Canada's second-quarter GDP figures have been released this week and they illustrate that the country is now experiencing a recession. The figures, released by Statistics Canada, demonstrate that the country has experienced two consecutive quarters of contraction in its gross domestic product. The Canadian economy contracted at a 0.8 percent annual pace during the first three months of this year alone. Between just the period of April to June of this year, the market shrank by 0.5 percent. Although, not everyone is buying into the recession hype, there are some economists who say that this isn't a recession...yet.
Other factors that can be considered when assessing a recession, are things like car purchases and unemployment rates. For now, we still see that many houses are being bought (there's an ongoing real-estate bubble/more people getting themselves into debt with mortgages), along with cars and other appliances, so perhaps the country is doing better than we think. According to BMO Capital Markets Chief Economist Douglas Porter, if this economic situation is truly to be deemed an official recession, then this recession will be “the mildest variety and one of the strangest recessions ever,” he says.
Although the economy expanded in June, the summer success wasn't enough to offset the problem; the market declined by 0.1 percent overall for the second quarter. Not only that, but the economy also shrank back in the first quarter of this year as well, and some experts have been saying that Canada has been on the verge of a recession for some time now. When it comes to assessing whether or not a nation is experiencing a recession, the task can be more complex than simply looking as to whether or not the nation has had two consecutive negative growth quarters. And for this reason, there will be varying opinions within the financial field among experts; as to whether or not we really are in a recession and exactly how bad that recession is.
However, according to the Canadian government itself, a recession is defined as a “period of at least two consecutive quarters of negative growth in real gross domestic product” for the country. Even though this definition comes from the government, Harper is refusing to accept the current set of circumstances. “[We had] one of the greatest monthly growths [occur] in June, so it's clear that the Canadian economy is growing,” said Harper this week at an event in Ontario. Despite the data from Statistics Canada demonstrating the consecutive decline, Harper insists that the economy is back-on-track and that it is headed in the right direction. After all, he's got an election campaign to try and win. We can look forward to the other candidates using this recession data as campaign fuel against Harper this fall.
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