TORONTO (Reuters) - Ontario’s economy will outpace the national average for the first time in eight years in 2010, but remains at risk from a strong currency, weak U.S. growth and a high deficit, according to a report released on Thursday.
The export-oriented economy of Canada’s most populous province, home to most of the country’s auto industry, has lagged the national average since the Canadian dollar began its rise against the greenback, CIBC World Markets said in a report on the outlook for provincial economies.
“For Ontario, 2009 was a year to forget,” CIBC’s senior economist Warren Lovely wrote.
Lovely said Ontario will help boost competition and lure jobs with its plans for a harmonized sales tax and corporate tax cuts. Growth in Canada’s banking sector and green energy also look to lead the province’s growth.
Ontario recently announced a C$7 billion ($6.5 billion) green energy investment by a consortium headed by South Korea’s Samsung C&T Corp that will make the province a leader in renewable energy technology.
CIBC’s forecasts show Ontario’s gross domestic product rising 2.4 percent in 2010 compared with a national average of 2.3 percent.
But resource-rich provinces in the East and West are seen topping the charts, with Saskatchewan forecast at 3 percent growth, British Columbia at 2.8 percent, and Newfoundland and Labrador at 2.6 percent.
Referring to Ontario’s slump in shipments last year, Lovely said factory job losses lopped more than 1.5 percent off total employment.
But he cautioned that once an inventory restocking has run its course, growth in Canada’s manufacturing heartland could be harder to sustain.
Reporting by Claire Sibonney; editing by Jeffrey Hodgson and Rob Wilson