Canada: Early-stage recovery view – RBC

Royal Bank of Canada (RBC) economist Claire Fan argues that recent contractions in Canadian GDP do not signal a recession, noting that the C.D. Howe Institute Business Cycle Council shares this view. She emphasizes that sharp swings in population growth distort traditional GDP readings. Fan highlights that per-capita GDP trends better capture household conditions and now suggest Canada is in an early-stage recovery from a soft patch.

Per-capita data reshape recession call

"Canada’s consecutive contractions in gross domestic product in recent quarters sparked some concerns about whether the economy had entered a recession."

"We don’t back that view, nor does the C.D. Howe Institute Business Cycle Council, responsible for formally dating Canadian recessions."

"A core reason for looking beyond GDP growth is the sharp swings in population growth Canada has experienced."

"Notably, the past two quarters of GDP decline both coincided with population declines—the first on record since the 1950s."

"Now the opposite is true: Headline GDP looks worse than reality, while Canada’s in early-stage recovery from a soft patch that began in early 2023."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)