Another recession means more hardship in areas of Ontario that struggled in recent years

It’s no secret that Ontario has gone through more than its share of economic pain in recent years. Thanks to weak economic and fiscal performance, we characterized the period from 2007-2016 as a “lost decade” for the provincial economy.

New economic forecasts show Ontario is once again headed into a recession. RBC Economics recently published a forecast showing Ontario’s inflation-adjusted Gross Domestic Product (GDP) declining by 4.2 per cent this year.

This type of steep recession will be felt all across the province. However, it’s important for policymakers and analysts to recognize that Ontario’s economic performance in recent years has been highly uneven across its regions. While Ottawa, Toronto and areas immediately surrounding Toronto have fared relatively well in recent years, almost the entirety of the rest of the province has fared much worse. Specifically, cities, towns and rural areas in southwestern Ontario, northern Ontario and eastern Ontario (excluding Ottawa) have generally struggled.

Consider the above chart. It shows aggregate job-creation in percentage terms in the GTA, Ottawa and the rest of the province between 2008 and 2018. While total employment increased by 17.3 per cent in the GTA and 9.7 per cent in Ottawa, total employment increased by just 1.9 per cent in the rest of the province.

Another way to look at the numbers is to consider the share of all employment growth that happened in Ontario in various regions of the province during this period. This approach shows us that 91 per cent of all job creation in Ontario from 2008-20018 occurred in either the GTA or Ottawa. The rest of the province taken as a whole was responsible for just 9 per cent of all job growth in Ontario during this period.

And the “rest of Ontario” category includes large urban centres such as London, Thunder Bay, Windsor, Kingston and other big cities. It also includes towns and rural areas. The near-zero job-creation rate for this category therefore represents economic challenges and hardships for millions of Ontarians.

Another recession in Ontario will bring even more economic hardship to areas of the province that have struggled in recent years. As the recession wears on and once the recovery begins, it will be important for policymakers to look beyond provincial economic statistics and pay careful attention to developments at the regional and municipal level to assess the extent to which communities that have been hard hit in recent years once again bear the brunt of the steep recession which we appear to be entering.