Ontario's real Gross Domestic Product will average 2.1 per cent growth between 2014 and 2035, compared with 2.2 per cent nationally, 2.4 per cent in the U.S. and 3.1 per cent globally, according to the long-term economic report released Wednesday by Finance Minister Charles Sousa.
The number of seniors in Ontario is expected to nearly double to 4.1 million by 2035, which the report says will increase the demand on public services, especially health care, social services and infrastructure.
It concludes that improving retirement income will be crucial to the economy in the future, supporting the Liberals' plan to introduce an Ontario Pension Plan if Ottawa keeps refusing to enhance the Canada Pension Plan, the province's preferred option.
"For Ontarians without workplace pension plans, the government is committed to developing innovative pension models to promote increased retirement savings," says the report. "The government is also working with employers and employees to enhance the sustainability of defined benefit pension plans."
The Progressive Conservatives said the report is being used by the Liberals to justify their desire to spend billions of dollars more in the upcoming budget and to introduce payroll deductions to support a provincial pension plan.
While the workforce shrinks, the report says immigration will become the main source of growth for new labour, supporting the Liberal's request for Ottawa to give the province the same powers to pick immigrants as Quebec.
"It will be crucial to smoothly integrate newcomers into the workforce," says the report. "The federal government will need to provide greater support to enable Ontario to achieve this goal."
The report predicts inflation will fall from the three per cent range to an average of two per cent in Ontario and about 2.2 per cent in the rest of Canada over the next two decades.
It also forecasts Ontario's unemployment rate will fall from 7.7 to 5.6 per cent over the next 20 years, but won't slip under the six per cent mark before 2018.
The report says Ontario is in a good spot to take advantage of the rising global share of market economies by developing countries like China.
"Ontario's diverse economy is well positioned to take advantage of this shift in the global economy through increased exports of goods and services from sectors such as agri-food, infrastructure, life sciences, information and communications technology, education, advanced manufacturing and financial services," it concludes.
The report also says Ontario's investment of billions of dollars in infrastructure projects will pay off over the long term.
"Attracting business investments also depends, in part, on maintaining, renewing and developing public infrastructure," it says. "The province has already made, and is continuing to make, significant infrastructure investments to support economic growth."