Ontario Chamber of Commerce 2024 Economic Report
Key Highlights
This year’s Ontario Economic Report (OER) reveals a provincial economy under strain. Business confidence has hit a new low, real GDP-per-capita is falling, and the economy is hampered by inflation, interest rates, skills gaps, infrastructure backlogs, mental health and addictions crises, and prolonged uncertainty.
Despite these challenges, Ontario has avoided a significant economic contraction. Inflation and labour shortages are gradually easing, and businesses have proven resilient in the post-pandemic economy.
Highlights from the 2024 Business Confidence Survey:
- Business confidence in the economy has dropped to a record low for the second year in a row, with only 13 percent of businesses feeling confident in Ontario’s economic outlook. Confidence is lowest among small businesses (1 to 99 employees).
- Pessimism is mainly attributed to high costs, including both costs of living and costs of doing business.
- The policy priorities of Ontario businesses reflect ongoing pain points, as they seek tax reforms, buy-local programs, workforce development support, and affordable housing for their employees.
- However, 48 percent of businesses are confident in their internal outlooks and a majority expect to grow in 2024, as population growth and a resilient labour market have sustained aggregate consumer demand in most sectors.
- Labour shortages have eased somewhat from last year, dropping from 55 percent to 40 percent of organizations reporting shortages, with elevated shortages in construction, transportation, and manufacturing.
- As businesses grapple with economic headwinds, many are limiting their investments in important social and economic issues, including employee health and well-being, diversity, equity and inclusion, Indigenous reconciliation and climate action.
Highlights from the 2024 Economic Outlook:
- Ontario’s real GDP is forecasted to grow by 0.4 percent in 2024, following 1.1 percent growth in 2023.
- Conversely, real GDP per-capita has fallen to below pre-pandemic levels and that downward trend is expected to continue into 2024.
- Inflation is expected to ease to 2.9 percent in 2024, after a period of ‘sticky’ inflation in 2023 in which core inflation measures (such as energy and housing costs) remained elevated.
- Inflationary pressure will continue to weigh on the economy, dampening consumer spending and housing starts.
- Ontario’s unemployment rate is expected to increase to 6.8 percent in 2024 in light of the forecasted economic slowdown after remaining relatively unchanged between 2022 and 2023.
- Most regions of Ontario are expected to continue seeing weaker employment growth and elevated unemployment over the next 12 months.
Faced with these circumstances, Ontario must pursue a principled economic growth strategy focused on addressing its productivity challenge. See Section III for the OCC’s policy recommendations.