Falling crude oil prices drop Canada into its first recession since 2009

Canada has officially entered a recession, after their economy shrank again in the second quarter of this year, by 0.5 per cent.

 

Plunging oil prices were blamed for putting the country back into recession for the first time since the financial crisis, though the 0.5 per cent GDP contraction beat forecasts.

 

Lower oil prices ate into energy and mining sector growth, which saw a 4.5 per cent drop in activity.

 

However, a 0.5 per cent pick-up in June bodes well for a healthier third quarter, and non-commodities exports increased by 3.7 per cent, a trend likely to continue as the US economy strengthens. 

 

Unemployment remains steady at 6.8 per cert and housing markets and retail sales figures are relatively strong outside oil-exporting provinces such as Alberta. 

 

The Royal Bank of Canada has cut interest rates twice this year to try to buoy the economy, but is expected to hold rates at 0.5 per cent when it meets next week.