The economy shrank 0.1 per cent in April, the fourth monthly decline in a row – adding to concerns the country could be headed for a recession.
The contraction, reported by Statistics Canada on Tuesday, was worse than what experts were anticipating, with the consensus calling for a modest expansion of 0.1 per cent.
Oil and gas activity, the biggest engine for economic growth and job creation in recent years, dropped 2.6 per cent in April and is down 6.4 per cent for the year, Statscan said. Oil prices ranged between $52 (U.S.) barrel and $62 in the month, or roughly half what oil was trading at last fall before crude’s dramatic slide.
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The economy has now posted month-to-month declines since the beginning of 2015, with the latest reading raising the spectre of Canada falling into back-to-back quarters of negative growth — a technical recession.
“The slight fall in GDP in April, coupled with the weak hand-off from the prior quarter, leaves us facing the probability that Q2 GDP could also be negative,” Andrew Grantham, an economist at CIBC, said.
David Madani, Canadian economist for Capital Economics, said the chance of technical recession is now “quite likely.”
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