Underperforming Economy Since 2003
Ontario’s economy has underperformed over the last 16 years. The province’s real GDP growth trailed the national average in 12 of the 16 years from 2003 to 2018. This contributed to slower employment and disposable income growth in Ontario compared to Canada as a whole.
The provincial economy now faces a number of challenges, including:
- Regional imbalances;
- Uneven growth among sectors;
- Underinvestment by businesses in machinery and equipment;
- High household and government debt levels;
- Deteriorating housing affordability;
- Elevated income inequality; and
- Underutilized labour.
These weaknesses represent a significant challenge for the province’s future prosperity and have heightened its vulnerability to a global economic slowdown.
Creating a Positive Economic Environment
Ontario’s Government for the People is supporting economic growth by creating an environment in which businesses can thrive, grow and create good jobs. Real GDP grew by 2.2 per cent in 2018.
The progress is also reflected in the labour market. Since June 2018, 132,000 net new jobs have been created, with 112,400 of those in the private sector. In the last six months alone, Ontario’s employment has increased at the strongest pace since January 2003.1 In addition, Ontario’s unemployment rate declined to 5.6 per cent in 2018, its lowest annual rate since the late 1980s.
Household indicators also show promising signs over the second half of 2018, with gains in employment, income and retail sales. Business indicators are holding steady, despite significant headwinds due to global economic uncertainty and financial market volatility, which have adversely affected business confidence.
Growing the Economy
Ontario’s economy is expected to grow at a steady pace over the 2019 to 2024 period, moderating from recent years mainly due to a less supportive external environment. A summary of Ontario’s economic outlook is presented in Table 2.1.
|Real GDP Growth||2.3||2.8||2.2||1.4||1.6||1.5||1.9||1.9||1.8|
|Nominal GDP Growth||4.4||4.1||3.4||3.4||3.4||3.2||3.6||3.9||3.9|
Table 2.1 Footnotes:
p = Ontario Ministry of Finance planning projection based on information up to March 8, 2019.
Sources: Statistics Canada and Ontario Ministry of Finance.
The Ontario Ministry of Finance regularly consults with private-sector economists and continually tracks their forecasts to inform the government’s planning assumptions. Private-sector economists are projecting continued but slower growth for Ontario over the forecast horizon. On average, forecasters expect real GDP growth of 1.8 per cent in 2019, 1.7 per cent in 2020, 1.6 per cent in 2021 and an average of 2.0 per cent from 2022 to 2024. For fiscal planning, prudent assumptions have been used, with the Ontario Ministry of Finance’s real GDP growth projections set below the average of private-sector forecasts in each year. More prudence was applied to the 2019 planning assumption because private-sector forecasters are expected to lower their growth outlook as a result of weaker-than-expected national growth at the end of 2018.
|BMO Capital Markets (March)||1.7||1.6||–||–||–||–|
|Central 1 Credit Union (February)||1.8||1.7||1.4||2.0||–||–|
|CIBC Capital Markets (January)||2.0||1.4||–||–||–||–|
|The Conference Board of Canada (February)||2.1||2.0||2.0||1.9||1.9||1.7|
|Desjardins Group (February)||2.0||1.6||0.3||1.5||2.0||–|
|Laurentian Bank Securities (February)||1.5||1.7||–||–||–|
|National Bank of Canada Financial Markets (February)||1.6||1.6||–||–||–||–|
|Quantitative Economic Decisions, Inc. (February)||1.5||2.0||2.0||2.0||1.8||1.7|
|Royal Bank of Canada (December)||1.9||1.3||–||–||–||–|
|Stokes Economics (January)||1.6||1.6||1.9||2.2||2.1||1.9|
|TD Bank Group (December)||1.8||1.7||–||–||–||–|
|University of Toronto (February)||2.0||1.9||2.2||2.3||2.3||2.2|
|Private-Sector Survey Average||1.8||1.7||1.6||2.0||2.0||1.9|
|Ontario’s Planning Assumption||1.4||1.6||1.5||1.9||1.9||1.8|
Table 2.2 Footnotes:
Source: Ontario Ministry of Finance Survey of Forecasters (March 1, 2019).
