World Economy

Canada Heading for Recession

Canada Heading for RecessionCanada Heading for Recession

The Canadian economy is likely headed for recession, two major banks said Thursday, predicting a successive contraction in the second quarter, AFP reported. Canada, the world’s fifth-biggest oil producer, has been hard hit by tumbling global oil prices and its economy shrank 0.6% at an annualized rate in the first quarter. A recession is defined as two consecutive quarters of contraction. Nomura bank said it expected the gross domestic product to contract by 0.5% in the second quarter, while Bank of America Merrill Lynch said a 0.6% decline in that period was likely. “The economy has surprised to the downside this year and appears to have entered a recession in 1H 2015, even after policy easing in January,” Bank of America economist Emanuella Enenajor said. Nomura’s Charles St-Arnaud said the dip was not just the result of forest fires in Alberta that forced the temporary closure of two facilities that account for 10% of the oil sands’ output. “The Canadian economy is likely in recession,” he said.