Ontario has been coping with a rising debt burden for years.
But since the recession, the province has also been handcuffed by a soft economy, says Avery Shenfeld, chief economist of CIBC World Markets in a new report. “Earlier in this cycle, the province [even] judged that more abrupt cuts in spending or broader tax hikes would have risked taking the economy off course from what was still a fragile recovery.”
Now, however, the tables have turned. Shenfeld says, “It’s time to tackle deficit reduction head on. The signposts are emerging that the province, while not yet at full employment, is on a much sounder footing, [and] running well ahead of the pack.”
He adds, “A fiscal tightening will still be a drag on growth. But for 2015, there are some nice tailwinds: cheaper gasoline will provide a cushion for household spending, [while] a Canadian dollar closer to fair value should be supportive for exports. And, over time, [will] help the province defend its existing plants and attract new ones.”
Read more on why Shenfeld’s optimistic about Ontario’s economy.
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