Global Economic Context
Developments in the global economic environment can have a significant impact on Ontario. Forecasts for key external factors are summarized in Table 2.3. These are used as the basis for the Ontario Ministry of Finance’s forecast for economic growth in the province.
|World Real GDP Growth (Per Cent)||3.8||3.7e||3.5||3.6||3.6||3.6||3.6||–|
|U.S. Real GDP Growth (Per Cent)||2.2||2.9||2.5||1.8||1.8||1.9||2.1||2.1|
|West Texas Intermediate (WTI)
Crude Oil ($US per Barrel)
|Canadian Dollar (Cents US)||77.0||77.2||76.0||77.3||77.9||79.1||80.0||80.2|
|Three-Month Treasury Bill Rate1 (Per Cent)||0.7||1.4||1.8||2.2||2.5||2.7||2.8||2.8|
|10-Year Government Bond Rate2 (Per Cent)||1.8||2.3||2.1||2.6||3.3||3.5||3.6||3.7|
Table 2.3 Footnotes:
e = estimate; p = Ontario Ministry of Finance planning projection based on external sources.
Sources: IMF World Economic Outlook (October 2018 and January 2019 Update), United States Bureau of Economic Analysis, “Blue Chip Economic Indicators” (October 2018 and February 2019), U.S. Energy Information Administration, Bank of Canada, Ontario Ministry of Finance Survey of Forecasters (March 1, 2019) and Ontario Ministry of Finance.
According to the International Monetary Fund (IMF), global economic growth is expected to moderate slightly over the outlook period. This reflects weaker real GDP growth in advanced economies and a temporary slowdown in activity in emerging market economies in 2019. The IMF projects global real GDP growth to average 3.6 per cent annually over the 2019 to 2023 period, following annual gains of 3.8 per cent in 2017 and 3.7 per cent in 2018.
The U.S. economy rose by a solid 2.9 per cent in 2018, boosted by tax cuts. Over the projection period, economic growth in the United States is expected to ease as the impact of tax reform fades. Private-sector forecasters project U.S. real GDP to rise 2.5 per cent in 2019 before averaging annual gains of 1.9 per cent over the 2020 to 2024 period. Canadian real GDP growth is projected to average 1.8 per cent over the projection period.
Recent indicators point to slowing global economic growth. Real GDP growth in China was 6.4 per cent in the fourth quarter of 2018 compared to a year earlier, the weakest since early 2009. Euro area real GDP increased 1.1 per cent in the fourth quarter of 2018 compared to a year earlier, marking the slowest increase in five years. Italy’s real GDP edged down in the third and fourth quarters, putting the country in a technical recession. Several nations, including Germany and Japan, also experienced a decline in real GDP in the third quarter of 2018 as summarized in Chart 2.4. Of the countries that have reported fourth quarter 2018 real GDP results, a smaller share have recorded a decline compared to the previous quarter.
The slowdown in global growth reflects a number of factors, including elevated geopolitical tension, financial market volatility and concerns regarding growth prospects in China. Uncertainty persists surrounding trade issues between the United States and China, the United Kingdom’s exit from the European Union and the pending ratification of the Canada-United States-Mexico Agreement (CUSMA) on trade.
Oil prices moved lower in late 2018, reflecting both supply and demand factors. Private-sector economists expect oil prices to rise over the projection period from $58 US per barrel to $72 US per barrel.
In recent years, in response to strong economic growth and a tight labour market, the U.S. Federal Reserve raised its policy interest rate to contain price pressures and maintain price stability. The Bank of Canada also raised interest rates during that time. However, recent developments have led the U.S. Federal Reserve to take a more neutral stance in its monetary policy. As a result, investors currently expect the U.S. Federal Reserve to keep its policy rate unchanged over the near term. Longer term interest rates have moved lower in both the United States and Canada since October. Combined with rising short-term rates, this has led to a flattening in the yield curve (long-term minus short-term interest rates) in both countries. In the past, this has typically signalled the potential for slower economic growth. Furthermore, the current economic expansion in the United States is longer than the historical average, which is also prompting concerns for even slower growth.
