Despite data, Canada isn’t in recession, Oliver says

TORONTO— The finance minister says Canada was not in recession in the first half of the year, despite data showing otherwise.

Joe Oliver said in an interview with The Associated Press that the downturn was largely confined to the energy sector, and the economy was hurt by falling energy prices and economic troubles in China in the first six months of the year.

Canada’s economy retreated at an annual pace of 0.5 per cent from April through June after sliding 0.8 per cent the first three months of the year. Two consecutive negative quarters are the technical definition of a recession.

“We don’t believe that the economy was in fact in a recession,” said Oliver. “We’re really talking about a contraction in the energy and resource sector of the economy, which is less than 20 per cent of the economy.”

Oliver noted the economy grew at a 0.5-per-cent pace in June, the first monthly gain in six months. “The trade numbers are robust. Consumer confidence is good and we returned a budget surplus.”

Canada has the world’s 11th-largest economy; but news this month of a recession spelled trouble for Conservative Leader Stephen Harper. According to a government memo prepared for Oliver, the trade impact on Canada of a prolonged slowdown in China would be significant, as China is Canada’s second-largest export partner with exports equivalent to roughly 1 per cent of Canadian GDP.

The government earlier this month announced a $1.9-billion surplus for last year: the first budget surplus after six straight years of deficits.