Despite economic challenges, Ontario is expected to see continued growth
On Monday, February 12, 2024, the government released the 2023–24 Third Quarter Finances, to provide an update on Ontario’s economic and fiscal outlook since the release of the 2023 Ontario Economic Outlook and Fiscal Review (also referred to as the Fall Economic Statement, or FES).
While inflation-related pressure has eased slightly across the province, high interest rates and unpredictable consumer price inflation continue to pose risks to the province’s economic outlook. In spite of this, Ontario’s economy is expected to see continued growth in 2024.
“Ontario’s economy is continuing to grow, largely driven by the hardworking people in every corner of this province,” said Peter Bethlenfalvy, Minister of Finance. “As this year unfolds, our government will continue to take a prudent, responsible approach to managing Ontario’s finances, ensuring there is capacity to respond to economic headwinds while continuing to invest in building Ontario’s future.”
Real GDP growth has been slowing, in part due to the impact of higher interest rates. Following a 0.4 per cent increase in the second quarter of 2023, Ontario’s real GDP was unchanged in the third calendar quarter of 2023.
The 2023–24 Third Quarter Finances projects a deficit of $4.5 billion in 2023–24, an improvement of $1.1 billion compared to the outlook published in the 2023 Fall Economic Statement. The improvement to the deficit is primarily due to increased revenue and lower interest on debt expense. The 2023 Budget published in March 2023 projected a deficit of $1.3 billion.
The outlook for revenue in 2023–24 is projected to be $202.7 billion, $0.9 billion higher than forecast in the 2023 FES. Increases in revenues since the 2023 Ontario Economic Outlook and Fiscal Review mainly reflect stronger than expected Broader Public Sector revenues, slightly higher taxation revenue and transfers from the Government of Canada.
Overall program expense in 2023–24 is projected to be $193.4 billion, $0.4 billion higher than forecast in the 2023 FES. Increases in program expense since the 2023 FES are primarily due to expense commitments for the health sector and support for the City of Toronto. New commitments announced since the release of the 2023 FES are primarily funded through third-party revenues, lower-than-expected spending and existing contingencies within the fiscal plan.
The government plans to provide its next update by March 31, 2024 as part of the 2024 Budget.