Private-sector forecasters expect interest rates to rise modestly over the forecast period. The three‑month Government of Canada T-bill interest rate is projected to rise from 1.4 per cent in 2018 to 2.8 per cent in 2024. Long-term interest rates are expected to rise from 2.3 per cent in 2018 to 3.7 per cent in 2024. The Canada–U.S. exchange rate is expected to decrease from an average of 77.2 cents US in 2018 to 76.0 cents US in 2019, before gradually rising to 80.2 cents US in 2024.
Projecting Economic Growth
The Ontario Ministry of Finance is projecting Ontario real GDP to rise by 1.4 per cent in 2019, 1.6 per cent in 2020, 1.5 per cent in 2021, 1.9 per cent in 2022, 1.9 per cent in 2023 and 1.8 per cent in 2024. This forecast is slightly below the average of private-sector forecasts in each year for prudent fiscal planning. More prudence was applied to the 2019 planning assumption because private-sector forecasters are expected to lower their growth outlook as a result of weaker-than-expected national growth at the end of 2018.
|Ontario’s Planning Assumption||1.4||1.6||1.5||1.9||1.9||1.8|
Table 2.4 Footnotes:
p = Ontario Ministry of Finance planning projection based on external sources.
Sources: Statistics Canada, U.S. Bureau of Economic Analysis, “Blue Chip Economic Indicators”, Ontario Ministry of Finance Survey of Forecasters (March 1, 2019) and Ontario Ministry of Finance.
As is the case for most other advanced economies, economic growth is expected to be more subdued over the next four years than average growth over the past eight years as shown in Chart 2.5.
Ontario’s export sector is expected to be an important contributor to growth over the projection period. This reflects solid U.S. demand and a competitive Canadian dollar. Ontario real exports are forecast to rise at an average annual rate of 1.8 per cent over the 2019 to 2024 period. The signing of CUSMA has removed some of the uncertainty surrounding the trade sector that had previously weighed on the outlook. However, lingering uncertainty remains, as CUSMA has yet to be ratified by the signatory countries, and global trade tensions remain elevated.
While export-oriented industries are broadly projected to capitalize on the current economic backdrop, Ontario motor vehicle exports are expected to move lower over the forecast period due to General Motors announcing it will not produce vehicles at its Oshawa assembly plant after 2019.
Ontario’s Open for Business, Open for Jobs plan and rising export activity is expected to prompt higher business investment over the outlook period, given that Ontario’s economy is already operating near full capacity. See Chapter 1, Section D: Open for Business, Open for Jobs for more details. The industrial capacity utilization rate in Ontario is estimated to be 83.1 per cent in 2018, close to pre‑recession levels. Business investment is expected to increase at an average annual rate of 2.4 per cent over the 2019 to 2024 period.
Housing Market Activity
Residential investment is projected to decline 1.3 per cent in 2019 following a 4.7 per cent decrease in 2018. Despite these declines, activity remains at an elevated level following a period of very strong growth. Over the 2020 to 2024 period, residential construction is expected to grow moderately, supported by steady employment gains, rising incomes and strong population growth.
Ontario home resale prices stabilized at the end of 2018. Affordability continues to pose a challenge and, along with rising interest rates, is expected to dampen resale activity. Future price gains are expected to be more moderate compared with those prior to 2018. Unit sales are expected to partly recover over the 2019 to 2024 period.
Support for housing affordability will come from the government’s plan to increase the supply of housing which will help people in Ontario find the type of housing they need. See Chapter 1, Section C: Protecting What Matters Most for more details.
Growing Labour Market
Employment in Ontario grew in the second half of 2018 and into early 2019. Since June 2018, 132,000 new jobs have been created and the unemployment rate has trended lower. Employment is expected to continue to rise over the outlook period. Ontario’s employment is forecast to rise at an average annual pace of 1.1 per cent over the 2019 to 2024 period. This is expected to keep the unemployment rate historically low over the outlook period.
The average annual unemployment rate is forecast at 5.5 per cent from 2019 to 2024. Wages and salaries are expected to rise by an average of 3.9 per cent annually over the 2019 to 2024 period.
Increasing Household Spending
Strong employment gains in the second half of 2018 helped lift real household disposable income by 0.1 per cent in the third quarter and 0.6 per cent in the fourth quarter, contributing to growth in household spending.
