Private sector economists warn of possibility of recession this year
Despite an economy that’s shrunk every month for which we have data this year, the federal finance minister says Canada is not in a recession and is poised for growth later in 2015.
At an event in Toronto on Friday, Finance Minister Joe Oliver told reporters that the economy will avoid recession this year, despite newdata from Statistics Canada earlier this week that shows GDP has contracted in each of the first four months of the year — two-thirds of the way toward the technical definition of a recession.
“First off, we’re not in a recession,” Oliver was quoted by Bloomberg as saying. “We don’t believe we will be in a recession.”
Technically, economists define a recession as two consecutive quarters with negative GDP growth. Oliver said it’s too early to say the country is in a recession because we don’t have economic data for the entire January to June period.
“We expect solid growth for the year, following a weak first quarter.”
Economic slowdown
Finance Minister Joe Oliver’s April budget projected an economy that would grow by about two per cent this year. (Darren Calabrese/Canadian Press)
April’s federal budget assumed an economy that would grow by about two per cent this year. So far, the numbers show the economy shrank by 0.6 per cent in the first three months of the year, and another 0.1 per cent in April.
The Finance Department’s optimism is far from a universal view. Bank of America economist Emanuella Enenajor raised eyebrows with a report on Thursday, in which she said the GDP report for April, which showed the economy shrank by 0.1 per cent, caused her to revise her expectations downward for the entire April to June quarter.
That would be enough to bring a dirty economic word into the discussion: recession.
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