News Releases

TORONTO, ONTARIO--(Marketwire - Oct. 12, 2011) - The Ontario economy has geared down after a strong post-recession rebound, with growth projected at 2.2 per cent for 2011, according to the Provincial Monitor report released today by BMO Capital Markets Economics.

"Ontario's economy has seen some positive post-recession indicators - the labour market has now recovered all of the jobs lost during the recession, and the jobless rate has fallen to 7.6 per cent from as high as 9.4 per cent in early 2009," said Robert Kavcic, Economist, BMO Capital Markets. "The housing market also remains firm thanks to extremely low interest rates and relatively tight – though increasing – supply. Average home prices have pushed ahead to record levels, while condo construction is robust."

Mr. Kavcic noted that while short-term shocks like the Japanese earthquake had a negative impact this year, longer-term challenges include sluggish U.S. demand and a long bout of fiscal restraint. "Ontario's growth is expected to slow to 1.8 per cent in 2012, in line with the national rate. A prolonged period of slow growth will continue to weigh on manufacturing and exports, offsetting any reprieve from the recently-softening loonie."

"Our commercial customers continue to show optimism about their business prospects," said Susan Brown, Senior Vice-President, BMO Bank of Montreal. "While interest rates, the loonie and the U.S. economy remain top issues for Ontario businesses, the availability of credit, and attractive investment opportunities contribute to this optimism, despite the potential challenges."

The Province of Ontario's fiscal 2010-2011 Public Accounts reported a deficit of $14.0 billion (2.3 per cent of GDP), $2.7 billion lower than estimated in this year's Budget. Nearly 90 per cent of the improvement was owing to lower program spending and the remainder was due to higher non-tax revenues. In its Q1 fiscal update, released before the Public Accounts, the Province had projected a $16.0 billion shortfall for fiscal 2011-2012 (2.5 per cent of GDP), compared to $16.3 billion in the Budget. "It is unclear how last year's significantly smaller budget shortfall will translate into the current fiscal year and beyond, and we'll find out mid-November in the Economic and Fiscal Update," said Mr. Kavcic.

The full Provincial Monitor report can be downloaded at www.bmocm.com/economics.