Quebec is in recession… but not for Minister Girard

Quebec is technically falling into recession, but the Legault government continues to talk about an economic slowdown.

The Quebec Institute of Statistics (ISQ) has just published data for the third quarter of 2023. Gross domestic product (GDP) fell by 0.2%.

In the previous quarter, GDP also fell, but by 0.4%. Since this is the second quarter in a row, Quebec is technically in recession, as that concept states.

However, Treasury Secretary Eric Girard believes it is still too early to speak of a recession.

“The ISQ confirms today that the economic slowdown will continue in the third quarter (-0.2%). This is the second consecutive negative quarter in Quebec. However, it is still too early to say that Quebec is in recession since the decline in economic activity is not widespread,” he explained on the social network X.

“In fact, several sectors are experiencing growth […] Employment, consumption and disposable income. We will continue to monitor the situation closely in the coming months and are aware that the situation remains difficult for many Quebecers,” he said.

On the phone, his office admits that there is technically a recession, but believes the three criteria for a true economic recession that would impact Quebec consumers are not present.

Before admitting a recession, the Minister of Finance would like to examine whether this trend will continue in the long term, whether it will spread across most sectors of the economy and whether this economic contraction will worsen. The consumer spending and gross fixed capital formation sectors are currently still positive, reports the Girard company and estimates that it is still premature to speak of a recession.

Strictness required

The decline in GDP would be characterized primarily by a decline in the electricity production market, argues the minister’s team.

Liberal Frédéric Beauchemin quickly called on the minister to remedy the situation.

“A little severity, please, Minister. Two consecutive negative quarters is the definition of a recession. Strict please, because Quebecers have the right to the truth. Can you change your growth forecast for the year by 0.6%? he answered.

Note that the construction and non-residential construction sectors suffered a second decline, this time by 1.3%.

Positive: The residential building market is experiencing its first increase in almost two years with growth of 1.3%.

Shades

Former Liberal minister and economist Clément Gignac gives Minister Girard the benefit of the doubt but believes a recession is upon us.

“If we take the United States approach, he is probably right. It is an official committee that determines whether or not we are in a recession. And they don’t just take into account GDP, which has fallen in two consecutive quarters. Those who use it are economists because it is practical and we have the information quickly,” he clarified, recalling that the definition of a recession remains a complex matter.

Quebec is in recession but not for Minister Girard

Clément Gignac ARCHIVE PHOTO JEAN-FRANÇOIS DESGAGNES

“Yes, it is likely that we will experience a recession, but it will be atypical. “As we speak, the word ‘stagnation’ is undoubtedly coming closer to what people are experiencing,” he explained.

This suggests that there is no increase in the unemployment rate yet, although there are some signs pointing to a slowdown in certain sectors.

Mortgage extensions at high rates could also hurt wallets in the coming months, says the man who now sits as an independent senator.

“We’re starting to see it […] As an economist, I believe that unfortunately we will undoubtedly experience a recession, but a recession that will not be very deep or long.”

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