TORONTO - Premier Dalton McGuinty was again forced to defend his government's handling of Ontario's ailing economy Thursday after a new forecast cautioned the province would be teetering on the brink of a recession this year.
Opposition parties accused the Liberals of ignoring a growing chorus of economists who are making gloomy predictions about the province's economy, which has been hard hit in recent years by thousands of job losses in the manufacturing sector.
"Obviously this is something you are not taking seriously enough, premier, as we saw in your tax-and-spend budget just two weeks ago,'' said Progressive Conservative finance critic Tim Hudak.
But McGuinty, who has been raked over the coals by the federal Conservatives for refusing to slash corporate income taxes in the hopes of stimulating growth, dismissed Hudak's call for more tax cuts.
"I haven't heard from a single economist that has projected negative growth for the province of Ontario,'' he said.
"Many are projecting modest growth. We ourselves in our recent budget... forecast growth of 1.1 per cent.''
NDP Leader Howard Hampton hammered McGuinty for his "rosy'' projections, reading excerpts from the new Royal Bank report which points to declines in key sectors, such as finance and forestry.
"That doesn't sound like anyone's moving ahead, premier,'' he said. "It sounds like there are very big clouds on the horizon.''
But both sides were able to find evidence in the report to support their clashing positions.
McGuinty pointed out that despite the gloomy forecast, RBC expects the slowdown to be "short-lived'' due to such positives as a healthy real estate market and rising wages.
"From time to time, I get the distinct impression that my honourable colleague would relish the thought of troublesome economic times,'' McGuinty said as Hudak pressed him on the report.
"We just don't see it that way... We don't have that kind of a disposition, we certainly don't have that kind of an outlook. We will work through these challenging economic times.''
RBC is forecasting growth of 0.8 per cent in 2008 and a modest improvement in 2009 of 1.9 per cent. That's lower than Finance Minister Dwight Duncan's predictions of 1.1 per cent growth in 2008 and 2.1 per cent in 2009.
But Duncan suggested the government's numbers, which are reached in consultation with private-sector forecasters, won't be revised in the wake of the report.
"Our forecasts, we believe, are the prudent and appropriate ones,'' Duncan said. "RBC, TD, the Conference Board are all over the map.''
The province's 2008 budget, which provided billions for infrastructure and re-training the unemployed, is the right response to "challenging times,'' he added.
"We continue to monitor the situation closely, but as I say, the economy has shown itself to be resilient and we're confident that our budget forecast will be met throughout the course of the year.''
The RBC report suggests that resilience in the job market is "overstated,'' with the public sector doing the "heavy lifting'' while the private sector continues to cut back in key sectors such as forestry, agriculture, manufacturing, finance, insurance and real estate.
Chief economist Craig Wright also noted that Ontario will be "disproportionately'' affected by a nationwide hit to exports, largely due to its heavy reliance on U.S. demand for its products, which are unfavourably focused on the auto and forestry sectors.
"Ontario's exports to the United States account for roughly 84 per cent of its total exports and about 40 per cent of its GDP,'' Wright noted in the report.
"The heavy drag from Ontario's trade sector will see the province teeter on the brink of a recession through 2008.''
