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OTTAWA - The Canadian economy shrank again in the second quarter, putting the country in recession for the first time since the financial crisis, with a plunge in oil prices taking a toll as business investment fell and inventory accumulation slowed.
Gross domestic product contracted at an annualized 0.5 percent rate in the second quarter, Statistics Canada said on Tuesday. That was better than forecast, though revisions showed the first quarter's contraction was steeper than first reported.
Two consecutive quarters of contraction are typically considered the textbook definition of a recession. The confirmation of a modest recession is likely to figure heavily into the election campaign as Canadians head to the polls next month.
Some economists and members of the Conservative government have argued that such a definition is too narrow and that other economic measures should be taken into account, such as unemployment, which has remained relatively subdued.
Encouragingly, the economy grew in June for the first time in six months, suggesting the recession may be short-lived. While the price of oil and other natural resources have weakened since June, many expect non-commodity Canadian exports to benefit from a strengthening U.S. economy.
The Canadian dollar pared losses after the data.
"Despite the technical recession materializing, it does look like the Canadian economy is jumping back, is rebounding strongly in the third quarter," said Derek Burleton, deputy chief economist at Toronto-Dominion Bank.
The last time Canada was in recession was in 2008-09, when the U.S. housing market meltdown triggered a global credit crisis.