GDP decline in second quarter
The Council noted that the second quarter’s GDP decline is the first negative quarter of 2025, thus meeting the initial recessionary criterion. However, members agreed that the contraction was not yet large or prolonged enough to declare a recession.
“While the Canadian economy is under clear stress, the current contraction does not meet the definition of a recession with the data we have available,” said Jeremy Kronick, Vice-President, Economic Analysis and Strategy at the C.D. Howe Institute and BCC Co-Chair.
“We are monitoring developments closely, and will reconvene if the data show further deterioration.”
The BCC’s diffusion index, which measures the breadth of economic weakness across industries, has been below the critical 50 threshold in two of the last three months to June. However, the three-month average stood at 50 in June and has remained at or above that level throughout 2025, except for April.
The Council also pointed out that GDP grew by 0.4 percent in the first quarter of 2025, and the cumulative growth rate for the first half of the year remains slightly positive at about 0.1 percent. Statistics Canada’s advance estimate for July 2025 suggests a modest 0.1 percent increase in real GDP by industry.