowed.
Gross domestic product contracted at an annual 0.5 percent rate in the second quarter, Statistics Canada said yesterday. That was better than forecast, though revisions showed the first quarter’s contraction was steeper than first reported.
Two straight quarters of contraction are considered the textbook definition of a recession. The confirmation of a modest slump may figure heavily in the election campaign as Canadians head to the polls next month.
Some economists and members of the Conservative government have argued that such a definition is too narrow and that other economic measures should be taken into account, such as unemployment, which has remained relatively subdued.
Encouragingly, the economy grew in June for the first time in six months, suggesting the recession may be short. While the price of oil and other natural resources have fallen since June, many see non-commodity Canadian exports to gain from a stronger US economy.
Derek Burleton, deputy chief economist at Toronto-Dominion Bank, said “it does look like the Canadian economy is jumping back, is rebounding strongly in the third quarter.”
