Forecast bright for regional growth
According to a recent report by Robert Kavcic, a senior economist at BMO Capital Markets, Waterloo Region’s economy is excelling in comparison to other regions in southwestern Ontario.
“We’re seeing a relatively stable growth in that part of the province,” Kavcic shared.“It’s probably a little faster than the province, overall.”
Kavcic’s report, released two weeks ago, suggests that the Waterloo economy will likely generate 13,000 jobs by the end of 2016, due to Waterloo’s strong diversity, special attention to education and the wide range of services.
If this occurs for the future, this will bring the unemployment rate down by six per cent, a full percentage point below the Ontario average.
In addition, the account claims that Waterloo’s local housing department is currently very well-balanced. Kavcic explained that local housing is reasonably affordable, especially compared to other cities in Ontario.
At 3.9 times the median household income, Waterloo Region’s housing affordability index is third highest of major urban areas. Toronto comes in at 6.6 while Hamilton is 4.2.
However, despite the positive observations made in the report, Kavcic also took note of the declines and struggles that are apparent in the region. These noticeable patterns of struggles, Kavcic said, are ones that need to be resolved for the near future.
“Even though the city outperforms that growth, it is still pretty sluggish by normal standards,” Kavcic said. “Even things in the housing market and population growth are quite a bit softer than they were back in the late ’90s and early 2000s, which was a pretty strong period for the city.”
The promise of 13,000 jobs for the future may not be as glamorous as the numbers seem to suggest. Kavcic shared that this kind of data is based on an employment intensification of just more than one per cent per year, which is essentially just below the 1.5 to 1.6 percent average over the previous ten years.
The layoff of about 5,000 employees at Blackberry is one of the most relevant indicators that Waterloo Region still needs to improve economically for the future, according to the report.
Kavcic also shared that the region continues to see manufacturing exporters struggling, due to a slow-moving financial augmentation. He explained that this part of the financial system is still under immense pressure. However, based on a potential pattern he noticed from his report, there may be little to fear in Waterloo.
“We do see a much stronger US economic growth for the second half of the year,” Kavcic predicted. “So that part of the economy could potentially pick up a bit for the next year or two.”
Kavcic shared that there is a possibility that these reports will be done periodically, resulting in their appearances once a year and indicated that he plans on doing an update report in the next six months.