Given the modestly rising interest rates and elevated debt levels, growth in real consumer spending has slowed since the third quarter of 2017. Over the projection period, with interest rates expected to rise moderately, consumption activity for interest-sensitive purchases is expected to weaken. Overall, total real consumption spending in Ontario is expected to grow over the next few years, in line with steady employment gains and modestly rising wages. The previously announced Low‑income Individuals and Families Tax (LIFT) Credit and the proposed Childcare Access and Relief from Expenses (CARE) tax credit, along with other relief through government policies, will help households stretch incomes further.
Weighing the Upside and Downside Risks
Ontario’s economy faces a number of risks. There are some upside risks, including the positive impact of new policies being implemented by the government. However, on balance, there are more downside risks to Ontario’s economic outlook, increasing the possibility of a slowdown.
Some of the notable risks include:
- The U.S. economy may receive a stronger than expected boost from recent tax cuts. This would benefit Ontario exporters and would likely prompt businesses to increase investment spending.
- Rising Canada Pension Plan contributions and the federal carbon tax, both of which are scheduled to increase annually, could have a more adverse impact on economic growth than reflected in current forecasts.
- The recently announced CUSMA on trade has lessened uncertainty in Ontario, but global trade tensions remain elevated. The outcome of trade negotiations between the United States and China could have ramifications for global growth and negatively impact Ontario export demand and investment.
- Ongoing global trade and geopolitical tension have heightened uncertainty and contributed to financial market volatility. This could lessen confidence and spending.
- Ontario home resale prices remain elevated, and housing affordability continues to pose a challenge. In addition, households are carrying elevated levels of debt, which leaves them more exposed to higher interest rates. This could lead to a decline in housing market activity and reduce consumer spending.
- Oil-producing provinces have recently been negatively impacted by lower oil prices and transportation constraints. There may be spillover effects to other provinces, such as Ontario, through interprovincial exports.
Table 2.5 provides current estimates of the impact of sustained changes in key external factors on the growth of Ontario’s real GDP, assuming other external factors are unchanged. The relatively wide range of estimated impacts reflects the uncertainty regarding how the economy could respond to these changes in external conditions.
|Item||First Year||Second Year|
|Canadian Dollar Depreciates by Five Cents US||+0.1 to +0.7||+0.2 to +0.8|
|Crude Oil Prices Decrease by $10 US per Barrel||+0.1 to +0.3||+0.1 to +0.3|
|U.S. Real GDP Growth Increases by One Percentage Point||+0.2 to +0.6||+0.3 to +0.7|
|Canadian Interest Rates Increase by One Percentage Point||(0.1) to (0.5)||(0.2) to (0.6)|
Table 2.5 Footnotes:
Source: Ontario Ministry of Finance.
Transparent Reporting on the Economy
The proposed Fiscal Sustainability, Transparency and Accountability Act, 2019 demonstrates the government’s commitment to enhance transparency and timeliness of public economic reporting. See Chapter 1, Section A: Restoring Fiscal Balance in a Responsible and Sustainable Manner for more details.
Based on the proposed legislation, the quarterly Ontario Economic Accounts (OEA) would be released within 45 days after the Statistics Canada release of the National Income and Expenditure Accounts. This deadline is included in the Premier and Minister’s Accountability Guarantee.
The OEA provides a comprehensive overall assessment of the performance of Ontario’s economy. Private-sector economists use this to assess the current state of the province’s economy and as a basis for updating their forecasts. The OEA forms the basis for the government’s economic and revenue forecasts, providing a key foundation for the province’s fiscal plan.In compliance with the proposed legislation, the OEA will be released according to the following schedule:
|Reference Period||Expected Statistics Canada Release of National Income and Expenditure Accounts||Corresponding deadline for release of Ontario Economic Accounts
(Within 45 days)
|May 31, 2019||By July 15, 2019|
|August 30, 2019||By October 15, 2019|
|November 29, 2019||By January 13, 2020|
|February 28, 2020||By April 14, 2020|
Details of Ontario’s Economic Outlook
Table 2.6 provides details of the Ontario Ministry of Finance’s economic outlook for the 2019 to 2024 period.
