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Finance Minister States Canada Not in Danger of Recession

Joe OliverJoe Oliver, the finance minister of Canada, is quite optimistic about his country’s economy. Insisting that Canada is not facing a recession, he said that the country will close the current fiscal year on a positive note. He recently told reporters that it “feels like a period of slower growth, but not a period of contraction.” He could be right, but things do not look as bright.

The finance minister had visited Toronto to announce that young job seekers can now get federal support.

Canada is currently struggling to define the term recession. The country’s economy collapsed by 0.6% in Q1 of 2015, and to make matters worse, this was followed by a further decline of 0.1% in April.

Statistics Canada does not release May GDP numbers till July 31, and the Q2 numbers will be released only in August.

Under these circumstances, the finance minister avoided predicting the final numbers, but he did point out that the general opinion was that Canada can look forward to “positive solid growth for the entire year.”

But the Bank of Canada refuses to be as optimistic. Governor Stephen Poloz put an end to policy inertia of 4-and-a-half years by cutting the lending level to 0.75% from 1% as fall in prices of oil had ripped the economy. On July 15, the lending level was further slashed to 0.50%.

Opining that economic growth will be slower in the early half of Q2, he said that in spite of the decline in gas output and oil prices, which contributes to 10% of Canada’s economy, and the decline in production of non-energy commodities, which contributes to 8%, the rest of the 82% is “seeing steady growth.”

While stating that odds of getting a negative quarter for the second time have increased, Douglas Porter, BMO Capital Markets’ chief economist, said that May is the crucial month. He stated:

Even if we had a miraculous turnaround in June, it probably wouldn’t be enough to save the quarter if May is again quite weak.

Oliver, however, sticks to his optimism. He says that 100,000 new jobs have been generated in 2015 and residents can expect the job creation trend to continue. He also said that the Conservative government will keep its promise and balance out the federal budget with just a few changes. He stated,

We remain positive and, just to be clear, we’re looking forward to a budgetary surplus this year.