Central 1 Credit Union’s Ontario Economic Forecast 2012-2015

Central 1 Credit Union
Art Chamberlain
Media Relations Manager

Central 1 Credit Union
Helmut Pastrick
Chief Economist

Ontario to Have Moderate Growth Through 2015, Slow Improvement in Unemployment, Central 1 Forecasts

Toronto, Ontario, Marketwire Feb. 16, 2012 – Ontario’s economic prospects for the next three years include moderate growth and continued high unemployment as government spending is cut and businesses expand carefully, according to the Ontario Economic Forecast, 2012-2015, released today by Central 1.

For the first half of this year, Ontario’s economy will grow more slowly than in 2011, but a strengthening U.S. market will help later this year and for the next three years, says a forecast by Helmut Pastrick, chief economist for Central 1 Credit Union, the trade association for credit unions in Ontario and British Columbia.

Pastrick forecasts overall real GDP growth in 2012 of 2.3 per cent, the same as last year, picking up to 2.8 per cent in 2013. Growth eases in 2014 to 2.2 per cent and moves up to 3.2 per cent in 2015.

The unemployment rate will decline from 7.8 per cent in 2011 to 7.5 per cent this year, fall below 7 per cent in 2013 and decline to 6 per cent in 2015.

“There are considerable risks factors for Ontario in the next few years, from a higher dollar to turmoil in Europe,” Pastrick said. “With the government focused on cutting its deficit and consumers restrained by modest income growth and high debt, growth will have to rely on business investment and exports.”

The good news on that front is that Ontario’s largest market, the U.S., appears to be recovering from the recession so demand for Ontario products will grow. Global economic growth will slow in 2012 and pick up in 2013, gaining strength in 2014 and 2015 led by the U.S.

Ontario’s trade deficit, which emerged in 2008, remains the largest drag on growth, the report says. “No material improvement in the trade deficit is expected through to 2015 since the growth in exports is generally matched by imports.”

A return to higher export growth needs not just a more robust U.S. economy but a substantial competitive edge in production costs, new product innovations or new market, the report says.

“House prices will continue to rise, but fears of a bubble are overblown,” Pastrick said. “Some people confuse high prices and poor affordability with overvaluation and an inevitable price correction. However, market supply and demand factors are behind the long-term uptrend in housing prices and while price corrections occur when the economy falls into recession, the long-term uptrend will remain intact.”

Consumer price inflation will drop below 2 per cent this year, after surging to 3.1 per cent in 2011, due to rising energy and food prices. Inflation will gradually begin to rise and tops 2 per cent in 2014 and 2015 due to a tighter labour market and higher commodity prices.

The full report Ontario Economic Forecast 2012-2015 is available here: 2012_ont01.pdf.

About Central 1
Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Central 1 represents a consumer-oriented, full-service retail financial system that serves 2.9 million members and holds about $80 billion in assets and is owned primarily by its member credit unions, 45 in B.C. and 105 in Ontario.

With offices in Vancouver, Mississauga, and Toronto, Central 1 provides a wide range of services such as liquidity management, direct banking, and flexible payment service solutions. For more information, visit

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