ONTARIO ECONOMIC REPORT SHOWS BETTER THAN AVERAGE BUSINESS CONFIDENCE IN COTTAGE COUNTRY : Report from Ontario Chamber of Commerce outlines latest sector-specific data on economy, business confidence, employment, and government supports.

Muskoka Lakes/January 28: Today, the Muskoka Lakes Chamber of Commerce and the Ontario Chamber of Commerce (OCC) released the fifth annual Ontario Economic Report (OER), providing the latest data on Ontario’s economy and business confidence, highlighting the unprecedented year that was 2020 – and the unpredictability that lies in the year ahead.

“The current health and economic crises have had a considerable negative impact on our economy. Only 21 percent of businesses Muskoka-Kawarthas Business Confidenceare confident in Ontario’s economic outlook—a historic low—reflecting the stark reality in which businesses continue to grapple with the financial and logistical challenges of operating under a pandemic,” says Rocco Rossi, President and CEO of the Ontario Chamber of Commerce.

The 2021 OER uncovers the disproportionate impact of COVID-19 on small businesses and entrepreneurs as well as specific regions, sectors, and demographics, highlighting the major vulnerabilities and opportunities Ontario will face in the year ahead. Public policy makers looking at strategies to support Ontario’s long-term economic recovery will benefit from the findings outlined in the OCC’s flagship annual report. View the report by clicking here and select Muskoka-Kawarthas to see specific insights into how our cottage country region is faring.

Findings for Muskoka-Kawarthas show slightly better results than other regions

“While so many of our businesses are hurting, it’s interesting – and perhaps surprising — to see that, according to this report that some of our Chamber Members took part in, businesses in cottage country show slightly more confidence than in other areas of Ontario, and job losses in 2020 appear not as severe,” says Spencer Morland, President, Muskoka Lakes Chamber of Commerce, adding “our accommodators, food service and retail industries are still among the hardest hit, and efforts need to be focused on helping those sectors.”

For example, business confidence was lowest in the Hamilton-Niagara region (12 percent confident), where cross-border tourism accounts for a large portion of the economy. By comparison, businesses in our tourist-heavy region — Muskoka-Kawarthas – were nearly twice as confident in Ontario’s outlook (23 percent confident), likely because Ontarians traveled more within this region as international travel was restricted.

This also aligns with employment data, which shows far fewer job losses in Muskoka-Kawarthas than other regions in 2020 (change in employment was -0.9 percent in Muskoka-Kawarthas and -4.9 percent across Ontario, see Ontario’s Economic Outlook). However, the EMPLOYMENT GROWTH outlook is not great for 2021: Morland points out the data shows the job growth forecast for 2021 for our combined cottage country region is at 4% – which puts us lower than more urban areas of Ontario (we’re at 6th out of 11 regions surveyed) yet ahead of London, Windsor, Stratford-Bruce Peninsula, Northeast and Northwest which all project below 4% growth.

“While some of the data suggests our businesses are surviving better than others, this report is no cause for celebration,” cautions Norah Fountain, Executive Director of Muskoka Lakes Chamber. “This report indicates lower employment growth than other parts of the province. It’s also important to understand some of our businesses didn’t have an equal ability to innovate due to lack of competitive broadband, especially in Muskoka Lakes. Definitely the report showed that businesses that could innovate, that could digitally transform themselves, are surviving better through this pandemic. Not all of our businesses are able to do that due to limited technology.”

Accommodations and food service among businesses hardest hit

This year’s OER also reveals the hardest-hit sectors were those requiring considerable face-to-face contact, namely: accommodation and food services; arts, entertainment, and recreation; and retail. Findings indicate that employment growth declined throughout the province with women, lower-income, racialized, new immigrant, and younger Ontarians suffering the biggest job losses. Every region of the province felt the impacts of the recession, though some considerably more than others.

The report’s co-author, Daniel Safayeni, Acting Vice President of Policy at the OCC, added: “No business, region, sector, or demographic should be left behind in the pursuit of economic recovery and growth. Support programs and pro-growth policies should be targeted towards those experiencing the most pronounced challenges. A focus on reskilling as well as widespread access to broadband infrastructure and capital will be necessary to the revival of small business and entrepreneurship as well as an inclusive and robust economic recovery.”

