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Once considered the engine of the Canadian economy, Ontario’s economic performance over the past two decades has been among the weakest in the country, according to a new study from the Fraser Institute.
“The decline of Ontario’s manufacturing sector in the 2000s, the 2008-09 recession and a timid recovery combined to create a prolonged period of economic weakness for the province,” said Ben Eisen, co-author of An assessment of recent economic performance and growth in business investment in Ontario.
âOntario’s position near the bottom of the Canadian provinces does not bode well for the province’s future prospects.
Covering the period from 2000 to 2019 (excluding 2020 due to the COVID-19 pandemic), the report found that Ontario performed well below its own historical economic standards, at most other provinces and neighboring US states.
In the key measure of business investment per capita that Eisen says “is at the heart of improving our standard of living and creating jobs,” Ontario recorded the third annual growth rate lowest average of only 0.3% after adjusting for inflation and population.
Only New Brunswick and Nova Scotia had lower growth rates and Ontario was far behind British Columbia, the best performing province, where the average growth rate was 2.7%.
Ontario had the worst performance in terms of overall real economic growth per capita of 9.1% from 2000 to 19, compared to an average of 26.1% for all provinces except Ontario.
Ontario’s economy has also underperformed over previous decades.
From 1982 to 1990, the average annual growth rate of real GDP per capita in Ontario was 1.5% and 1.4% from 1991 to 2000, before dropping to 0.1% from 2001 to 2010 and to only partially recover to 0.9% from 2011 to 2019.
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Private sector employment growth in Ontario increased only 23.2% from 2000-19, compared to an average of 31.7% for all other provinces, ahead of only New Brunswick (10.0%) and Nova Scotia (14.2%) and tied with Newfoundland and Labrador (23.1%) and Manitoba (23.1%).
Ontario’s nominal net debt per capita from 2000 to 2019 grew more than in any other province – by $ 12,952 – and its debt-to-GDP ratio – the lower the better – fell from sixth highest among provinces in 2000 to the second highest in 2019.
âIn recent years (before the COVID pandemic), the weak economic performance of several jurisdictions, particularly the oil-producing regions of Canada, resulted in a slight improvement in the relative performance of Ontario in Canada in terms of economic growth, âthe study concludes.
âHowever, Ontario should not feel reassured by this development. The reversal is the result of a weakness in other jurisdictions, not an improvement in Ontario per seâ¦ “
The Fraser study does not address the reasons for Ontario’s economic decline from 2000-19, and to be clear, provincial economies are affected by national and global events in addition to the policies of provincial governments.
That said, for the vast majority of the time covered by this study, the big-spending and deficit-spending Liberal governments of Dalton McGuinty and Kathleen Wynne were in charge of the province – from 2003 to 2018.
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Their policies have made Ontario one of the most indebted non-sovereign borrowers in the world and, among other things, dramatically increased electricity prices, causing significant job losses in the manufacturing sector in the world. Ontario.
Further proof, if needed, that government policies have a direct impact on economic growth, employment and our standard of living.