Ontario’s waiting for growth
Ontario’s economy has been stagnant for the past 25 years when compared to our peers. Each year the data show unequivocally that Ontario lags the economic output and productivity of its US peers. Despite the general decline in the “prosperity gap” – the difference in GDP per capita between Ontario and the North American peer median – starting in 1999, the gap increased in 2012 to $8,000 from $7,500 in 2011. But it is the comparison of economic growth over time that shows how Ontario has fared worse than nearly all of the other comparators.
While Ontario was fairly close to the peer median in 1987, the province’s economic performance trended downwards since then. The only improvements in Ontario’s ranking occurred because some of its peers were hit harder by the 2008-2009 recession. From 2007 to 2010, Ontario passed Michigan and Florida in the rankings, although Michigan most recently passed Ontario and Florida is nipping at its heels. Even the advantage over Quebec is only in absolute terms: relative to the levels in 1987, Quebec has fared better than Ontario.
It turns out that, apart from the past five years, Ontario presents the worst GDP per capita relative to the 1987 levels among all peer regions. This means for the better part of the last 25 years, Ontario has experienced the lowest growth rates among its peers. If we eliminate the recent recession years, we find that Ontario has in fact the lowest cumulative growth in GDP per capita among all peer regions. This truly highlights the stagnant nature of Ontario’s economy.
When we dig deeper and examine this economic performance relative to its level in 1987 we find that overall Ontario has basically only performed better than Michigan among its peers. Moreover, even this advantage over Michigan falls apart once the recession years are eliminated from the analysis. This means Ontario’s economic performance is better than its peers only when these other jurisdictions experience harsh economic downturns.
Ontario performed better than some of the peers only during economic downturn periods; however it needs more power to fuel the economy in growing periods. The meager growth rates stress the need for Ontario to institute major changes to curb its stagnant economic trajectory. The road map for growth outlined in the Task Force’s 2012 Annual Report should serve as a minimum prerequisite for setting Ontario on a more prosperous path. Businesses and policymakers must take action to enhance productivity and invest in tools for growth. Ontario’s competitors are not standing still.
Photo Credit: erhui1979, Getty Images