|Real Gross Domestic Product (Total)||2.8||2.2||1.4||1.6||1.5||1.9||1.9||1.8|
|Real Gross Domestic Product — Household Consumption||3.9||2.8||1.8||1.6||1.7||1.9||1.9||1.8|
|Real Gross Domestic Product — Residential Construction||1.0||(4.7)||(1.3)||1.3||2.2||2.4||1.9||1.8|
|Real Gross Domestic Product — Non-Residential Construction||1.7||(3.4)||1.3||2.6||1.5||2.0||2.1||1.5|
|Real Gross Domestic Product — Machinery and Equipment||7.9||8.6||1.3||2.6||2.8||3.4||4.2||2.6|
|Real Gross Domestic Product — Exports||1.8||2.3||1.5||1.8||1.7||2.0||2.1||2.0|
|Real Gross Domestic Product — Imports||5.1||1.7||1.2||1.8||1.6||2.0||1.9||1.8|
|Nominal Gross Domestic Product (Total)||4.1||3.4||3.4||3.4||3.2||3.6||3.9||3.9|
|Nominal Gross Domestic Product — Primary Household Income||4.7||4.4||3.5||3.6||3.8||3.9||4.2||4.2|
|Nominal Gross Domestic Product — Compensation of Employees||4.7||5.2||3.8||3.8||3.8||4.0||4.1||4.1|
|Nominal Gross Domestic Product — Net Operating Surplus — Corporations||1.8||(3.7)||4.4||1.2||2.9||3.7||4.5||3.8|
|Other Economic Indicators — Retail Sales||7.7||3.9||3.7||3.3||2.9||4.0||4.2||3.5|
|Other Economic Indicators — Housing Starts (000s)||79.1||78.7||72.8||71.5||75.1||77.4||78.7||79.3|
|Other Economic Indicators — Home Resales||(10.3)||(13.4)||4.9||1.7||1.7||0.8||2.5||2.4|
|Other Economic Indicators — Home Resale Prices||9.6||(2.7)||4.0||3.1||4.4||3.8||4.0||4.1|
|Other Economic Indicators — Consumer Price Index||1.7||2.4||1.9||2.0||1.7||1.9||2.0||2.0|
|Other Economic Indicators — Employment||1.8||1.6||1.3||1.0||1.0||1.0||1.0||1.0|
|Other Economic Indicators — Job Creation (000s)||128.0||114.0||96.0||70.0||77.0||76.0||76.0||76.0|
|Other Economic Indicators — Unemployment Rate (Per Cent)||6.0||5.6||5.5||5.5||5.5||5.5||5.5||5.5|
|Key External Variables — U.S. Real Gross Domestic Product||2.2||2.9||2.5||1.8||1.8||1.9||2.1||2.1|
|Key External Variables — WTI Crude Oil ($ US per Barrel)||51.0||65.0||58.0||61.0||61.0||64.0||67.0||72.0|
|Key External Variables — Canadian Dollar (Cents US)||77.0||77.2||76.0||77.3||77.9||79.1||80.0||80.2|
|Key External Variables — Three-Month Treasury Bill Rate1||0.7||1.4||1.8||2.2||2.5||2.7||2.8||2.8|
|Key External Variables — 10-Year Government Bond Rate2||1.8||2.3||2.1||2.6||3.3||3.5||3.6||3.7|
Table 2.6 Footnotes:
Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Canadian Real Estate Association, Bank of Canada, United States Bureau of Economic Analysis, “Blue Chip Economic Indicators” (October 2018 and February 2019), U.S. Energy Information Administration and Ontario Ministry of Finance.
Changes to Ontario’s Economic Outlook
Ontario’s real GDP growth was 2.2 per cent in 2018, higher than the 2.0 per cent projected at the time of the 2018 Ontario Economic Outlook and Fiscal Review. The outlook over the 2019 to 2021 period has moved slightly lower compared to the projections in the 2018 Ontario Economic Outlook and Fiscal Review.
