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Bank of America Merrill Lynch has become the first bank to call for a Canadian recession this year.

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tap here to see other videos from our team. Try refreshing your browser, or Canada is already in a recession, says Bank of America, and the loonie is set to get hammered Back to video

Data out this week showed the damage of oil’s collapse is deeper than many thought, raising fears that we are slipping into recession and speculation that the Bank of Canada will cut rates.





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Economist Emanuella Enenajor and her team now say that Canada’s economy will shrink by 0.6 per cent in the second quarter, following a 0.6 per cent contraction in the first. The definition of a recession is two consecutive quarters of contraction.

A recession sets up the Bank of Canada for another rate cut this year, said Enenajor, and she expects that the downturn will hammer the Canadian dollar — knocking it down to just under 77 cents U.S. by early 2016, the lowest level in more than a decade.

“The economy has surprised to the downside this year, and appears to have entered a recession in 1H 2015, even after policy easing in January,” she said in a note to clients.