In Affordability Issues Cool Housing Markets: Ontario’s Two-Year Outlook, we forecast that Ontario’s real GDP will expand by 5.6 per cent this year, with a further gain of 3.4 per cent in 2022. The recovery will be led by gains in household spending due to pent-up demand and the excess savings built up last year.
The auto sector is recovering quickly, but a shortage of semiconductors widely used in the manufacturing process could restrain production over the near term. Housing markets will cool in the second half of this year and into 2022 due to affordability issues. Rising demand and a lack of supply have sent prices surging, especially in Ottawa and Toronto. Ontario’s exporters will face increasing competitive challenges if the Canadian dollar appreciates against the greenback higher than anticipated.