- ‘Unbelievable’ decline in oil drilling could impact banks, construction
- Cost-cutting budgets in Alberta, Quebec will reduce economic growth
- Analysts completely divided on where oil prices are headed now
Following some nasty recent surprises in Canada’s economic data, analysts are starting to sound more pessimistic about the country’s prospects than they were even just a few weeks ago, and many are now saying Canada’s economy is shrinking.
In a report issued Friday, Capital Economics said the economy “fell off the cliff in January” and likely shrank in the first quarter of the year, which ends next week.
“The reported declines in retail, wholesale, manufacturing and export volumes for that month were very disconcerting. It’s typically never a good sign when all these key indicators fall together,” it said.
The report said it’s “almost unbelievable” how quickly oil and gas drilling “cratered” at the start of the year, and estimates that activity is at similar levels to where it bottomed out during the economic crisis of 2008-2009.
The report estimates Canada’s economy is currently shrinking at an annualized rate of about one per cent.
Capital Economics estimates Canada’s GDP “fell off a cliff” in January.
Other analysts are seeing signs that the oil price collapse is beginning to have a spillover effect into other parts of the economy.
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