Canada's Economic Outlook: Navigating Recession Risks

Canada's GDP contracted by 0.3% in August, with estimates suggesting a potential 0.1% growth in September, leading to an annualized Q3 growth of 0.4%. Despite risks of recession, upcoming federal budgets and boosted September output may help. Manufacturing and mining are sectors dragging the economy down.

In a surprising turn of events, Canada's GDP shrank by 0.3% in August, according to Statistics Canada. The contraction negated any growth seen in previous months.

Despite this setback, an advance estimate points to a possible 0.1% GDP growth in September, potentially avoiding a recession with an anticipated annualized increase of 0.4% for the quarter.

Especially hard-hit sectors include manufacturing and mining, with the latter contracting due to declines in metal ore and coal mining. Economists remain hopeful that federal budget measures could help stimulate demand.

(With inputs from agencies.)