Canada PM Harper says it's a bump, not recession

Canada's Prime Minister Stephen Harper speaks at Laurel Steel on a campaign stop in Burlington, Ontario, September 1, 2015.
Fred Thornhill | Reuters

Prime Minister Stephen Harper, campaigning for a fourth term on a record of economic growth, has refused to recognize that Canada is in a recession, despite new data to the contrary.

Collapsing prices for oil — a major export — have taken their toll on Canada's economy, which has recorded its second consecutive negative quarter, the economic benchmark of a recession. It contracted at an annual pace of 0.5 percent in the second quarter and 0.8 percent in the first quarter of 2015, Statistics Canada reported Tuesday.

That could spell trouble for Harper, whose Conservative Party already faced an uphill battle ahead of the Oct. 19. election. Analysts call the three-way race a toss-up.

Read More Canada is on the brink of a 'very unusual recession'

Harper has refused to use the term recession, however, saying the economy was bouncing back after a brief bump. He pointed to 0.5 percent growth in June.

"I think it's more important to describe the reality of the situation rather than to have labels," Harper said.

Harper called Canada an "island of stability" amid rough financial waters. The country avoided the worst of the 2008 global financial crash and fared better than most nations. Unlike the U.S., Canada avoided a real estate market implosion or credit crisis.

That was before oil prices plunged, dragging down Canada's economy. Now Harper's bid to become the first Canadian leader in more than a century to win four consecutive terms is far from assured.

Read More Canada pharmacy charged in $78M drug export scheme

Harper has reminded Canadians of their recent prosperity.

"We've had a couple of weak months, but the fact of the matter is over the long haul, post the global financial crisis, Canadians know there is no better place to be," Harper said.

The Conservatives have run small deficits and are promising balanced budgets.

Since coming to power in 2006, Harper has managed to pull a traditionally center-left country to the right. He has lowered taxes and supported the oil industry, but has failed to win approval for new pipelines that would get the oil to market.

Santelli Exchange: Scary energy impact

Analysts say the left-of-center opposition New Democrats, led by Tom Mulcair, has a chance to gain power for the first time. Mulcair has moved his party to the center and vowed to balance the budget.

No matter what party wins the most seats in Parliament, analysts say a minority government is likely, meaning the winner would retain a shaky hold on power and rely on another party to pass legislation.

The campaign is the first three-way race in Canadian history. The vote on the left could split between the New Democrats and Liberals, who could form a coalition.

The opposition Liberals, who governed Canada for most of last century, said they would stimulate the economy with deficit spending on infrastructure. Opposition Liberal leader Justin Trudeau, the 43-year-old son of late Prime Minister Pierre Trudeau, said Harper refused to acknowledge the economy was in trouble and his plan was failing.

"Today it has been officially recognized what Canadians have known for a long time, that there is a need for investment," Trudeau said.