Canada’s economy appears to be turning a corner — away from a technical recession and toward a sustainable growth path.
The pace may not be consistent, at the moment, but the numbers are starting to add up to a third-quarter gain after two consecutive declines in the first half of 2015.
In fact, gross domestic product — the measure of all goods and services produced in this country — could be close to, or even matching, that of the United States between July and September.
So far, most forecasters expect the current quarter’s output to come in anywhere from 1.5% — in line with the Bank of Canada’s most recent estimate — to about 2.8%.
Quite a turnaround from declines of 0.8% in Q1 and 0.5% in Q2, which met the broad definition of a recession. The next key economic numbers will come Wednesday, with the release of GDP figures for July.
Other forecasters — including those at Bank of Montreal and Canadian Imperial Bank of Commerce — expect the July GDP number to be closer to 0.2%, leading to an even bigger Q3 recovery.
BMO is calling for slightly larger growth of 2.8% between July and September — which also matches its Q3 forecast for the United States, the world’s largest economy and Canada’s number-one trading partner.
Momentum seems to be mounting behind those improved forecasts.
One indicator is Canada’s strengthening fiscal position — reflected in Friday’s report by the Finance Department that showed the federal government posted a $150-million surplus in July, compared with a $1.23-billion deficit in the same month in 2014, and pointing to the possibility of Ottawa posting a second fiscal surplus in a row.
That’s news the Conservative government welcomes ahead of the Oct. 19 national election, a vote in which all political parties have pushed the economy to centre stage after the global collapse in oil prices pummeled Canada’s resource-dependent provinces and dragged the country as a whole into the first recession since 2008-09.
