Trouble in the North: Canada's economy continues to shrink

Canada is now facing its worst dilemma - a mild contraction, according to Stephen Poloz, governor of the Bank of Canada.

Most of Canada's industries are experiencing turmoil adding to the economy shrinkage by 0.2% in May this year. It has been five consecutive months that Canada's economy went down.

Industries greatly affected are wholesale trading, oil, mining, manufacturing and sectors that involve gas and oil extraction. It was reported that manufacturing incurred a decrease of 1.7% last May while oil and gas extraction, quarrying and mining went down to 0.7% for seven consecutive months.

Economists blame it on the oil crash that started a year ago and the weakening of the loonie- the Canadian dollar. Oil companies like Schlumberger even have to lay off some of its employees.

Alberta, which is Canada's major oil-producing province has recorded an unemployment rate of 5.8% in May.

Adjustments are being made to cope with the economy's contraction. This includes cutting of interest rates to make it easier for loaners to pay their debt.

Although most of the industries shrank in May, other sectors in the economy experienced modest growth. Construction, for example, moved up a little, as Canadians continuously spend money to renovate or build homes.

There was also a boost in retail trade because of the expenditure on building materials, supplies and garden equipment as being reported.

Home prices in Vancouver and Toronto did not change but soared, and are greatly in-demand. Home prices in Toronto are much higher by 42% compared in 2008 while Vancouver is considered to have the second-most expensive home prices.

Canada's general election is going to take place towards the end of this year and economic issues are taking the center stage.

Canadian Prime Minister Stephen Harper together with his Conservative Party had ruled since 2006. Opposition leaders from both the New Democratic Party and the Liberal Party want an end to the Conservative's fiscal austerity, The Guardian reported.

The election campaign in Canada officially started on Sunday, 2 August and will end at the polls on 19 October.