Ontario's economic outlook remains bright despite slow start to 2015

Setbacks expected to be temporary

OTTAWA, May 28, 2015 /CNW Telbec/ - Reminiscent of last year, the Ontario economy got off to a slow start this year. The weakness, however, will be temporary, as economic growth should pick up in the coming quarters. Overall, real gross domestic product (GDP) is forecast to expand by 2.6 per cent in 2015 and 2.3 per cent in 2016, according to The Conference Board of Canada's Provincial Outlook: Spring 2015.

"Ontario has not performed up to expectations, but the outlook over the short term remains positive, as strength in the United States economy will help bolster the province," said Marie-Christine Bernard, Associate Director, Provincial Forecast. "Along with exports, consumer spending will continue to increase at a good pace in Ontario, fuelled by improving consumer confidence."

HIGHLIGHTS

• Ontario's economy started the year on a soft note, but a strong U.S. economy is expected to spur better gains over the rest of 2015 and in 2016.
• The province's real GDP is expected to increase by 2.6 per cent in 2015, with growth easing to 2.3 per cent next year.
• Overall, economic growth will be strongest in Central Canada, British Columbia, and Manitoba over the near term, as Alberta and Saskatchewan continue to struggle with the impact of lower oil prices.

The drop in exports at the beginning of 2015 was caused mainly by a temporary halt in production at the Windsor and Oakville motor vehicle plants. As these plants reopen, international exports will rebound and are expected to grow by a strong 3.9 per cent this year, boosted by a lower Canadian dollar and a U.S. economy that is set to post robust growth.

However, a recent announcement by General Motors that it will let go 1,000 workers at its Oshawa plant by the end of the year weakens the manufacturing and exports prospects heading into 2016. Production at the plant will be hurt as assembly of the next-generation Camaro is moved to Michigan.

West of Ontario, the economic forecast is influenced by weaker oil prices. Following a modest contraction this year, Alberta's economy will see modest growth in 2016, and a similar story is unfolding in neighbouring Saskatchewan. British Columbia and Manitoba, however, are expected to be growth leaders over the next two years. British Columbia will hold the top spot this year, with growth of 3.1 per cent. Manitoba is expected to post real GDP growth of 2.8 per cent in 2015 and again in 2016, when it will lead all provinces.

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SOURCE Conference Board of Canada

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