Report: Canada's Economy Slipped Into Q3 Recession

Facts

• According to data released on Tuesday, the Canadian economy halted in August and most likely entered a minor recession in the third quarter. It suggests that the Bank of Canada's ten interest rate hikes since last year are hurting the nation's Gross Domestic Product (GDP).¹
• The report states that the Canadian economy fell into a technical recession after two consecutive quarters of negative growth, likely due to higher interest rates, inflation, as well as severe forest fires and drought.²
• The economy is reportedly performing slower than the central bank's prediction, with the Canadian dollar trading at its weakest level in a year and interest rates hovering at 5%, which is the highest mark in 22 years.³
• In its preliminary estimates, Statistics Canada has reported that the economy contracted in the second quarter at an annualized rate of 0.1%.²
• In its quarterly monetary report, the Bank of Canada predicted a rise of GDP by 0.8% in the third quarter, compared with an earlier forecast of 1.5% in July.⁴
• Economists have expressed caution that Canada's central bank interest rate policies suggest that Canada's economy will likely enter a recession in 2024.¹

Sources: ¹Reuters, ²BNN, ³US News & World Report and ⁴Kitco News.

Narratives

• Establishment-critical narrative, as provided by National Post. This Canadian recession has been different from others in the past in that certain industries have continued to try to hire while others have been forced to lay off staff. This is in contrast to typical recessions, which are usually followed by increased unemployment and layoffs as business circumstances worsen. It's anticipated that high interest rates will keep stifling economic growth, and things will get worse for the Canadian people in the near future.
• Pro-establishment narrative, as provided by The Globe and Mail. The Bank of Canada has finished raising interest rates, which are already at record-high levels and have crippled consumers while skyrocketing inflation has reduced their purchasing power. Though changes in interest rates will still take time to reflect in the market — perhaps even as long as a year and a half — Canada's resilient economy will undoubtedly bounce back.