Ontario, U.S. and World GDP: Growth and Outlook
Ontario, Canada‘s GDP increased 3.7% in 2022, in real terms, and 9.4% in nominal terms, compared to 2021, according to data from that province’s Ministry of Finance.
Both rates were above the Ontario Economic Outlook and Fiscal Review planning assumption for 2022 of 2.6% and 9.2%, respectively.
Global growth prospects have weakened, in part due to the effects of tighter monetary policy as central banks around the world address elevated price inflation.
The International Monetary Fund estimates that global real GDP grew 3.4% in 2022, and forecasts that real GDP will increase 2.9% in 2023.
U.S. real GDP grew 2.1% in 2022 and is forecast to increase 0.5% in 2023, according to Blue Chip Economic Indicators.
On average, private sector forecasters expect Ontario’s real GDP to be up 0.3% in 2023, compared with the Ontario Economic Outlook and Fiscal Analysis’ 2022 planning assumption of 0.5 percent.
They too project that Ontario’s nominal GDP will grow 2.9 percent in 2023, compared with the Ontario Economic Outlook and Fiscal Analysis 2022 planning assumption of 3.5 percent, largely due to weaker GDP inflation expectations.
According to the Ontario provincial government, the future path of price inflation is a key risk to the economic outlook.
In 2022, the Bank of Canada raised interest rates significantly to help reduce inflation.
In recent months, inflation has begun to moderate, helped by lower energy prices.
If inflation remains above the Bank of Canada’s 2% target for longer than expected, the Bank could raise interest rates more than expected, with the consequent risk of further negative effects on the economy.
Conversely, there is also a risk that inflation will moderate faster than expected, which would allow the Bank of Canada to lower interest rates sooner than expected, thereby supporting economic growth.
Russia‘s invasion of Ukraine remains a source of global economic uncertainty and continues to affect commodity markets and global supply chains.
On the other hand, the easing of pandemic-related health restrictions in China and the resulting increase in economic activity could help to further ease global supply chain disruptions and boost global GDP growth.