Key changes since the 2018 Ontario Economic Outlook and Fiscal Review include:
- Lower real GDP growth in 2019 and 2020; and
Lower nominal GDP growth from 2018 to 2020.
|Real Gross Domestic Product||2.0||2.2||1.8||1.4||1.7||1.6||1.5||1.5|
|Nominal Gross Domestic Product||3.8||3.4||3.8||3.4||3.5||3.4||3.2||3.2|
|Housing Starts (000s)||75.0||78.7||71.1||72.8||72.0||71.5||71.4||75.1|
|Primary Household Income||4.4||4.4||3.7||3.5||3.9||3.6||3.8||3.8|
|Compensation of Employees||4.8||5.2||4.0||3.8||4.1||3.8||3.9||3.8|
|Net Operating Surplus — Corporations||0.6||(3.7)||3.4||4.4||3.0||1.2||4.7||2.9|
|Job Creation (000s)||107.0||114.0||87.0||96.0||72.0||70.0||58.0||77.0|
|Consumer Price Index||2.5||2.4||2.1||1.9||2.0||2.0||1.6||1.7|
|Key External Variables — U.S. Real Gross Domestic Product||2.9||2.9||2.6||2.5||1.8||1.8||1.8||1.8|
|Key External Variables — WTI Crude Oil
($ US per Barrel)
|Key External Variables — Canadian Dollar
|Key External Variables — Three-Month Treasury Bill Rate1 (Per Cent)||1.4||1.4||2.1||1.8||2.5||2.2||2.6||2.5|
|Key External Variables — 10-Year Government Bond Rate2 (Per Cent)||2.3||2.3||2.8||2.1||3.3||2.6||3.4||3.3|
Table 2.7 Footnotes:
p = Ontario Ministry of Finance planning projection.
Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Bank of Canada, U.S. Energy Information Administration, United States Bureau of Economic Analysis, “Blue Chip Economic Indicators” (October 2018 and February 2019) and Ontario Ministry of Finance.
Chart 2.1: Ontario Growth Lagged Canada in 12 of the Past 16 Years
The bar chart illustrates real gross domestic product (GDP) growth for Ontario and Canada for the period 2003 to 2018. Ontario’s economic growth has lagged that of Canada in every year since 2003 with the exception of 2015, 2016 and 2018.
Sources: Statistics Canada and Ontario Ministry of Finance.
Chart 2.2: Strengthening Labour Market
The chart depicts the employment level and the unemployment rate in Ontario from January 2017 to February 2019. Since June 2018, Ontario has added 132,000 net new jobs, with 112,400 of them in the private sector. At the same time, the unemployment rate has declined 0.2 percentage points to 5.7 per cent in February 2019.
Source: Statistics Canada.
Chart 2.3: Signs of Positive Growth
The bar chart depicts different signs of positive growth in Ontario during the first half and the second half of 2018. Average weekly earnings increased 1.4 per cent in the first half of 2018 and 1.3 per cent in the second half of 2018. Employment increased 0.4 per cent in the first half of 2018 and 1.0 per cent in the second half of 2018. Retail sales rose 1.2 per cent in the first half of 2018 and 2.7 per cent in the second half of 2018.
Source: Statistics Canada.
Chart 2.4: Global GDP Growth in 2018
This bar chart shows the number of countries that recorded an increase or decrease in real gross domestic product (GDP) compared to the previous quarter; as well as those that recorded no growth or were in a technical recession. The chart presents data on a quarterly basis and covers the period over the first quarter of 2018 to the fourth quarter of 2018.
In the first quarter of 2018, of the 45 countries reported by the Organisation for Economic Co-operation and Development, 42 had real GDP increase and three had declines (Japan, Ireland and South Africa).
In the second quarter of 2018, 42 countries had real GDP increases, two had declines (Mexico and Argentina) and South Africa declined for a second consecutive quarter and was classified as in a technical recession.
In the third quarter of 2018, 37 countries had real GDP increases, seven had declines (Japan, Germany, Italy, Switzerland, Sweden, Turkey and Iceland). Real GDP in Argentina declined for a second consecutive quarter and was classified as in a technical recession.
In the fourth quarter of 2018, of the 40 countries that have so far reported GDP, 36 countries had real GDP increases. Greece real GDP declined in the quarter and Germany had no growth. Turkey and Italy were classified as in technical recessions.
Source: Organisation for Economic Co-operation and Development (OECD).
*Only 40 of 45 countries have reported GDP for the fourth quarter of 2018.
