Slow Path to Full Recovery Continues in Ontario: Ontario’s Two-Year Outlook—December 2020

This quarterly economic forecast for the province of Ontario examines the economic outlook for the province, including gross domestic product (GDP), output by industry and labour market conditions.

Document Highlights

  • Real GDP will decline by 6.4 per cent in 2020 but rise by 5.2 per cent in 2021.
  • Many pieces of data indicate that growth will be strong in the third quarter.
  • The province has done much better at handling the second wave of the pandemic, which sets the province up for a better-than-average fourth quarter.
  • Economic growth will slow significantly in the first half of 2021 as industries that require a vaccine remain below pre-pandemic levels.
  • Government programs have supported household incomes, though much of that income support has been directed to savings. Thus there is upside risk to household spending over the next year.
  • Investment will struggle in 2020, but project-based investment (including work on the Darlington and Bruce power plants), combined with strong housing starts, means investment will be solid in 2021 and 2022.
  • An already high level of debt and a large COVID-19–related deficit means government spending will be restrained in the outer years of the medium term.