Canada Enters into Technical Recession with Q2 Contraction

Canada has entered what many consider to be a recession as the country deals with the consequences of a dive in oil and other commodity prices.

Statistics Canada on Tuesday reported a 0.5% decline in second-quarter GDP, following a downwardly revised 0.8% decline in the first quarter. A recession can be defined as consecutive negative quarters of growth, and Canada is the only of the Group of Seven industrialized countries in that territory. The U.S. grew 3.7% over the same time period, the Commerce Department reported last week.

While not everyone agrees Canada in recession — employment has not declined — it’s not a pretty picture.

“While not yet a recession, since employment hasn’t declined, Canada’s first half was about as weak as advertised, although the momentum registered in June is consistent with our view that the third quarter will provide a breather as the economy, at least for a quarter, returns to growth,” said Avery Shenfeld of CIBC World Markets.

Canada’s mining and oil sectors were to blame, with oil and gas extraction collapsing at an annual rate of 15.4%, and mining tumbling by 5.9%.

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza