Canada’s Saving Grace Amid Falling Oil Prices Could Be Ontario
Canada's banking on Ontario to help maintain the country's surging economy, now that Alberta could hit recession due to the falling prices of crude oil. Ontario is Canada's manufacturing haven. TD Economics, way back December 2014, had forecast that Ontario will lead Canada with the fastest rate of real GDP growth at 2.6 percent in 2015.
The Canadian Press reported it won't be long before Ontario benefits from Western Canada's losses. Mark Perry, a manufacturer of specialized plastic products and one of the survivors of Central Canada's manufacturing downturn, said he had noticed a reversal. Even Jayson Myers, the president and chief executive of Canadian Manufacturers and Exporters, said there have been noticeable improvements in the production and sales of some manufacturers. "There's no reason in the world why Ontario manufacturing sales cannot exceed where we were back before the recession," Myers told Canadian Press.
But it remains to be seen if Ontario would be able to keep up under the present global scenario. For one, Myers said, manufacturers need to modernise their rusty mass-producing facilities with something that gives off "higher-value goods."
He cautioned Ontario manufacturers that these days, buyers put their money on the design, engineering, innovation and customer service. The manufacturing itself isn't much highlighted anymore. "It's not going to be business as usual and it is going to require companies to focus more on very specialized products and to do things that nobody else can do," Myers said.
Peter Hall, Export Development Canada's chief economist, forecast Ontario could start seeing significant new investments a year from now, or perhaps earlier if the current conditions last. "Demand is firing up now," Hall said, noting Ontario is attractive because of its "clustered, highly developed" manufacturing sector which happened to be close to the U.S. market.
Indeed, the cheaper oil coupled with the lower dollar could help Ontario manufacturers that haven't already closed up shop and left regain what they had before the 2008-09 financial and economic crisis. But a lot of work still needs to be done before it can fully claim that economic revival.