Canada is in a technical recession, economists say. Here’s what that means

Canada’s economy shrank in the last two quarters, which many say meets the definition of a technical recession. But some economists say that label is misleading, while others argue that the distinction doesn’t really matter.

“Technically, we are in a recession,” Colin Mang, assistant professor of economics at McMaster University, told CTV News Channel on Tuesday.

“We’ve had two quarters where overall spending in the economy dropped, but to put things into context, the decline from the fourth quarter of 2025 to the first quarter of 2026 was only about $1 million. That represents 0.03 per cent of our total $3.2 trillion economy.”

Mang’s comments came after Statistics Canada released its latest gross domestic product (GDP) data on Friday, which found that the slight first-quarter GDP drop followed a dip of one per cent in the fourth quarter of last year, a number StatCan revised down.

According to StatCan, the Canadian economy has seen negative real GDP growth in three of the last four quarters.

What is a technical recession?

Two consecutive quarterly contractions in real GDP are what’s known as a technical recession, but there’s some disagreement about the definition amongst experts.

Like Mang, David Macdonald acknowledged that Canada is technically in a recession for the time being, but the senior economist with the Canadian Centre for Policy Alternatives noted that it could be short lived.

“This is something that might change when the next round of data comes out in about three months,” Macdonald told CTV News Channel on Tuesday.

“The negative return that we’re seeing in the first quarter of this year is very small, and so it’s something that could be adjusted away… we might find out that it’s slightly positive when we get some revisions in the next quarter, or we might find out as well that it’s slightly worse.”

Others stopped short of using the word recession to describe Canada’s economy following StatCan’s release last week.

“Don’t get me wrong, the economy has struggled to gain any meaningful traction over the last year... but for now, we wouldn’t necessarily call it a technical recession,” TD Bank economist Marc Ercolao told The Canadian Press.

Prime Minister Mark Carney also refrained from using the word while discussing Canada’s economic situation with reporters in Ottawa on Tuesday.

“This government’s been in the process of laying the foundations for a stronger, more resilient, more independent Canadian economy,” he said.

“That process is settling in during that time as we make major investments, major changes to how the government operates, how we do major projects, how we have new trade agreements with other countries.”

‘Not good news’

Whether Canada is or isn’t in a technical recession may be besides the point, argued Macdonald, who said no matter how you look at StatCan’s latest economic data, it points to weakness.

“Three of the four last quarters have been negative. This is not good news; the fact that real GDP is slightly lower today than it was a year ago in (the first quarter) of 2025 says that this past year has been a pretty miserable year for economic growth in Canada,” he said.

“Whether we’re a dollar below or a dollar above that key zero-growth mark is neither here nor there.”

However, Mang argued that the technical recession Canada finds itself in for the time being is “not anything like” the 2008 financial crisis or the recession in 2020 at the outset of the COVID-19 pandemic.

“This is much more like that very, very short recession we had in 2015, which last for only two quarters; most people didn’t even notice it,” he said.

“So, technically it is a recession but it is about the shallowest possible recession we could have.”

With files from CTV News’ Stephanie Ha and The Canadian Press