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Canada Is Not in a Recession Despite GDP Decline, Council Finds
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| Citation | . 2025. "Canada Is Not in a Recession Despite GDP Decline, Council Finds." Media Releases. Toronto: C.D. Howe Institute. |
| Page Title: | Canada Is Not in a Recession Despite GDP Decline, Council Finds – C.D. Howe Institute |
| Article Title: | Canada Is Not in a Recession Despite GDP Decline, Council Finds |
| URL: | https://cdhowe.org/publication/canada-is-not-in-a-recession-despite-gdp-decline-council-finds/ |
| Published Date: | September 22, 2025 |
| Accessed Date: | September 23, 2025 |
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September 22, 2025 – Canada’s economy shrank in the second quarter of 2025, but conditions do not yet meet the definition of a recession, according to a new Communiqué from the C.D. Howe Institute’s Business Cycle Council (BCC).
In “Canadian Economy Contracts, But Does Not Meet Recession Definition,” the Council notes that real GDP fell 0.4 percent in Q2, driven by declines in exports and investment in machinery and equipment. The Bank of Canada responded with a policy rate cut, and the combination of a contracting economy and weak employment data has stirred recession fears.
While one quarter of contraction meets a necessary condition for a recession, it was neither pronounced enough nor yet prolonged enough to qualify fully as a recession.
Still, members flagged labour market weakness, with August employment falling by 66,000 and unemployment rising to 7.1 percent – the highest since August 2021. The Council will meet to discuss revisiting its assessment if GDP contracts again in Q3.
“While the Canadian economy is under clear stress, the current contraction does not meet the definition of a recession with the data we have available,” says Jeremy Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute and BCC Co-Chair. “We are monitoring developments closely, and will reconvene if the data show further deterioration.”
For more information, contact: Jeremy Kronick, Vice-President, Economic Analysis and Strategy, C.D. Howe Institute; Steve Ambler, Fellow-In-Residence, C.D. Howe Institute; Percy Sherwood, Associate Editor and Communications Officer, C.D. Howe Institute, 416-407-4798, psherwood@cdhowe.org.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
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