Amid another day of financial market turmoil and more bad news about the economy, the Liberal Opposition demanded in the House on Monday that Prime Minister Stephen Harper apologize to Canadians for misreading the economy.

During question period, Liberal Finance critic John McCallum quoted Harper as saying last September that "if we were going to have some kind of crash or recession, we probably would have had it by now."

"We now know he said this on the eve of the biggest contraction of the Canadian economy in almost 20 years," McCallum said. "Will the prime minister apologize to the thousands of Canadians who have needlessly lost their jobs because of his utter misreading of the Canadian economy?"

Harper said the Canadian economy contracted in the fourth quarter of 2008 as reported by Statistics Canada on Monday but that things could be much worse. (Gross domestic product shrank at an annualized rate of 3.4 per cent in the fourth quarter, Statistics Canada said Monday. Following the report, the Canadian dollar dropped on global currency markets and the S&P/TSX composite index lost more than 500 points in early trading before closing down 435.51 points at 7,687.51.)

"They should also know the American economy contracted twice as quickly; the European economy twice as quickly; the Japanese economy four times as quickly," Harper replied.

Harper said the solution to the economic woes is to quickly pass his government's budget and get stimulus money flowing.

McCallum criticized Harper for wasting precious time by calling a fall election in September and proroguing Parliament late last year rather than addressing the weakening economy, saying the delay had cost thousands of jobs.

Now Finance Minister Jim Flaherty must be ready to present a second stimulus package beyond the $40-billion earmarked in the budget, if necessary, McCallum added.

"We don't know [how bad it will get]," he said. "If you take the consensus view of economists, I don't think the recession will be as deep as the early '80s, when we had a very deep recession. But these economists don't know … so a prudent responsible government has to be ready."

NDP Leader Jack Layton also was not ready to let the government off the hook. He urged Flaherty to get the $3 billion "emergency fund" into the hands of municipalities quickly through the gas tax mechanism.

With files from the Canadian Press