Finance Minister Jim Flaherty says although Canada's real gross domestic product edged down in the first quarter of 2008, he doesn't think the economy will slip into a recession.
Data released by Statistics Canada on Friday showed real GDP dropped 0.1 per cent in the first quarter -- the first decline in nearly five years.
"We are well positioned to weather this period of global economic uncertainly," Flaherty told reporters Friday.
"Canada's economic fundamentals are solid."
Flaherty is in Montreal for the second day of meetings with provincial and territorial finance ministers.
"The fact that Canada's economy is slowing should come as no surprise to anyone," he said.
"Canada is not an island. We anticipated economic slowness last year for this year. Challenges abroad impact us here at home."
The finance minister noted that Friday's report blames the GDP decline largely on manufacturing cutbacks -- most notably in the auto sector.
"We've been looking state-side and figuring these are the people who are in recession -- not us. But this doesn't appear to be the case," BNN's Michael Hainsworth told 麻豆影视net Thursday afternoon.
Hainsworth pointed out there is one key factor behind the economy's slip.
"It has everything to do with the Americans, actually. American Axle -- which is a big supplier to General Motors in the United States -- had a huge strike. That idled production in Canada. The auto production component to our economy played the biggest role in why we ended up seeing our economy shrink."
Hainsworth said he has spoken with other analysts -- and it appears that the small economic decline may be a "one off" and a recession will likely be avoided.
Excluding the production of motor vehicles -- and the estimated ripple effects the industry has had on motor vehicle parts, wholesaling and transportation -- GDP for the remainder of the economy grew by 0.1 per cent in the quarter, Flaherty said.
He added that Ottawa has provided significant support for the auto sector and he hopes the industry will get help on the provincial level.
"As you know, I have been calling on the Ontario government to follow our lead and reduce the Ontario government's business taxes," he said.
Details of the report
In addition to manufacturing cutbacks, weather disruptions also hampered economic activity in the quarter, says the report.
At an annualized rate, the Canadian economy declined 0.3 per cent in the first quarter, compared with 0.9 per cent growth in the United States.
"The expectations were that the Canadian economy was going to grow... at a pretty moderate pace of 0.4 per cent," BNN's Marty Cej said Friday.
The report says economic output contracted 0.2 per cent in March.
Meanwhile, final domestic demand advanced 0.6 per cent in the quarter on strength of consumer spending.
Inventory accumulation, after two quarters of large build-ups, eased considerably in the first quarter.
Declines in manufacturing, mining and some transportation industries were partially offset by growth in retail trade, accommodation services, finance and insurance.
While the economy continued to create jobs in the first quarter, average hours worked declined -- partially because of bad weather.
