Ontario’s economic outlook is brightening, businesses say

Weakening Canadian dollar and a strengthening American economy good news for Ontario’s economic outlook, says province’s largest business group.

Thestar.com
Dec. 9, 2015
By Robert Benzie

A weakening Canadian dollar and a strengthening American economy are good news for Ontario’s economic outlook, says the province’s largest business group.

The Ontario Chamber of Commerce, which represents 60,000 businesses and 135 local boards of trade, on Wednesday issued a rosy forecast for next year and 2017.

“I’m pleased to say that Ontario is looking at some improved economic conditions over the coming years,” Allan O’Dette, president and CEO of the non-partisan group, said at Queen’s Park.

“Our future economic growth will be as a result of several factors, including the strong U.S. economy that we see rebounding and, unfortunately, the lower Canadian dollar - both of which we see driving exports into the future,” said O’Dette.

“Federal and provincial infrastructure commitments should also stimulate growth across the province and across a variety of sectors,” he said.

“However, despite the relatively encouraging news ... Ontario still faces some very significant challenges, including a downturn in the mining sector in northern Ontario, which affects the entire province.”

Low commodity prices for metals and slackening Chinese demand, due to the slowdown there, have hit the north particularly hard.

Still, Helmut Pastrick, chief economist for Central 1 Credit Union, who prepared the 13-page economic update, is forecasting Ontario’s economy will grow by 2.6 per cent next year and a robust 3 per cent in 2017.

That compares favourably to Finance Minister Charles Sousa’s prediction of 2.2 per cent growth in gross domestic product for 2016 and 2.3 per cent the year after that.

“Most Ministry of Finance budgets do tend to take a conservative stance,” Pastrick said of his more optimistic assumptions.

“My 2.6 per cent is based in the newly revised data that came out from Statistics Canada, which showed Ontario’s growth in 2014 to be 2.3 per cent, which is a bit higher than I thought it would turn out to be, so I’m using that growth momentum as well,” he said.

Pastrick emphasized his analysis does not take into account the looming cap-and-trade that will create financial incentives for business to reduce the greenhouse gas emissions contributing to climate change.

The provincial government will eventually take in an additional $1.3 billion by putting a price on carbon, money businesses will likely recover by passing on new costs to consumers.

Nor does his outlook factor in the new Ontario Retirement Pension Plan that will be launched in 2017 for the two-thirds of Ontarians who lack a workplace pension.

He said details of the two ambitious programs are still too vague to weigh the impact, if any, on the economy.