TORONTO, March 19, 2013 /CNW/ - Ontario's economic momentum is expected
to be restored this year as the fiscal uncertainty surrounding its top
trading partner - the United States - continues to lift, according to
the latest RBC Economics Provincial Outlook issued today. RBC anticipates provincial real GDP growth of 1.6 per
cent in 2013, slightly below the national average of 1.8 per cent.
"Although Ontario kicked-off 2013 with little more than a breeze in its
sails, we expect the provincial economy to keep forging ahead," said
Craig Wright, senior vice-president and chief economist, RBC. "Rising
U.S. demand for the province's exports, and a slightly weaker Canadian
dollar will boost Ontario's trade performance, though slowing domestic
sectors such as residential investment will somewhat curb overall
growth in the province."
The Outlook notes that in the second half of 2012, economic activity
largely stalled in Ontario. Recent indicators, such as sales by
provincial manufacturers, wholesalers and retailers, merchandise trade
with other countries and construction activity, point to stagnation.
Much of this interference with Ontario's growth rate stemmed from
heightened uncertainty in the U.S. surrounding the looming deadline of
the so-called 'fiscal cliff', RBC says.
"Concerns that a full-blown fiscal hit would torpedo the U.S. economy
caused businesses and consumers south of the border, and in Canada, to
adopt a wait-and-see stance," noted Wright. "Averting a swan dive over
the 'fiscal cliff' removed a significant layer of uncertainty and we
expect to see a pick-up in U.S. demand for Ontario's goods and services
RBC expects strong corporate balance sheets, low interest rates and
intense competition to drive up business investment in Ontario in 2013.
Residential investment, however, will likely cool as slower home
resales that began in late-2012, start to apply downward pressure on
new home construction. RBC forecasts housing starts to drop to 58,900
units in 2013 down from 76,900 in 2012.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 8 a.m. ET today at rbc.com/economics/market/pdf/provfcst.pdf.
For further information:
Craig Wright, RBC Economics Research, 416-974-7457
Robert Hogue, RBC Economics Research, 416-974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416-842-5635