By Temple Scott Associates

On August 14th, the Ontario Government released the 2023-24 First Quarter Finances report, as of June 30, 2023.

There is little news here other than to confirm the Government of Ontario is on track with its forecasts presented earlier this year in Budget 2023:

• Ontario’s real gross domestic product (GDP) increased by 1.0 per cent in the first calendar quarter of 2023, following a 0.2 per cent decline in the fourth quarter of 2022. Real GDP growth in the first quarter was supported by higher exports and household spending.
• Ontario’s labour market has remained strong, with employment increasing by over 230,000 net jobs between September 2022 and July 2023. In addition, Ontario’s unemployment rate of 5.6 per cent in July 2023 is near historic lows.
• Since the 2023 Ontario Budget, expectations by private-sector forecasters for GDP growth have improved for 2023, reflecting better-than-expected economic performance so far this year. However, expectations for GDP growth have declined for 2024, reflecting the impact of Bank of Canada policy interest rate increases — the fastest rise in the key policy interest rate since 1981.
• Ontario’s Consumer Price Index (CPI) inflation has moderated for 12 consecutive months, from 7.9 per cent in June 2022 to 2.6 per cent in June 2023. The Bank of Canada projects that Canadian inflation will stay around 3 per cent for the next year, returning to the 2 per cent target by the middle of 2025.
• Economic uncertainty remains elevated. High interest rates and inflation persistently above the Bank of Canada’s 2 per cent target remain key downside risks for the economic outlook.
• As of the 2023–24 First Quarter Finances, the province’s 2023–24 deficit is projected to be $1.3 billion — unchanged from the outlook published in the 2023 Ontario Budget.
• Revenues in 2023–24 are projected to be $204.4 billion, largely unchanged compared to the forecast in the 2023 Ontario Budget.
• Overall program expense in 2023–24 is projected to be $190.6 billion, largely unchanged from the outlook presented in the 2023 Ontario Budget. New commitments announced since the release of the 2023 Ontario Budget are primarily funded through existing contingencies within the fiscal plan.
• Following the 2023 Ontario Budget, Standard & Poor’s, Moody’s and DBRS Morningstar have all placed Ontario’s credit ratings on positive outlook, while Fitch confirmed Ontario’s credit rating with a stable outlook.

Source: Temple Scott Associates