Key highlights from the OER include:

  • Ontario witnessed a steep decline in real GDP growth (-5.6 percent) in 2020 but is projected to see a moderate rebound of 4.8 percent in 2021, fuelled largely in part by expectations for vaccination rollout and the eventual re-opening of the economy.
  • In 2020, only 21 percent of survey respondents expressed confidence in Ontario’s economic outlook. Less than half of Ontario businesses (48 percent) are confident in the outlook of their own organizations over the next year.
    • Small businesses are more pessimistic about Ontario’s outlook than larger ones. Only 20 percent of small businesses expressed confidence in Ontario’s economy, compared to 27 percent of medium and large businesses.
  • The majority (58 percent) of survey respondents said their organizations shrank between April and September, while only 17 percent grew.
  • Employment growth declined throughout the province in 2020, with 47 percent of organizations indicating they let employees go due to COVID-19.
  • Sectors most negatively impacted by the crisis included: accommodation and food services; arts, entertainment, and recreation; and retail. Businesses in these sectors were among those most pessimistic about the economic outlook and most likely to have shrunk and let go of staff in 2020.
  • Businesses’ priorities for governments during economic recovery included enhancing access to capital, reforming business taxes, encouraging Ontarians to buy local, and investing in broadband infrastructure.

“The prolonged nature of the crisis, rising case counts, and uncertainty around vaccine deployment timelines have taken a toll on employers and Ontarians across the province. Yet, Ontario has a proven track-record of resilience and recovery. Our long-term prosperity will depend on all levels of government, business, chambers of commerce and boards of trade working together towards economic recovery,” added Rossi.

The Ontario Economic Report was made possible by support from Hydro One. Please see backgrounder below for provincial key findings.

 

2021 ONTARIO ECONOMIC REPORT KEY FINDINGS – BACKGROUNDER

Today, the Muskoka Lakes Chamber and the Ontario Chamber of Commerce (OCC) released the fifth annual Ontario Economic Report (OER), providing the latest data on Ontario’s economy and business confidence, highlighting the unprecedented year that was 2020 and the unpredictability that lies in the year ahead.

Key PROVINCIAL highlights from the OER include:

  • Data provided by the Bank of Montreal indicates that Ontario witnessed a steep decline in real GDP growth (-5.6 percent) in 2020 but is projected to see a moderate rebound of 4.8 percent in 2021, fuelled largely in part by expectations for vaccination rollout and the eventual re-opening of the economy.
    • Projections for the coming year suggest moderate GDP and employment growth across most regions, suggesting a near-full recovery after steep drops in 2020.
  • In 2020, only 21 percent of survey respondents expressed confidence in Ontario’s economic outlook. Less than half of Ontario businesses (48 percent) are confident in the outlook of their own organisations over the next year.
    • Small businesses are more pessimistic about Ontario’s outlook than larger ones. Only 20 percent of small businesses expressed confidence in Ontario’s economy, compared to 27 percent of medium and large businesses.
    • Confidence also varied considerably across sectors of the economy, a testament to the uneven nature of the pandemic. The most pessimistic sectors were accommodation and food services (62 percent were not confident in Ontario’s outlook); arts, entertainment, and recreation (55 percent); and retail trade (51 percent).
  • Employment growth declined throughout the province in 2020 and is expected to make a steady recovery in the year ahead.
    • 47 percent of organizations indicate they let employees go due to COVID-19 (23 percent permanently and 24 temporarily).
    • Amid the second wave, 53 percent of businesses surveyed said their organizations shrank between June and November; while only 19 percent grew.
  • Sectors most negatively impacted by the crisis included: accommodation and food services; arts, entertainment, and recreation; and retail. Businesses in these sectors were among those most pessimistic about the economic outlook and most likely to have shrunk and let go of staff in 2020.
    • In some of these sectors, more than two-thirds of organizations let staff go: labour (83 percent), accommodation and food services (70 percent); arts, entertainment, and recreation (68 percent); and transportation and warehousing (67 percent).
    • Fewer than one-third of organizations let staff go in the following sectors: management firms (14 percent); utilities (20 percent); government (25 percent); finance and insurance (25 percent); non-profits (31 percent); and real estate, rental and leasing (33 percent).
    • From a regional perspective, businesses were most likely to say they shrank in Hamilton-Niagara Peninsula (70 percent) and Northwest Ontario (68 percent). These are two regions that reported above-average employment losses in 2020. A more detailed analysis of regional employment numbers can be found in Ontario’s Economic Outlook.
  • Despite lagging confidence in Ontario’s economic outlook and ongoing regional and sectoral disparities in how businesses have been impacted by the crisis, an encouraging 60 percent of businesses believe their communities have enough economic opportunities for them to thrive.
  • Further, 60 percent of businesses reported feeling confident that entrepreneurship would rebound after the pandemic. Entrepreneurship and small business growth will play an essential role in Ontario’s economic recovery.
  • Businesses’ priorities for governments during economic recovery included enhancing access to capital, reforming business taxes, encouraging Ontarians to buy local, and investing in broadband infrastructure.

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