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Canada's economy shrank in January, April, October and December of 2022 and again in April, July, September and December of 2023.
But, the downturns were not enough to put the nation into recession.
However, the risk of recession persists this year as inflation is yet to be fully in check, mortgage interest rates remain high and consumers and businesses are jittery.
All this comes out of the latest report by C.D. Howe Institute, the Toronto-based economic and social think tank.
Photo credit: Headway on Unsplash
Canada avoided recession in 2022 and 2023, but risk remains for this year.
The name of the report is 'So Far, So Good: C.D. Howe Institute Business Cycle Council Declares Recession Avoided in 2022, 2023.
The Business Cycle Council -- a group of economists, economics professors, statisticians and analysts -- meets whenever economic conditions indicate the possibility of entry to, or excit from, a recession.
Technically, for an economy to go into recession, there has to be two consecutive quarters of gross domestic product (GDP) contraction experienced by a wide-range of industries.
GDP is the measurement of total expenditures on goods and services.
The GDP, according to the C.D. Howe Institute's examination of business cycles, did fall in the final quarter of 2022 and the third quarter of 2023.
However, the shrinkage was tiny, just 0.1 percent, and each of those negative quarters was bracketed by a positive one, even if the growth in those positive quarters was also tiny.
Photo credit: Jeriden Villegas
Despite being at risk of recession, the Canadian economy continues to create jobs.
Despite the shaky ground, the Canadian economy continued, for the most part, to create jobs.
The Canadian economy started to falter post-pandemic when the Bank of Canada started to raise its trend-setting interest rate in March 2022 in an effort to tame rampant inflation.
Inflation skyrocketed anyway, hitting its highest points in 40 years at 8.1% in June 2022.
Inflation has since come down and sat at 2.8% in February.
The inflation target is 2% and then interest rates are expected to come down.
Lower interest rates will spur people to build and buy and sell homes, consumers to borrow money to make big purchases and businesses to spend and invest and hire.
So, the economy could get back on track in 2024.
But, it could also slip in recession this year, according to C.D. Howe, which says: "risks remain for 2024."
As such the institute's Business Cycle Council will continue to meet and monitor monthly and quarterly stats to track how the economy rebounds or fumbles.
Thumbnail photos by Headway and Josue Isai Ramos Figueroa on Unsplash
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