Reminiscent of last year, the Ontario economy got off to a slow start this year. The weakness, however, will be temporary, as economic growth should pick up in the coming quarters. Overall, real gross domestic product (GDP) is forecast to expand by 2.6% in 2015 and 2.3% in 2016, according to The Conference Board of Canada’s Provincial Outlook: Spring 2015.
The drop in exports at the beginning of 2015 was caused mainly by a temporary halt in production at the Windsor and Oakville motor vehicle plants. As these plants reopen, international exports will rebound and are expected to grow by a strong 3.9% this year, boosted by a lower Canadian dollar and a U.S. economy that is set to post robust growth.
However, a recent announcement by General Motors that it will let go 1,000 workers at its Oshawa plant by the end of the year weakens the manufacturing and exports prospects heading into 2016. Production at the plant will be hurt as assembly of the next-generation Camaro is moved to Michigan.
West of Ontario, the economic forecast is influenced by weaker oil prices. Following a modest contraction this year, Alberta’s economy will see modest growth in 2016, and a similar story is unfolding in neighbouring Saskatchewan.
British Columbia and Manitoba, however, are expected to be growth leaders over the next two years. British Columbia will hold the top spot this year, with growth of 3.1%. Manitoba is expected to post real GDP growth of 2.8% in 2015 and again in 2016, when it will lead all provinces.