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Canada's great recession wasn't that bad after all: Statistics Canada
Seems like good policies and good planning sheltered Canada from the worst, while the rest of the world reeled from a financial tsunami, which threatened to spiral into the worst disaster since the 1930s.
"The 2008-2009 recession was rapid and closely synchronized around the world," wrote Statistics Canada's head economic analyst, Philip Cross. "(But) Canada, in contrast, experienced a recession that was less severe and shorter than in the other G7 nations," Cross said.
Statistics Canada reported that 2008-2009 recession as a most ordinary recession in Canada, in fact, even milder than the other two previous economic slowdown. According to Stats Canada, even though exports fell, more than 400,000 jobs were lost, and company profits plunged, it could have been much worse.
Canada suffered a 3.3 percent drop in GDP over three quarters between the fall of 2008 and summer of 2009, and employment declined 1.8 percent. In the United States, the total GDP dropped 3.7 percent, and employment tumbled 6 percent over two years and 8.5 million people were thrown out of work.
Canada appears to be bouncing back stronger than any country in the G7 which includes the US, the UK, France, Germany, Italy, and Japan. Output rebounded by five percent in the fourth quarter of 2009 and forecasts to have had a even bigger bounce at the beginning of this year. Also, the economy has added about 180,000 jobs since July.
Stats Canada remarks that Canada was able to withstand the storm better because it entered the slump in better shape.
"Corporations had used years of record financial surpluses to reduce debt-to-equity rations to an all-time low," wrote Phillip Cross, Statistics Canada's head economic analyst. "Large government and trade surpluses over the previous decade had significantly lowered both government and external debt and raised Canada's national saving rate."
And although the personal savings rate of Canadians was similar to that of American households, the national rate - thanks to government and corporate balance sheets - was three times higher than in the U.S.
The difference, along with sounder financial markets, helped Canada's domestic economy remain relatively strong during the recession. Canada's was really an export recession, said the agency, noting that export earnings fell a massive 22 per cent in 2009, and corporate profits plunged 33 per cent.