The most wide-reaching provincial economic forecast of the year, the Ontario Economic Update 2016, was released today by the Ontario Chamber of Commerce and the Credit Unions of Ontario. According to the province wide and regional data, most areas of Ontario will enjoy improving economic conditions in the coming year. Growth will be driven in part by an uptick in exports, the result of a stronger U.S. economy and a low Canadian dollar. Government fiscal policy will also be a key driver, as federal and provincial infrastructure commitments will stimulate growth across a variety of sectors.
As a result of improved employment projections, unemployment is expected to drop from its current rate of 6.9 percent to 6.3 percent by 2017 — the lowest rate since the recession. Gross Domestic Product (GDP) will grow 2.5 percent this year, followed by gains of 2.6 percent in 2016 and 3.0 percent in 2017.
Despite some encouraging statistics, the province still faces significant challenges, including the impact that low metal prices and slowing Chinese demand are having on Ontario’s mining industry and Northern Ontario. Meanwhile, interprovincial exports will be constrained by the negative fallout from the poor oil and natural gas markets that are affecting energy producing provinces such asAlberta. As such, the Ontario Chamber of Commerce is urging the Ontario government to weigh the impact of new input costs and their potential to slow down the economy.
The Ontario Economic Update 2016 also finds that Ontario’s economic growth will be distributed unevenly across its regions. Northern Ontario will post slight growth, while the central and southwestern regional economies will be the province’s main growth drivers. The housing market is a significant regional differentiator, as Toronto and Hamilton are expected to experience strong residential sales and lead residential price increases. Toronto’s housing market will continue to perform well, with prices projected to grow by 8.7 percent in 2016 to reach an average sale price of $680,000.
Key Facts and Highlights:
- Ontario’s economic performance will improve over the next two years. Growth will be driven in part by an uptick in exports, the result of a stronger U.S. economy and a low Canadian dollar. Government fiscal policy will also be a key driver, as federal and provincial infrastructure commitments will stimulate growth.
- Exports are projected to grow strongly over the coming years, from a value of $11.2 billion in 2015 to $16.5 billion in 2016 and a projected value of $20.4 billion in 2017.
- Total employment is expected to grow by 0.8 percent in 2015, before growing 1.5 percent in 2016 and 1.4 percent in 2017.
SOURCE Ontario Chamber of Commerce