Economic and Fiscal Overview
The government is providing the people of Ontario with a clear view into the province's finances, outlining its strategy to build a strong Ontario for both current and future generations.
Despite a strong start to 2023, Ontario, like other jurisdictions, is not immune to heightened economic and geopolitical uncertainties, the impact of interest rate increases and a slowing global economy. The impacts of high inflation and the Bank of Canada’s rapid interest rate increases are weighing on Ontario’s economic outlook for the remainder of this year, and into next.
Economic Outlook
Ontario’s economy continued to grow in the first half of 2023, supported by strength in the job market. Over the first nine months of the year, employment in Ontario increased by more than 170,000, concentrated in full-time and private-sector positions.
Ontario’s real GDP is projected to grow by 1.1 per cent in 2023, 0.5 per cent in 2024, 2.0 per cent in 2025 and 2.8 per cent in 2026. The Ministry of Finance’s real GDP projections continue to be set below the average of private-sector forecasts in each year for prudent planning purposes.
Fiscal Outlook
In spite of economic uncertainty and risk, Ontario remains committed to balancing the budget.
Ontario’s 2023–24 deficit is projected to be $5.6 billion. Over the medium term, the government is forecasting a deficit of $5.3 billion in 2024–25 and a surplus of $0.5 billion in 2025–26. The 2023–24 total revenue outlook is $201.8 billion, $2.6 billion lower than projected in the 2023 Budget and the 2023–24 First Quarter Finances. The decrease in the revenue forecast in 2023–24 is mainly due to lower taxation revenues. The 2023-24 total expense outlook is projected to be $206.4 billion, $1.7 billion higher than both the 2023 Budget and the 2023–24 First Quarter Finances. This increase is primarily due to a $2.5 billion top-up of the Contingency Fund to provide greater flexibility in the fiscal plan to help protect against unforeseen changes and mitigate expense risks.
The government will continue to be open and transparent about the state of Ontario’s finances through the release of regular fiscal updates. The government will work to preserve the fiscal flexibility necessary to respond to unforeseen events and support a long-term plan that will enhance transparency and accountability, invest in the future of Ontario, and help protect the province against potential economic challenges.