Central 1 Credit Union

Central 1 Credit Union

March 30, 2010 07:00 ET

Central 1 Credit Union: Ontario's Economy Rebounds This Year, With Moderate Growth Through 2014

MISSISSAUGA, ONTARIO--(Marketwire - March 30, 2010) - Ontario's economy will rebound this year before settling into a moderate growth path through to 2014, according to the first Ontario economic forecast by Central 1 Credit Union. The economy will grow by 3.0 per cent in 2002 dollars this year and by an average 2.7 per cent annually after that to 2014.

"The province's economic recovery is underway and spreading to more sectors and industries," said Central 1's Chief Economist, Helmut Pastrick. "The rebound from the recession's low point results in an above-trend growth performance in 2010, but growth will slow to 2.3 per cent next year before gaining some momentum through to 2014."

The U.S. economic recovery will help to lift Ontario's exports, led by auto-related manufacturing, but the rising Canadian currency results in little improvement in the trade sector, leaving the domestic economy to generate most of the predicted growth. Policy stimulus winds down in 2011 and the private sector becomes the sole engine of growth.

Ontario's unemployment rate will stay high this year, averaging 8.7 per cent, but ultimately declining to below 6.0 per cent in 2014.

Consumer price inflation is seen rising to 2.2 per cent this year from 0.3 per cent in 2009. Higher energy prices are the main reason, but the HST will trigger a one-time increase.

Business investment spending is usually the last sector to recover after a recession and the first gain here will not occur until 2011. Machinery and equipment investment climbs at a double-digit pace in 2011 and 2012, but non-residential construction lags until 2012.

Construction will generate the highest rate of job growth of any industry in the forecast period. Residential and government-funded construction will be the main sources of growth this year and next, supported by rising private non-residential construction in 2012 to 2014.

Forestry and related manufacturing also turns up rather sharply in the forecast period from its low base in 2009 base, in response to higher demand in the U.S. and other export markets.

Mining and related manufacturing also rebounds in 2010 from last year's poor demand environment and labour-management disputes that affected supply. Metals prices are well up from their recession lows and consumption demand is firming, and in some cases increasing.

Finance, insurance, and real estate will see growth on the strength of greater domestic demand lifting interprovincial exports, which will maintain the domestic trade surplus in this sector.

Contact Information

  • Central 1 Credit Union
    Helmut Pastrick
    1-800-661-6813, ext. 5026