Wednesday, December 17, 2014

TD Predicting Ontario Growth of 2.5% in 2015 and 2016, Surly Hamiltonian Doubts It

Apparently TD is predicting GDP growth for Ontario of 2.5% in both 2015 and 2016 as mentioned in this Globe article, in light of recent currency and oil developments. Certainly I think oil's price drop is definitely good for Ontario as is the currency drops. However with the current fiscal year's deficit of $12.5 billion I don't see how the province can contribute much in the way of GDP growth.

More importantly I don't see the private sector doing much heavy lifting. Manufacturing has decreased so much in Ontario since the recession, that there are not the companies and plants to jump into the breech to crank up production. Private sector investment in Ontario has been low for years now. Adapting to the lower oil and currency will take time (and who knows how long they will last). Ontario could export potentially more services, but I'm skeptical. Ontario lately has been based around selling each other expensive homes, charged by low interest rates. If housing prices fail to climb in the next couple of years, that's not going to be good for the Ontario economy.

One other interesting factoid from the article:

"But there are “powerful offsets,” TD said, including the lower dollar, the Bank of Canada on the sidelines for longer given what will be lower inflation, and a boost to consumers through lower pump prices, which the bank forecasts will save the average family about $300 a year."

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