Ontario slips to last place on growth, says RBC Economics
TORONTO, October 13, 2006 — Ontario's economic
outlook has weakened with expected growth of 1.5 per cent
in 2006 and two per cent in 2007, according to a new provincial
forecast released today by RBC.
"Ontario's economic growth forecast has weakened and
is facing further downside risks," said Craig Wright,
vice-president and chief economist, RBC. "The economy
isn't far from being at a standstill despite the drop in natural
gas and oil prices, which should both serve to stimulate growth."
RBC notes that much of the weakness was already evident in
the first half of 2006, and more numbers on growth in retail
sales, housing starts, building permits, housing resale activity,
job growth, manufacturing shipments and exports, continue
to underperform.
According to the report, since last quarter, the U.S. housing
market has soured further, and Central Canada's has joined
this correction although not to the same magnitude. Ontario's
housing markets will be a drag on growth this year and next,
with resale prices expected to modestly soften.
Furthermore, while RBC forecasts that manufacturing will
emerge much stronger towards the end of this decade, it will
remain weak this year and next. In addition, Ontario's auto
sector awaits new production runs thanks to recent investment
announcements with production expected to stabilize in 2008.
However, the sector faces a flat outlook for the remainder
of the decade.
For the overall Canadian economy, RBC has revised its 2006
growth forecasts downward with Ontario being sharply downgraded
to last place among the provinces. Alberta and British Columbia
are now in first and second place respectively, bumping Newfoundland
and Labrador to third place for growth in 2006.
The RBC Economics Provincial Outlook assesses the
provinces according to economic growth, employment growth,
unemployment rates, personal income growth, retail sales,
housing starts, and the Consumer Price Index.
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For more information contact:
Craig Wright, RBC Financial Group Economics,
(416) 974-7457
Derek Holt, RBC Financial Group Economics,
(416) 974-6192
Beja Rodeck, RBC Media Relations,
(416) 974-5506
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