Canada says economy may be in recession

Sun Nov 23, 2008 7:37pm EST
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By Frank McGurty

TORONTO (Reuters) - The global financial crisis may have pushed Canada's economy into a "technical" recession, Finance Minister Jim Flaherty said on Sunday, the first time the Conservative government has conceded that possibility.

"We may well be in a technical recession in the last quarter of this year and the first quarter of next year," Flaherty said in an interview with CTV television.

"It's quite possible that Canada will be below the line slightly in both of those quarters, which technically would be a recession."

Flaherty's remarks were later echoed by Prime Minister Stephen Harper at the close of the Asia-Pacific leaders summit in Peru.

Harper said it was possible that Canada has now entered a period of "technical recession" -- defined by economists as two consecutive quarters of contraction.

Harper also said he was concerned by the emergence of rapid global deflationary pressure, which may force Canada's government "to take unprecedented fiscal stimulus."

"The most recent private-sector forecasts suggest the strong possibility of a technical recession the end of this year, the beginning of next," Harper said.

The government's latest economic assessment follows a speech by Bank of Canada Gov. Mark Carney last week in which he said the risk of recession was growing.   Continued...

<p>Jim Flaherty, Canadian Minister of Finance, speaks to the media after the federal and provincial finance ministers meeting in Toronto in this November 3, 2008 file photo. REUTERS/Mark Blinch</p>