A small contraction of Canada’s economy in the first half of the year put the country in a technical recession, which may already be over if an uptick in June wasn’t a blip.
But a leading B.C. economist doesn’t believe the ‘R’ word applies to B.C., or to most of the country for that matter.
“I don’t believe Canada is in an official recession,” said Helmut Pastrick, chief economist for Central 1 Credit Union. “This situation is not really indicative of what most economists would consider a full-fledged recession.”
He said the downturn is a narrow one focused mainly on the energy sector, hitting Alberta hard as producers slash capital spending following the plunge in oil prices.
Statistics Canada reported a 0.5 per cent drop in GDP in the second quarter, following a 0.8 per cent decline in the first quarter.
But a monthly breakdown pointed to economic growth of 0.5 per cent in June.
“That offers some glimmer of hope that what we’ve seen in the prior five months of negative GDP contraction could be at an end.”
B.C. and central Canada are not likely in recession, Pastrick stressed.
There may be weak regions of B.C., he said, such as the energy-exposed northeast or mining-dependent communities hit after metallurgical coal firms cut production.
But Pastrick sees continued slow growth in southern B.C., including the Lower Mainland, Vancouver Island and the Okanagan.
“Our forecast for the B.C. economy is that we will see growth this year and we currently do not see it in a recession.”
He said employment data backs that up, indicating job growth across B.C. running at about 0.7 per cent so far this year.
As for whether the term recession should apply to the country as a whole, Pastrick said he leaves that to a panel of economists at the C.D. Howe Institute, who assess various factors, including the depth of the downturn, its duration and breadth across multiple industries, and not strictly the rule of thumb regarding two quarters of shrinkage.
The expected confirmation of a recession and what to do about it has been an issue in the federal election campaign, with the Liberals pledging aggressive stimulus spending and deficits, in contrast to Conservative and NDP promises to balance the budget.