Chart 2.5: Slowing Economic Growth
The bar chart illustrates average annual real GDP growth for China, Germany, U.S., Canada and Ontario over the 2010 to 2018 period and the 2019 to 2023 period. Average annual real GDP growth is projected to slow across all these regions over the 2019 to 2023 period. Real GDP is projected to slow from an annual average growth of 7.8 per cent over the 2010 to 2018 period, to 6.0 per cent over the 2019 to 2023 period in China, 2.1 per cent to 1.4 per cent in Germany, 2.2 per cent to 2.0 per cent in the U.S., 2.2 per cent to 1.8 per cent in Canada and 2.3 per cent to 1.8 per cent in Ontario.
Sources: IMF World Economic Outlook (October 2018 and January 2019), U.S. Bureau of Economic Analysis, “Blue Chip Economic Indicators” (October 2018 and February 2019), Statistics Canada, Ontario Ministry of Finance, and Ontario Ministry of Finance Survey of Forecasters (March 1, 2019).
Chart 2.6: Solid Business Investment Growth Projected
This bar chart shows average annual growth of real GDP and its components over the 2019 to 2024 period. The overall economy is projected to average real GDP growth of 1.7 per cent over the 2019 to 2024 period. Over this period, average annual growth is estimated at 1.8 per cent for household spending, 1.5 per cent for government, 1.3 per cent for residential investment, 2.4 per cent for business investment, 1.8 per cent for exports and 1.7 per cent for imports.
Notes: Government includes investment and consumption expenditure. Business investment includes non-residential construction, machinery and equipment and intellectual property products.
Source: Ontario Ministry of Finance.
Chart 2.7: Housing Market
The first bar chart on the left shows historical annual growth in Ontario home resales from 2010 to 2018 and projected growth from 2019 to 2024. Ontario home resales are projected to rise by 4.9 per cent in 2019, 1.7 per cent in 2020, 1.7 per cent in 2021, 0.8 per cent in 2022, 2.5 per cent in 2023 and 2.4 per cent in 2024.
The second bar chart shows historical annual growth in Ontario home resale prices from 2010 to 2018 and projected growth from 2019 to 2024. Ontario home resale prices are projected to rise by 4.0 per cent in 2019, 3.1 per cent in 2020, 4.4 per cent in 2021, 3.8 per cent in 2022, 4.0 per cent in 2023 and 4.1 per cent in 2024.
p = Ontario Ministry of Finance planning projection; Sources: Canadian Real Estate Association, Ontario Ministry of Finance Survey of Forecasters (March 1, 2019) and Ontario Ministry of Finance.
Chart 2.8: Employment Gains Expected to Continue
This bar chart shows historic Ontario employment gains in 2018 and annual projections from 2019 to 2024. Ontario employment rose by 114,400 in 2018. The Ontario Ministry of Finance projects employment will increase by 96,400 in 2019, 70,400 in 2020, 77,000 in 2021, 75,500 in 2022, 75,600 in 2023 and 76,400 in 2024.
p = Ontario Ministry of Finance planning projection; Sources: Statistics Canada and Ontario Ministry of Finance.
Chart 2.9: Household Spending Growth to Moderate
This bar chart shows historical annual growth of Ontario real household disposable income and real household spending in 2017, estimated growth in 2018 and projected growth from 2019 to 2024.
In 2017, Ontario real household disposable income grew by 3.5 per cent and real household spending increased 3.9 per cent. In 2018 real household disposable income grew by 3.0 per cent and real household spending by 2.8 per cent. The Ontario Ministry of Finance projects real household disposable income will grow by 2.1 per cent in 2019, 1.8 per cent in 2020 and 2021, 1.9 per cent in 2022, 2.2 per cent in 2023 and 2.1 per cent in 2024. The Ontario Ministry of Finance projects real household spending will grow by 1.8 per cent in 2019, 1.6 per cent in 2020, 1.7 per cent in 2021, 1.9 per cent in 2022 and 2023 and 1.8 per cent in 2024.
p = Ontario Ministry of Finance planning projection;
Sources: Statistics Canada and Ontario Ministry of Finance.
-  As of February 2019, the most current data available at the time of finalizing the 2019 Ontario Budget.