- Part of Canada's slower growth is due to China's weakness
- China is playing a larger role at meetings of Group of 20
Canadian Finance Minister Joe Oliver shrugged off the debate on whether the economy fell into a recession in the first half of the year, citing job gains and output growth outside of producers of crude oil and other commodities.
“The other 80 percent-plus of the economy, while there were some spillover effects, was growing through that period,” Oliver said in an interview Friday at a Group of 20 meeting in Ankara. “A recession is a prolonged, pervasive, major decline and you don’t have along with a recession a big increase in employment, you usually have a big decrease.”
The Group of Seven’s biggest crude oil exporter is struggling as a global commodity slump guts business spending, and debate about a recession grew after Statistics Canada said Sept. 1 that output fell in the second quarter as well as in the first. Oliver’s Conservative Party government is in a tight three-way race before an election on Oct. 19, and he left the campaign trail to come to the G-20 where he said China is playing a bigger role.
“China is definitely trying to play a constructive role, but it is the second-largest economy in the world and so when it slows down it has global implications,” Oliver said. “When you bring it back to Canada, because we are a large trading country, we are obviously impacted by slower growth, and China is part of that slower growth, and tumultuous markets are also disruptive to growth because they can impact adversely on capital spending.”
Canadian energy companies chopped capital spending in the first half after crude oil prices tumbled. Oliver said the more recent slide in crude won’t trigger the same kind of response this time.
“It’s not linear,” Oliver said. “There is an adjustment that companies made that they don’t have to make again.”
Gross domestic product in Canada will post “solid” growth in the second half of the year, Oliver said, citing the projections of the central bank and private economists.
Even the first half ended with a monthly expansion of 0.5 percent that was the strongest in about a year and the trade reports for June and July showed improvement, he said, reiterating the country will record a surplus for the current fiscal year.
“Those are all facts, and they are positive facts,” he said. “We believe that they are the result of a number of things including our fiscal policy, our low tax plan for jobs and growth.”
Prime Minister Stephen Harper’s move last month to announce during an election campaign that he had spoken with Bank of Canada Governor Stephen Poloz about market turmoil was appropriate, Oliver said. Harper said in an Aug. 24 statement he sought an update from Poloz on a rout in financial markets.
“Whenever the prime minister does something, it quite appropriately attracts attention,” Oliver said. “It’s perfectly appropriate, in other words it would be a bit odd if somehow he is precluded from speaking to the Governor of the Bank.”