Canada’s economy will bounce back says finance minister

OTTAWA — Federal Finance Minister Joe Oliver says he won’t discuss the prospect of a recession because he fully expects the economy to rebound after it shrank in the first three months of the year.

Oliver’s testimony at a Senate committee today comes less than week after data showed the economy contracted by 0.6 per cent at an annualized rate in the first quarter.

He says he’s expecting the economy to bounce back in the second quarter as the Bank of Canada, the International Monetary Fund and private-sector economists have all projected.

A recession is typically defined as two or more consecutive quarters of negative growth.

Oliver says the Harper government is still projecting a $1.4-billion surplus for 2015-16 despite the weaker-than-expected first quarter. He also cites the central bank’s projection that the economy will have growth of 1.9 per cent in 2015.

Oliver will also field questions today about the state of the economy at the House of Commons finance committee.

“I’m not going to be discussing the prospects of a recession,” Oliver told a Senate committee Tuesday in response to a senator’s question.

The steep drop in oil prices and the failure of other sectors to pick up the slack helped push the economy into reverse in the first quarter of 2015.

The contraction of real gross domestic product was below the Bank of Canada’s projection of zero growth, the first time the rate dipped into negative territory since the fourth quarter of 2011.

It was also the deepest decline in real GDP since the recession-walloped second quarter of 2009, when it fell by 3.6 per cent, Statistics Canada said.

Released less than five months before the Oct. 19 federal election date, the disappointing GDP reading will reverberate on the political scene — where the health of the economy remains a key ballot-box issue.

© 2015 The Canadian Press