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Ontario’s economy to slow for the next three years, according to Economic Outlook 2019 to 2021

Ontario Economic Outlook 2019 – 2021

The report provides a deep dive into current economic trends; predicts economic slowdown largely attributed to external factors

ONTARIO, CANADA, March 21, 2019 – Ontario’s economy will face slower economic growth for the next three years due to domestic and external factors, according to the latest Central 1 Credit Union (Central 1) forecast.

Central 1 Ontario Regional Economist, Edgard Navarrete, attributes the economic growth slowdown to stalls in investment spending, a decline in residential spending, a rise in the unemployment rate and a slowdown in the U.S. economy.

Real GDP (Gross Domestic Product) growth is expected to be below two per cent annually, compared to above two per cent in the prior three years. Nominal GDP growth is forecast at less than four per cent annually, compared to more than four per cent over the same period.

“Slowing domestic activity will contribute to the province’s sluggish economic performance, as well as the slowing U.S. economy,” said Navarrete.

“Exports and business investment will be lower than what we have been accustomed to in previous years, as will residential spending—an outcome of the imposed B-20 mortgage stress tests at the beginning of 2018.”

One aspect of residential investment flourishing during this period of otherwise muted activity will be renovation spending.

“Homeowners will prefer to remain in their current homes and make renovations, rather than face a mortgage stress test in order to move,” said Navarrete.

Ontario’s population increased at a robust pace in 2018, thanks to increased international and interprovincial migration and is expected to remain strong throughout 2019 at 1.8 per cent.

Services industries will outperform goods industries, remaining the primary growth driver in Ontario’s economy throughout the forecast period. Accommodation and food services are forecast to grow the fastest, with a 2.2 per cent average yearly pace over the next three years. Services industry GDP growth is seen averaging 1.7 per cent annually through 2021, compared to 1.0 per cent in goods industries.

Highlights from the report:

  • GDP growth will slow across most industries, with goods-producing industries – notably motor vehicle assembly parts and construction – undergoing greater slowdown than services-producing industries
  • While the federal government’s proposed accelerated capital cost allowance incentive increases investment spending over pre-policy levels, market realities hinder more robust spending
  • Job growth is predicted to slow to 1.4 per cent and the unemployment rate is expected to edge higher to an average of 5.7 per cent
  • Residential investment spending and sales continue to cool, an outcome of tightened mortgage regulations and reduced credit availability

Read the full Ontario Economic Outlook 2019 – 2021 report that provides a deep dive into current economic trends, the macro economic environment, population growth and employment. Visit Economic Insights for more information and insights.

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 $16.9 billion in assets, we leverage our scale, strength and expertise to power progress for more than 250 credit unions and other financial institutions, enhancing the financial well-being of more than five million customers from coast to coast. For more information, visit www.central1.com.

Contacts

Sarah Roberts
Communications Specialist, Central 1
T 604.714.6722 E sroberts@central1.com or communications@central1.com