Canada's GDP Shrinks: Is The Sky Falling? No.

Canada's GDP fell 0.1% in Q2 2011, the first quarterly decline since 2009.

Analysts were expecting growth would be flat in the period. However, the decline was due largely to a 2.1 per cent drop in exports, which are of course related to oil prices.

However, Canada's economy expanded at an annualized pace of 3.6 per cent in the first quarter (a downward revision of the 3.9% initially reported by Statistics Canada).

Oil and gas extraction dropped 3.6 per cent, while output in the manufacturing sector declined by 0.9 per cent.

Consumer spending on goods and services increased 0.4% in the quarter, after being unchanged in the first three months of the year.

Business investment in plants and equipment was also 3.7% higher.