Canadian Prime Minister Mark Carney has acknowledged signs of weakness in the country’s economy but stopped short of declaring that Canada is in a recession, even after new economic data showed the nation’s gross domestic product (GDP) contracted for two consecutive quarters.
Speaking to reporters in Ottawa on Tuesday, Carney defended his government’s economic strategy while emphasizing that current economic challenges are occurring during a broader transition aimed at building a more resilient and independent economy.
“This government’s been in the process of laying the foundations for a stronger, more resilient, more independent Canadian economy,” Carney said when asked directly whether Canada had entered a recession.
His comments came days after Statistics Canada reported that the economy experienced slight GDP declines over two consecutive quarters, a development that meets the commonly accepted technical definition of a recession.
Despite the data, Carney avoided using the term and argued that broader economic indicators should be considered before drawing conclusions about the overall health of the economy.
The prime minister pointed to several government policies that he said have contributed to slower economic activity in the short term, including efforts to reduce immigration levels and curb federal spending.
According to Carney, these measures are part of a longer-term strategy designed to strengthen Canada’s economic foundations, improve productivity, and reduce dependence on external economic pressures.
“There’s some other choppiness in terms of how investment is happening,” Carney said, adding that the government is simultaneously pursuing major investments, streamlining project approvals, and expanding trade relationships with international partners.
The comments reflect the government’s attempt to balance concerns about slowing growth with its message that structural reforms will generate long-term benefits.
Bank of Canada Urges Broader Economic Assessment
The debate over whether Canada is officially in a recession was also addressed by Carolyn Rogers during testimony before a House of Commons committee on Monday.
Rogers cautioned lawmakers against relying solely on GDP figures when evaluating the state of the economy.
“Two quarters of annualized contraction in GDP does meet one definition of a recession,” she said, while noting that the term “technical recession” itself suggests the need to examine a wider range of economic indicators.
Her remarks indicate that policymakers are looking beyond GDP data to assess factors such as employment, consumer spending, business investment, and overall economic resilience.
Political Pressure Intensifies
The economic slowdown has become a growing political issue for the government.
Opposition leader Pierre Poilievre sought an emergency debate in Parliament on the state of the Canadian economy following the release of the GDP figures.
However, the request was rejected Monday by the Speaker of the House of Commons, preventing an immediate parliamentary debate on the issue.
The development is likely to fuel continued political debate over the government’s economic management, particularly as Canadians face concerns about affordability, housing costs, inflation, and employment prospects.
Trade and Economic Uncertainty
The discussion also comes as Canadian and U.S. officials continue negotiations over outstanding issues related to the Canada-United States-Mexico Agreement (CUSMA), while recent tariff actions by the United States have added uncertainty to key industries, including steel and aluminum production.
Carney has maintained that strengthening trade relationships and encouraging domestic investment remain central pillars of his economic agenda.
While economists may classify Canada’s recent GDP performance as a technical recession, government officials are emphasizing that broader economic conditions and long-term reforms will ultimately determine whether the slowdown develops into a more significant downturn.
For now, Carney is acknowledging economic weakness while arguing that Canada is undergoing a period of adjustment that he believes will produce a stronger and more competitive economy in the years ahead.