OTTAWA — Federal Finance Minister Joe Oliver says talk of a recession is premature because he fully expects the economy to rebound after it shrank in the first three months of the year.
Oliver’s testimony Tuesday at a Senate committee comes less than week after data showed the economy contracted by 0.6 per cent at an annualized rate in the first quarter.
He noted that the Bank of Canada, the International Monetary Fund and private-sector economists all predict a second-quarter economic bounce.
Oliver also cited the central bank’s projection that the economy will grow by 1.9 per cent in 2015.
A recession is typically defined as two or more consecutive quarters of negative growth.
“I’m not going to be discussing the prospects of a recession because we don’t anticipate that at all,” Oliver told the committee in response to a senator’s question.
Oliver said the Harper government is still projecting a $1.4-billion surplus for 2015-16 despite the weaker-than-expected first quarter.
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.
At the Senate committee, Oliver defended the government’s management of the economy. He said most of its challenges were due to external factors.
“Had we not been in a relatively strong fiscal situation, the impact (from the oil slump) would’ve been even more severe and we were able to avoid draconian steps or, really, austerity,” he said.
“There wasn’t a need for it, we didn’t do it and that’s a good thing.”
Oliver also fielded questions Tuesday about the state of the economy at the House of Commons finance committee.
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Andy Blatchford, The Canadian Press