Bank of Canada cautions against calling current slump a recession
While GDP shows two quarters of negative growth, economists and central bank officials say the picture is more complex and shouldn't be labeled recession yet.
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Even though recent GDP reports meet the technical definition of a recession—two consecutive quarters of negative economic growth—the Bank of Canada and several economists are resisting the label.
Senior Deputy Governor Carolyn Rogers told a House of Commons committee Monday that "we need to be careful not to put too much weight in any one indicator."
The annualized rate of GDP dropped one per cent in the final quarter of 2025 and another 0.1 per cent in the first quarter of 2026. But GDP is just one measure of economic health. Rogers noted that employment, leading indicators, and other data points paint a more complex picture.
Canada's unemployment rate rose to 6.9 per cent in April, with 18,000 jobs lost that month. Inflation spiked to 2.8 per cent in April due to higher gas prices, though core inflation declined to two per cent.
Chief Economist Doug Porter at Bank of Montreal said in a note Friday: "While there will be plenty of debate over whether this constitutes a recession (we would say 'no, not really'), there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict."
Conservative Leader Pierre Poilievre called on the government to account for the shrinking economy, saying Canada is the only G7 nation experiencing negative growth. Prime Minister Chrystia Carney was not present for question period Monday.
Scotiabank Chief Economist Derek Holt cautioned that winter weather, tariff-induced trade swings, and volatile gold imports may be skewing recent data and noted that premature recession declarations would be irresponsible.