It’s official! Canada is now officially in a recession. Did we really need statistics Canada telling us that Canada was in a recession and that the economy was shrinking?
When Prime Minister Stephen Harper indicated in late 2008 that Canada was in a “technical recession” and his Conservative government was almost toppled amid the global finance crisis, experts and critics agreed that the Prime Minister had missed the financial boat. Canada was in a recession and his “technical recession” delayed dealing with the problem when firing a shot across the bow of the other political parties.
With economists predicting that Canada’s economy would shrink by 3.6 percent, Statistics Canada released data on Monday indicating that the Canadian economy had shrank at an annualized rate of 3.4 percent in the fourth quarter. This has made Harper’s “technical recession” and official one.
Almost all major sectors reduced production as the Canadian economy showed signs of receeding at a very fast rate. Gross Domestic Product (GDP) dropped by almost 1 percent in December alone, following a 0.7 percent drop in November.
With the Canadian economy weakening, the Bank of Canada is poised to further reduce the key lending rate. Some experts expect 50 basis points to be trimmed from the key rate, puting the rate at just 0.50 percent.
What’s alarming about the Canadian economy and the current recession is that the drop in the GDP came at the fastest pace since 1991 according to Statistics Canada. Exports, consumer spending and capital spending have all shown declines and it is now apparent that no sector is immune to this global financial crisis.
Canada has yet to pass its financial stimulus budget as it is sitting in the senate, being debated and analyzed. This comes as other financial stimulus packages throughout the world have failed to restart the economies, driving financial markets even lower.
Canada’s recession is here and it will stay for some time. Look for things to get worst as 2009 numbers are released.
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It’s really bad here in the UK as well. A number of people are going back to Universities because they lost their jobs.
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