| The Ottawa Citizen |
Thursday, August 02, 2007
Ontario is barely hanging on to its "have" province status, according to a new report from economic forecaster Global Insight Canada.
"From the early 1980s until the early 1990s, Canada had three provinces solidly in the 'have' category," said the report, released yesterday. "In the late 1990s, B.C. left the camp and now Ontario's standard of living is heading downward to the Canadian average."
Of the three original "have" provinces, Alberta's standard of living has led the country for about 20 years and that trend shows no sign of changing, the report said.
"This is a pretty big change from two decades ago," said Global Insight's senior economist Arlene Kish.
The report measures each province's standard of living by real gross domestic product per capita and compares it with the Canadian average.
"Economic growth in Alberta has outpaced the Canadian economy overall by a wide margin every year since 2003, largely, but not entirely, due to strong energy prices," the report noted.
The oil-rich province has also benefited from a downturn in Central Canada caused mainly by the strong dollar, it added.
In 2002, Alberta's standard of living was 19-per-cent above the national average.
By last year, Alberta's standard of living had risen to 24-per-cent above the average, about where it is expected to stay until 2012, Global Insight said.
"The oilsands and an 'open for business' investment climate are expected to provide Alberta with a stronger pace of economic growth over 2007-2012 than any other province," it noted.
Increased population growth in the western province will not offset strong economic growth enough to affect per-capita standard of living, the report said.
At the same time, Ontario -- which has held second spot among the provinces since the 1980s, even tying with Alberta briefly in 1986-87 -- will see its standard of living drop to 5.5-per-cent above average this year from nine per cent in 2002.
It will continue falling until it levels off at about four-per-cent above the Canadian average in 2010, according to the report, which cited the appreciating Canadian dollar, strong energy prices and relatively high business taxes for the decline.
"The Ontario economy has been moving at a pace below the Canadian average since the SARS (severe acute respiratory syndrome) and electricity blackout days of 2002," said the report, stressing that Ontario's standard of living is still growing, just not as fast as in some other provinces.
Ontario is well-positioned to benefit from the "knowledge-based" economy, Ms. Kish said, pointing to restructuring in the auto sector, as well as a strong financial industry and investments in education, science and research.
Weak commodity prices, soft demand from Japan and a "souring business environment" caused British Columbia's standard of living to fall to seven-per-cent below the national average in the late 1990s, the report noted. It has improved to about 96 per cent of the average, where it will remain in the medium-term.
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