Ontario’s economic outlook for the year suggests that a recession may be avoided, according to the province’s Financial Accountability Office (FAO). However, the latest report indicates that the ongoing trade war with the United States is negatively impacting Ontario’s economy.
The report from the FAO provides insights into Ontario’s economic challenges from April to September, particularly following the implementation of tariff policies by U.S. President Donald Trump. It emphasizes the decline in Ontario’s manufacturing sector, which has seen a loss of around 20,600 jobs over the past two years, facing additional pressure due to the trade conflict.
Ontario’s real gross domestic product (GDP) experienced a 0.6% decrease in the second quarter of the year, primarily attributed to a significant drop in exports and a sharp decline in business investment, as highlighted in the report.
FAO officer Jeffrey Novak stated that the report underscores the current period of weak economic growth in Ontario due to various factors affecting the economy. The projections for the third quarter suggest that Ontario may avoid a “technical recession,” characterized by two consecutive quarters of GDP decline. Despite the overall stability in the economy, fluctuations in job losses and improvements in retail and manufacturing sales could impact the outcome.
The report also addresses the rising challenges in the manufacturing industry, citing factors such as supply chain disruptions, pandemic-related shutdowns, shipping issues, and auto plant retoolings contributing to job losses. The share of manufacturing jobs in Ontario’s workforce has dropped below 10% for the first time since 1976, according to the FAO.
Regarding unemployment, Ontario’s rate stood at 7.8% between April and September, with a notable increase in long-term unemployment exceeding 28% of jobless individuals. The report highlights a rise in youth unemployment to 16.8%, the highest rate since 2012, excluding the pandemic.
Finance Minister Peter Bethlenfalvy dismissed the report’s findings as outdated, emphasizing the government’s efforts to support Ontario’s economy. While the FAO projects a 0.9% growth rate for Ontario in 2025, exceeding the province’s earlier estimates, opposition leaders have criticized the government’s response to the economic challenges, particularly in addressing the impact of tariffs on the province.
NDP Leader Marit Stiles and Liberal parliamentary leader John Fraser expressed concerns over the government’s approach to economic recovery, with calls for more effective measures to stimulate job growth and address the economic downturn. Green Party Leader Mike Schreiner emphasized the need for a comprehensive industrial strategy focusing on sectors like electric vehicle manufacturing and renewable energy to create employment opportunities in the province.