Uncertain U.S. economy hurts Ontario

Today’s U.S. election matters to Ontario almost as much as it does to Americans, according to the Conference Board of Canada. This is because Ontario’s dependence on the U.S. has left it vulnerable to a slow economic recovery.

Read: What to watch during the U.S. election

The province’s trade relies on large firms, intra-firm trade and manufacturing, especially within the auto industry.

Without addressing capital investment, weak productivity growth and a looming labour shortage, Ontario’s economic growth will decline to 1.9% annually after 2015, says a Conference Board of Canada study.

“If Ontario is to sustain high-quality public services and continue to be an attractive place to live, it needs a comprehensive growth strategy that improves capital investment, enhances productivity and competitiveness and bolsters the labour force,” says Glen Hodgson, senior vice president and chief economist.

Read: Ontario hikes insurance premiums on small employers

Although the Ontario economy has rebounded since 2010, its growth is tepid and it continues to face pressures for fundamental restructuring.

Ontario could embrace an agenda to reduce and eliminate barriers to trade and investment—both within Canada and internationally, says the Board. The federal government is already pursuing an aggressive international free trade agenda, which will benefit Ontario firms once improved market access is secured. Companies should explore international business opportunities beyond the U.S..

Read: Ontario drug plan signals social shift

Within Canada, the province could join with others to ensure that goods, services, investment capital and people move freely across the country without regulatory or administrative constraints. This could be built on the positive example of the Trade, Investment and Labour Mobility Agreement between Alberta and British Columbia, adds the Board.

Read: Ontario backs away from PRPPs

And creating a single Canadian market would allow Ontario firms to become preferred suppliers to the expected surge of resource investment in western Canada. This open-market agenda would improve business access to markets internal to Canada and abroad, and increase competition within Ontario, which can boost productivity.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.