Ontario Economic Forecast for 2010

As a business wholly located in Ontario we focus on the economy of our province in conjunction with developments throughout North America.  The latest reports from CIBC show that Ontario’s economy is predicted to outpace the national average this year but the confidence remains fragile due to to a high Canadian dollar, weak U.S. growth. 2009 (like so many places) was not the year we’d like to repeat but the green shoots of change were evident in Q3 last year.  That continued growth projects that Ontario will have growth at a rate above the national average for the first time since 2002.  This ‘return to form’ will be welcomed throughout Ontario as historically it was a region that defined growth for Canada however the changes in the value of the Canadian Dollar had seen a negative impact in recent years. In addition Ontario has an economy in the midst of change and realignment from manufacturing to far more positions in the service sector.

The reliance on manufacturing is less weighted than previously however it keeps the recovery tied to a degree with the strength of manufacturing orders. While the forecasts aren’t exceptional it’s forecast that GDP will reach  2.4% in 2010 and 2.8% the following year. Changes in the exchange rate can make these predictions volatile. On the positive side changes in sales tax and cuts to corporate tax make Ontario businesses more competitive for attracting new jobs and investment.  The transition to service sector employment can be expected to continue and the labour force (still running at 9.2% unemployment) is in place to fill those gaps. Anticipated growth in banking and financial services may dominate that expansion. Through the remainder of Canada the forecast is mixed however upward growth is essentially a benchmark for each province.

The strongest include Saskatchewan in 2010 with GDP up to 3.0 per cent the highest in Canada.  A robust job market combined with migration and population growth that is unrivalled elsewhere. In British Columbia 2.8% growth is expected tying in the boom from the Olympics with continued gains in trading status with Asia. In a region that will welcome such news Newfoundland and Labrador can expect dramatic improvement in 2010 with GDP reaching 2.6%behind a recovery in overall output. Longer term the province is expected to almost lead the nation in growth in 2011.

Ontario remains ideally positioned to secure new business and staff it accordingly. It’s also interesting to note the six point plan being enacted by the Ontario Chamber of Commerce to better stimulate growth in 2010:

1. Stimulate economic activity by staying the course on the taxation reform package announced in last spring’s budget, where possible accelerating its implementation and further reducing personal and business taxes as a way to stimulate the economy.

2. Create a more competitive business climate through smarter regulation and less red tape keeping in mind that a dollar spent on managing red tape is a dollar less for investment and hiring new people.

3. Keep spending growth at or below the same rate as the economy.

4. Conduct an actuarial analysis of healthcare expenditures in order to facilitate long term planning and provide much needed predictability, transparency and accountability.

5. Develop a 30 year long-term transportation plan in order to plan ahead for a generation, not just five years.

6. Apply smarter and more efficient spending to all programs across the broader public sector with a mandated competitive bidding process which allows bids from both the public and private sectors.

With a watchful eye we’ll monitor developments in 2010.