Canada's economy grew by a weaker-than-expected 0.3 percent in the second quarter, but a revision of the first quarter contraction to 0.8 percent confirmed that the economy narrowly avoided sliding into recession, a government agency reported Friday. Statistics Canada had initially reported the first quarter to have contracted by only 0.3 percent, but Friday's revision shows the economy had a much worse winter than analysts predicted. Despite the mild rebound, the March-June 0.3 percent advance was well below the Bank of Canada's prediction of a 0.8 percent advance and means the economy essentially retreated in the first six months of 2008. Minutes after the news about the gross domestic product was announced, Finance Minister Jim Flaherty called a surprise news scrum to assure Canadians that economic fundamentals remain strong. But Scotia Capital's Derek Holt said if Canada did avoid a mild recession by recording two consecutive quarterly declines, it was mainly through a technicality. “The key point is to look at the fact that in the first half of 2008, the Canadian economy contracted,” he said. He said the miscalculation on the state of the economy has been large enough that central bank governor Mark Carney should cut interest rates next week by at least one-quarter of a point, and possibly by half a point. “Every single category of business declined and detracted from growth... residential structures, nonresidential structures, business machinery and equipment... and this is the among the weakest pace of consumer spending we've had in years.” On a quarter-to-quarter basis, the real gross domestic product edged up 0.1 percent in the second quarter of 2008, following a 0.2 percent decline in the first quarter.
