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Ontario economy expected to slow as consumer demand stumbles, according to new Central 1 report

New Ontario Economic Outlook Report 2018–2020

Ontario’s economy slows and is expected to grow less than two per cent annually in 2019 and 2020, according to the latest Central 1 Credit Union (Central 1) forecast.

The Ontario Economic Forecast Update 2018-2020 report looks at residential investment, employment, economic and population growth, as well as trade.

“Lacklustre trade performance, less residential investment, and restrained consumer spending are the main factors,” said Central 1’s Ontario Economist, Edgard Navarrete. Retail sales—a key  indicator of consumer spending—demonstrates subdued consumer confidence. “Consumer confidence in Ontario has slipped with retail sales growth at just 4.2 per cent, compared to eight per cent in 2017 and seven per cent in 2016,” said Navarrete.

Housing activity also shows consumer-uncertainty with residential unit sales down 17 per cent and sale price down five per cent compared to the same time last year. “Tougher mortgage rules and higher mortgage rates are making it more difficult for potential home buyers to qualify for mortgage credit,” said Navarrete.

While consumer-related activity has slowed, Navarrete said the new United States-Mexico-Canada Agreement (USMCA) will have a minimum effect on Ontario’s economy when it’s introduced in 2019. “Ontario’s dairy producers will be negatively affected, with the consolation of the phase-in period to 3.59 per cent market share and Federal compensation,” said Navarrete. Ontario consumers can expect to benefit from more choice and lower prices.

According to the report, the unemployment rate will rise from 5.6 per cent to 5.8 per cent. Job seekers will outpace jobs generated, which translates into slower personal growth income to between 3.0 and 3.5 per cent annually, down from an expected 4.8 per cent in 2018.

 Highlights from the report:

  • Growth is forecast to ease to 2.2 per cent this year, then slip to 1.8 per cent and 1.7 per cent in 2019 and 2020 respectively.
  • Consumer confidence slips as retail sales dip to just 4.2 per cent compared to eight per cent in 2017.
  • Home sales plunge on policy measures, as well the average sale price.
  • Unemployment rate is expected to rise as job seekers outpace jobs generated in Ontario.
  • Ontario continues to experience healthy population growth with high levels of immigration, above 1.5 per cent year-over-year.

Read the full report: Ontario Economic Forecast Update 2018-2020.

About Central 1

Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $19.5 billion in assets, we leverage our scale, strength and expertise to power progress for more than 300 credit unions and other financial institutions, enhancing the financial well-being of more than 3.4 million. For more information, visit www.central1.com.

Contacts

Laura McIntyre
Member & External Communications Manager
Central 1 Credit Union
T 604.737.6814 or 1.800.661.6813 ext. 6814
E communications@central1.com

Edgard Navarrete
Regional Economist
Central 1 Credit Union
T 905 282 8501 or 647 295 6356 ext. 8501
E enavarrete@central1.com