Canada is now officially acknowledged to be in recession.
From AFP we read: “Canada officially enters recession.”
Reeling from low oil prices, Canada fell into a recession in the first half of the year, government data confirmed Tuesday, putting Conservative Prime Minister Stephen Harper on the defensive in the run-up to October elections.
According to Statistics Canada, the economy contracted 0.5 percent in the second quarter after retreating 0.8 percent in the previous three months.
It is Canada’s second recession in seven years and it is the only Group of Seven nation in economic retreat. The figures are the weakest since the 2008 global financial crisis.
The data reflects fears about the health of the global economy as more gloomy evidence emerged of a slowdown in China, a main engine of growth worldwide.
How does the data reflect fears about the health of the global economy? The recession does not reflect fear but is the proof that fears about the economy were grounded in reality.
Harper, whose Tories are trailing their rivals in opinion polls ahead of the October 19 election, blamed the overseas turmoil for Canada’s woes, and emphasized an expansion in the economy in June.
“We are living, once again, in a time of ongoing global economic instability,” Harper said.
“Obviously there has been challenges, particularly in the energy and some commodity sectors because of falling prices. But the fact of the matter is over 80 percent of the Canadian economy has been growing.”
Canada, the world’s fifth-largest oil producer, has been hit particularly hard by the halving of world oil prices from above $100 last year.
In the second quarter, its mining, quarrying and oil and gas extraction sector posted a “notable decrease” for a second consecutive quarter, said the government statistical agency.
The fact that there is “overseas turmoil” is useless information. China was inflating a giant, unsupportable, financial bubble which boosted the perceived need for energy. Canada was able to make a great deal of money by supplying that need. But now the truth is being revealed that much of the demand for oil was the result of mistaken investment decisions. Now investors need to cut their losses, reassess the economic situation, and try to do a better job in meeting real needs.
The good news is that, with the price of oil dropping, new investments will be possible—hopefully ones based on reality rather than fantasy.
The article goes on to tell us that experts believe the damage will be limited. That may be true but there is no way to know. Experts always claim the damage will be limited. That is exactly what Ben Bernanke said about the housing crash.
If Canada is in recession, does anyone really believe that we are going to continue growing?