Ontario GDP growth best since 2000: RBC

Ontario’s economy has shown its best result since 2000, and is now almost entirely free of the effects of recession, according to the latest outlook from RBC Economics (available at this link).

The largest provincial economy in Canada, Ontario’s GDP is going to expand 3.3 per cent this year, RBC said, and will stay solid in the next year at 3.1 per cent.

RBC expects Ontario will move beyond a full recovery and finally enter into economic expansion phase. It points to several positive economic indicators, including the province’s employment gains this year, which accounted for 60 per cent of all jobs in created in Canada.

“Most indicators showed steady advances, which we believe are consistent with our view that the significant recession losses will be entirely recouped by the middle of this year in the province, therein opening the gate to the long-sought expansion phase thereafter,” RBC noted.

Growth of 3.4 per cent in the U.S. economy by 2012 will spur demand for Ontario products and offset any weakness in provincial capital spending, RBC also said.

The only sour note comes from the auto sector. While noting that car and truck output was up by more than 20 per cent in the first quarter of 2011 relative to a year ago, RBC said that Japan’s recent earthquake and tsunami will have a negative short-term impact on Ontario’s auto sector. “Disruptions [from Japan] will be temporary, but they will nonetheless dampen activity in the industry in the second quarter of this year,” the outlook said.

No such bad news for the housing market, however. “Housing starts have held up much better than we anticipated,” RBC said. “We previously assumed that they would slow markedly, which has prompted us to upgrade our call for the entire year. While we still expect housing starts to moderate in the second half of this year, we bumped up the forecasted units by 10,500 to 64,200 overall in 2011.”

How are the rest of Canada’s provinces faring? According to the outlook’s 2011 GDP growth projections across Canada, the Alberta economy will grow by 4.3 per cent, Newfoundland by 4.0 per cent, Saskatchewan by 3.8 per cent, Manitoba by 3.6 per cent, British Columbia by 2.6 per cent, Quebec by 2.4 per cent, Prince Edward Island by 2.4 per cent, New Brunswick by 1.9 per cent, and Nova Scotia by 1.7 per cent.