Canada’s GDP shrunk by 0.1% in October according to Statistics Canada. The significant drop was the first GDP decline over an eight-month period.
Several sectors were affected including manufacturing which dropped by 1.4% in October. Retail also fell by 1.1%, which is the largest drop over the last three years.
During October, the Canadian economy also lost 23,100 jobs. A month later, in November, the country saw a whopping 71,000 jobs lost.
Despite the worrying signs, the Liberals have maintained that the Canadian economy is doing well.
The latest fiscal update released mid-December projected that the Trudeau government is expecting a $26.6 billion deficit for this year, exceeding projections by almost $7 billion. For the following year, the Liberals are projecting an even higher deficit of $28.1 billion.
Both Trudeau and Morneau have understated the significance of the worrying economic trends. In a year-end interview, Trudeau said that the Liberals have kept their debt low.
“I actually disagree with those economists. We’ve been very careful to keep our debt low as a share of our economy,” said Trudeau.
According to Oxford University economists, Canada has a 40% chance of a recession heading into 2020. Canadians also seem to be settled on the possibility of an oncoming recession, with a majority reporting that they believe a recession is “likely” or “somewhat likely.”
Conservative MP and Finance Critic, Pierre Poilievre, has warned that the Liberal government could be leading the country towards a “made-in-Canada” recession.
“I’m not saying there is (a recession), but if we head to a recession, it will be a made-in-Canada recession,” Poilievre told reporters.
In response, Morneau called the comments “irresponsible” and maintained that the Canadian economy was growing.