Ontario to release 2021 economic outlook and fiscal review
Ontario’s provincial government will release its 2021 Economic Outlook and Fiscal Review today.
Ontario, Canada’s largest province by population, generates almost 40% of the country’s economic output. After an initial period of economic recovery from COVID-19, the Canadian economy unexpectedly contracted last quarter.
Amid fears that supply chain issues and a potential fourth wave of COVID-19 cases could further set back or at least delay the economic recovery, the Liberal-controlled federal government announced another $7.4 billion in economic support and stimulus this week. Ontario’s Progressive Conservative government under Doug Ford is likely to follow suit.
These moves will have major fiscal consequences for Ontario’s bottom line. The budget deficit for the province in 2021-22 alone is currently projected at $32.4 billion. Ford has also not yet fulfilled his promise to cut income taxes—which he will likely make a push for before provincial elections in mid-2022—a move that will exacerbate this deficit.
The measures may spur provincial economic growth, thus helping kick federal economic growth back into gear and pulling the national economy out of its rut. However, it is unlikely that Ontario’s deficit will be meaningfully reduced by the provincial government’s measures at all.
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