Media Release: FAO releases economic and budget outlook


TORONTO, February 13, 2024  Today, the Financial Accountability Office of Ontario (FAO) released its outlook for the provincial economy and the Province’s finances over the 2023-24 to 2027-28 period, based on current and announced government policies.

Ontario’s economic growth (as measured by growth in real GDP) slowed sharply to 1.2 per cent in 2023 and is projected to slow further to 0.7 per cent in 2024, reflecting the ongoing impact of higher interest rates on household spending and the housing market, and a weaker global environment. Ontario’s economic growth is projected to improve over the 2025 to 2028 period as lower interest rates bolster household spending and residential investment.

The FAO projects a $4.7 billion budget deficit in 2023-24, slightly smaller than the government’s $5.6 billion deficit projected in the 2023 Fall Economic Statement. Ontario’s budget deficit is expected to widen to $6.2 billion in 2024-25 and gradually improve over the outlook, reaching a balanced position by 2026-27, one year later than expected by the government.

The FAO’s current budget outlook is a significant deterioration from the FAO’s Spring 2023 outlook, which expected growing budget surpluses over the forecast to 2027-28. This downward revision is due to lower-than-expected personal income tax revenues reported in 2022 tax returns, and higher projected spending for public sector salaries and wages, new government policy measures, and higher debt interest payments. Despite these changes, Ontario’s net debt-to-GDP ratio, a measure of the government’s debt burden, is expected to remain below the government’s 2023 Ontario Budget target of 40 per cent over the projection.

There are a number of risks that could impact the FAO’s economic and budget outlook. Ontario’s economic and revenue growth could be negatively affected by numerous geopolitical risks, or if inflation and interest rates remain higher for longer than anticipated. However, if the US economy continues to grow above expectations, that could positively affect Ontario’s economic and revenue growth. The FAO’s outlook now includes higher projected spending related to expected compensation for Bill 124 wage restraint and above historical wage settlements from elevated inflation. However, the outcomes of upcoming negotiations or arbitration awards could affect the FAO’s spending projection.

To learn more, read the full report here.

Quick Facts:

  • Compared to the FAO’s last outlook in the Spring 2023 EBO, the FAO’s revenue projection has decreased by an average of $5.8 billion per year, for a cumulative total of $29.0 billion from 2023-24 to 2027-28. The FAO’s spending projection has increased by an average of $6.7 billion per year, for a cumulative total of $33.4 billion over five years.
  • From 2022-23 to 2027-28, the fastest growing spending sectors are expected to be interest on debt at 5.2 per cent average annual growth, followed by health (4.3 per cent), children, community and social services (4.1 per cent), postsecondary education (3.7 per cent) and education (3.5 per cent).
  • The interest on debt-to-revenue ratio, a measure of budget flexibility, is projected to increase from 6.4 per cent in 2022-23 to 6.8 per cent by 2027-28 but remain below the government’s target in the 2023 Ontario Budget of 7.5 per cent.

About the FAO:

Under the Financial Accountability Officer Act, 2013, the Financial Accountability Officer provides independent analysis on the state of the Province's finances, trends in the provincial economy, and related matters important to the Legislative Assembly of Ontario. Visit our website and follow us on Twitter and LinkedIn.


For further information, please contact:
Sophia Zhu | 416 931 5498 | |