Press
Lower Loonie will help Ontario’s economy, but not soon, Central 1 Credit Union forecasts
TORONTO, ON (March 18, 2014) — Ontario’s economy will remain in a modest-to-moderate growth mode for another two years until the impact of a depreciated Canadian dollar boosts international trade and business investment, according to the latest economic forecast by Central 1 Credit Union (Central 1).
“Rising exports will eventually lead to larger increases in business investment and job creation, but I don’t see that happening until 2016,” said Helmut Pastrick, Central 1’s Chief Economist.
Pastrick predicts that a trade surplus and rising corporate profits in the next two years will set the stage for more business investment and faster economic growth after 2015. The biggest change since his last forecast six months ago is the decline in the loonie.
“In this forecast I have the loonie at 87 cents U.S. If it drops further, say to 80 cents as some suggest, Ontario will enjoy even more economic expansion in 2016-18,” Pastrick said.
Key findings:
— Ontario’s economy is in a slow growth holding pattern waiting for exports to increase and stimulate business investment.
— Real gross domestic product (GDP) will rise by 1.9 per cent in 2014, 2.4 per cent in 2015, about three per cent in 2016 and more than three percent in 2017 and 2018.
— Faster U.S. growth and a lower loonie will be the main catalysts for growth.
— The labour force participation rate has been dropping. If it does not increase, Ontario will face labour shortages and considerable wage pressure by 2017.
— The housing market will remain range-bound until 2017-18 when activity upshifts with the faster growing economy.
Read the full report Ontario Economic Forecast 2014-2018 on central1.com.
About Central 1
Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Owned primarily by its member credit unions, 43 in B.C. and 90 in Ontario, Central 1 represents a consumer-oriented, full-service retail financial system that serves 3.2 million members and collectively holds $92.0 billion in assets.
With offices in Vancouver, Mississauga and Toronto, Central 1 provides liquidity management, direct banking and payment service solutions as well as a wide range of trade services. For more information, visit www.central1.com.