Canada Is Not in a Recession Despite GDP Decline, Council Finds (C.D. Howe)

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 ...

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