Canada’s economy seemed a shovel-full deeper into a downturn in May – and a recession, if only by strict definition.
But we’ll find out just how close the economy actually is to retracing the previous recession of 2008-09 when Statistics Canada reports May Gross Domestic Product on Friday.
Many economists are looking for a flat, or slightly negative, reading for May after four consecutive monthly contractions since the start of 2015.
The collapse of global oil prices and harsh winter weather were blamed for an output decline of 0.2 per cent in January. But it was much the same in subsequent months.
There was a 0.1% drop in February and a negative reading of 0.2% in March — resulting in an overall 0.6% negative reading in the first quarter.
April’s contraction of 0.1% put the economy on a weak leg to start the second quarter. And so far, May has showed similar weakness.
That leaves just June data, set for release by the federal data agency on Sept. 1, to round out the status of the GDP.
The Bank of Canada has been equally cautious on the state of the economy.
On July 15, Governor Stephen Poloz cut policymakers’ key lending rate to 0.5% — the second drop in the benchmark this year — as the crunch from oil prices continued to squeeze overall output.
The bank has also revised its economic outlook, estimating second-quarter GDP will decline 0.5% — compared to a 1.8% increase expected in its April forecast. The third quarter has been adjusted downward as well, to growth of 1.5% from 2.8%, although the final quarter estimate of 2015 is unchanged at 2.5%.
There is some hope, however. For the entire year, Poloz and his policy team are still looking for growth — but at a reduced rate of 1.1%, compared to 1.9% in its April outlook.
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