Canada is in a recession, according to former Bank of Canada governor Stephen Poloz.
Poloz, who is now special adviser to Osler, Hoskin & Harcourt LLP, made the statement during a webinar hosted by the law firm on Tuesday.
“I would say we’re in a recession, I wouldn’t even call it a technical one,” he said.
“A technical one is a superficial definition that you have two quarters of negative growth in a row, and we haven’t had that, but the reason is because we’ve been swamped with new immigrants who buy the basics in life, and that boosts our consumption enough.”
A recession is defined as a significant, widespread and prolonged downturn in economic activity. The general rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession.
Last Friday, Statistics Canada reported that the gross domestic product (GDP) per capita fell 0.4% for the sixth consecutive quarter.
Poloz said that Canadians are spending less because the cost of living has increased 30% following the recent period of inflation.
He added that inflation dipping faster than forecasted is also a sign of a recession.
Canadians have certainly been feeling the pinch. The latest report from Equifax found that Canada’s consumer debt levels have reached another record high last quarter, hitting about $2.5 trillion.
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The skyrocketing cost of living has even driven some Canadians — like this BC man with a disability — to share a one-bedroom apartment with a roommate.
In November, the federal government announced a two-month cut on GST for groceries and other products, aiming to alleviate Canadians’ financial struggles during the costly holiday season.
According to Poloz, the measure will only provide relief in the short term, not the long term.
“There are so many other ways to boost the economy that would provide a longer-lasting effect,” he said. “So giving away these things is kind of like giving somebody a fish instead of giving them a fishing rod, right?”
The former Bank of Canada governor isn’t the only one to say that we’re in a recession.
A recent report by Oxford Economics suggested that the housing crisis finally pushed Canada’s economy into recession.