It’s not just the Middle East that’s seeing its economy fall alongside oil prices.
Canada has officially entered a recession, driven largely by the harsh global oil market.
While the country has business ties to the U.S. shale, and is home to part of the prolific Bakken shale play, most of Canada’s oil production comes from more expensive oil sands.
Understand, oil sands production is still highly profitable… but investment in the sector has slowed as the market dropped in recent months.
And Canada is feeling the sting. The country’s GDP dropped 0.8% in the first quarter of 2015, and another 0.5% in the second quarter.
This is the worst its economy has been since the 2009 financial crisis.
The country’s national statistical agency Statistics Canada claims a portion of this stems from the 4.5% slump in the oil and gas sector and a 5.7% slump in the unconventional oil extraction industry. Industry support and investment has dropped a full 18% this quarter as well.
In July, the Bank of Canada had to cut interest rates after the unanticipated speed of oil’s downward spiral.
However, even as the low oil market continues, Canada’s outlook isn’t all doom and gloom.
According to the Bank of Canada, “The Bank expects growth to resume in the third quarter and begin to exceed potential again in the fourth quarter.”
Ongoing oil demand and consumption is expected to boost oil extraction expansion and investment, which will, given time and slightly better oil prices, repair the damage to the Canadian economy.
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