Canadian analysts watching for recession 

Dana Malcolm

Staff Writer

#Canada, September 9, 2023 – Financial analysts are watching the Canadian economy for the possibility of recession following a contraction in its Gross Domestic Product (GDP) for the second quarter of 2023, and a decision to keep interest rates at 5 percent.

The Bank of Canada decided to ‘hold steady’ on interest rates this Wednesday, a week after Information shared by Statistics Canada revealed the country’s GDP declined last quarter, failing to reach the over 1 percent growth that was predicted by economists.

“The slowdown was attributable to continued declines in housing investment, smaller inventory accumulation, as well as slower international exports and household spending,” Statistics Canada explained.

Central Banks in North American countries like Canada and the US have been hiking interest rates over the past year to balance out inflation. Both countries want inflation levels to remain at 2 percent.

A recession occurs when a market records negative GDP growth for two consecutive quarters. If Canada records another contraction in its GDP for the third quarter of the year, it will officially be considered to be in a recession.

In late 2022, the Royal Bank of Canada had predicted the country would fall into recession early this year because of cooling housing markets and high interest rates.

The country has not recorded a recession since the beginning of the pandemic.