The Ontario government says its deficit for the current fiscal year is now expected to be $16.9-billion, up from the $13.8-billion it projected in its March budget, as U.S. tariffs and higher oil prices have cut the province’s anticipated economic growth in half.
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tariffs → say → half
In his fall economic statement, released on Thursday, Finance Minister Peter Bethlenfalvy also warns that next year’s deficit could be $12.7-billion – more than double the predictions in his March budget.
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deficit → release → budget
And for 2028-29, when he had just months ago predicted a $600-million surplus, he now expects a $6.7-billion deficit, with the province’s books finally balancing in 2029-30 – the fourth time the government has put off a return to black since 2024.
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government → predict → 2024
In prepared remarks to the Ontario Legislature, Mr. Bethlenfalvy called this “the most consequential time in our country’s recent history,” adding that we “are living in a post free-trade, protectionist world.”
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we → prepare → world
But he said his government was remaining prudent.
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government → say → ?
As we have shown, our government will continue investing to protect our economy.”
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government → show → economy
U.S. tariffs have hit the province’s steel, auto and manufacturing sectors, with steel exports to the United States down more than 50 per cent so far this year when compared with the same time period in 2024, the economic statement says.
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statement → hit → 2024
Meanwhile, oil prices have shot up owing to the U.S.-Iran war.
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prices → shoot → war
Back in March, the Ontario government had predicted modest 1-per-cent growth in real gross domestic product this year, in the face of U.S. tariffs.
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government → predict → tariffs
Now, it expects just half that, based on its conservative read of projections from private-sector economists, with better but still slow growth returning next year.
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growth → expect → economists
But predicting what the Ontario economy will do is tricky, as so much depends on whether a threatened doubling of U.S. tariffs on the Canadian automotive industry takes effect Jan. 1, or a trade deal can be reached to avoid it.
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deal → predict → it
Comparing deficits over time is also difficult.
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Comparing → compare → time
But Ontario’s new projected deficit figure this year is higher, in nominal terms, than the province’s pandemic-emergency-fuelled shortfall of 2020-21, which hit $16.4-billion.
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which → project → billion
Citing the increasing economic uncertainty, the province says it is adding $3.8-billion to its contingency fund, which now sits at a total of $4.9-billion – much of which it is expected to spend.
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it → cite → which
The economic statement says the move is “to protect Ontario’s economy and maintain the flexibility to protect key services.”
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move → say → services
The fall economic statement is often a kind of “mini-budget” in which a government announces new initiatives as well as publicly updating its finances.
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government → announce → finances
This year’s contains no major new moves beyond those that have already been announced.
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that → contain → those
Among those is Ontario’s commitment to match the federal government’s “productivity mega deduction,” a tax move to allow companies to accelerate write offs for a wide range of expenditures.
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companies → match → expenditures
Meant to lower taxes and attract investment, the latest measure is expected to cost the province $8-billion over five years.
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measure → lower → years
The federal and provincial governments also recently committed nearly $9-billion in new help for tariff-hit auto and steel industries, and for a road to the remote Ring of Fire mining region in the northern part of the province.
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governments → commit → province
The Aporia
