TORONTO, Dec. 13, 2012 /CNW/ - Ontario's economy is set to advance at a
moderate, unspectacular speed over the next two years, according to the
latest Provincial Outlook issued today by RBC Economics Research. RBC forecasts real GDP growth
in Ontario of 2.3 per cent in 2013 and 2.6 per cent in 2014.
RBC notes that while the outlook may appear to be on par with the
province's economic status quo, there will be notable differences in
"External trade will increase its contribution to Ontario's economic
expansion - although this is, of course, contingent on the U.S. economy
staying on the rails," said Craig Wright, senior vice-president and
chief economist, RBC. "On the other hand, residential investment, which
was a powerful economic engine in the province since the start of the
recovery, will play a lesser role - in fact, we expect housing
construction to decline in 2013 and 2014."
Barring any negative economic impact that the so-called 'fiscal cliff'
could cause in early 2013, the U.S. economy is expected to strengthen
over the course of the next year, which is good news for Ontario's
economic outlook. The U.S. market accounts for nearly 80 per cent of
Ontario's international merchandise exports and is significantly
important to the province's economic performance.
After weighing on the economy each of the past ten years, net external
trade will boost provincial growth in 2013. RBC notes that progress in
this direction is already visible with Ontario's vehicle and parts
exports rising noticeably in 2012.
Additionally, Ontario's manufacturers - including producers of machinery
and equipment and of steel and tubes - will continue to benefit from
the boom in Western Canada that is providing attractive opportunities
for interprovincial exports.
RBC's Outlook notes that provincial housing activity was surprisingly
brisk in the first half of 2012. More recent data, however, indicates
that the long-awaited cooling is starting to take shape and will
ultimately translate to a decline in new home construction in the
In terms of fiscal restraint, little change is expected at both the
federal and provincial levels. RBC believes this will continue to be a
drag on Ontario's growth prospects.
"At $12.9 billion and projected to reach $14.4 billion in fiscal 2012,
Ontario's provincial deficit represents a tough dragon to slay over the
medium-term," explained Wright. "The challenges will be similarly
daunting at the federal level, leaving fiscal restraint a necessary
focus of public administration in Ontario."
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 more information, please contact:
Craig Wright, RBC Economics Research, 416 974-7457
Robert Hogue, RBC Economics Research, 416 974-6192
Elyse Lalonde, Corporate Communications, RBC Capital Markets, 416 842-5635