2025 Ontario Economic Outlook and Fiscal Review
Fall Economic Statement, 2025
On November 6, 2025, Ontario’s Finance Minister Peter Bethlenfalvy tabled the 2025 Ontario Economic Outlook and Fiscal Review (FES). With ongoing economic uncertainty and tariffs threatening key sectors like manufacturing, automotive, and steel, the Ontario government is prioritizing economic resilience and increased competition to boost investment and productivity to chart a course through turbulent waters.
The 2025 FES introduced little new spending but reinforced many of the investments already made in the Ford Government’s Protect Ontario mandate. This includes the $201 billion infrastructure plan, $705 million STEM program delivery fund, and $4 billion Municipal Housing Infrastructure Program.
The four key takeaways from the FES are:
- Ontario’s projected deficit has decreased
- Measures have been taken to bolster Ontario’s competitiveness and economic resilience
- Slow housing starts are being addressed
- Ontario’s critical minerals sector to be strengthened
With three more years of President Trump’s policies on the horizon, Ontario is shifting its own policy response to more permanent solutions against U.S. trade instability, rather than relying on government stimulus to keep businesses afloat.
Ontario’s Projected Deficit Has Decreased
Why This Matters
The province’s fiscal position impacts its ability to invest in growth and infrastructure. While continued tariffs and unsuccessful negotiations could provide for slower growth, U.S. stability and investment attraction could see the province’s projected 2027-28 surplus realized. The Ford government’s path to balance will depend on maintaining revenue stability amid uncertain trade conditions, and managing rising debt-servicing costs associated with its ambitious capital plan.
By the Numbers
Compared to Budget 2025, the FES forecasts:
- Lower deficit for 2025–26 ($13.5B vs $14.6B)
- Slight reduction in real GDP growth from 2024-25, but an expected increase from 2025-26
- Lower net debt-to-GDP ratio for 2025–2026 (37.7% vs 37.9%)
- A projected 0.8% increase in unemployment (7.0% vs. 7.8%)
- Consistent debt servicing and reserves forecasts
The Bottom Line
Ontario’s fiscal outlook has improved slightly in the past six months despite significant headwinds, with a narrowed projected deficit and a modest reduction in the net debt-to-GDP ratio. Still, keeping finances on track will depend on careful spending, steady economic growth, and how global trade and interest rate trends unfold.
Bolstering Ontario’s Competitiveness and Economic Resilience
Why This Matters
The Ford Government is doubling down on resilience and competitiveness in response to external shocks. New measures include supporting critical minerals, supply chain resilience, manufacturing tax credits, and tax deferrals for businesses, signal a more proactive posture in economic defence and strategic growth.
The Details
- Tax Action Plan: Will focus on updating Ontario’s personal and corporate income taxes to encourage and attract more business investment, improve Ontario’s competitiveness in the G7, and lower costs or provide relief for individuals and families
- Various Tax Incentives: To spur greater investment by industry in critical technologies that contribute to defence spending objectives and economic resilience, including artificial intelligence, cybersecurity, autonomous systems, and advanced sensing
- Ontario Trade Together Fund (OTTF): Investing an additional $100 million in OTTF to help small and medium-sized enterprises diversify into new markets and strengthen trade resiliency, bringing the total program funding to $150 million
The Bottom Line
The Ford Government is focused on building internal capacity and diversification to withstand economic shock by freeing up personal and business capital through tax measures, and encouraging businesses to enter new markets.
Addressing Slowing Housing Starts
Why This Matters
Ontario’s housing starts have been impacted by rising construction and labour costs and supply chain disruptions, compounding issues a reeling development industry was already facing. With fewer homes being built and purchased, the pressure on housing affordability continues to grow. The Ford Government will continue to be under pressure to take further measures to kickstart the creation of new housing.
The Details
- Slowed Housing Starts: Housing starts are projected to decline from 74,600 units in 2024 to 64,300 units in 2025, before recovering to 70,200 units in 2026. A more significant increase is expected in 2027 and 2028. These estimates fall well below previous projections
- Condominium Construction: Condominium construction has slowed from the 2023 peak, indicating a shift in demand and potential challenges in high-density housing development. There are, however, signs of life in the purpose-built rental market, demonstrating the policy success of moves like removing the HST on rental housing
- Home Resale Prices: The average home resale price remains significantly lower than its 2022 peak, declining by 3.3% in 2025, reflecting ongoing market adjustments
The bottom line
Ontario is facing slower housing market activity, with housing starts and home resales remaining below historical levels in 2025. To address these challenges, the Ford Government has introduced measures such as the HST rebate for first-time homebuyers on all types of homes and record investments in housing infrastructure, aiming to stimulate construction, support affordability, and increase market confidence. The outcome will depend on how effectively these initiatives help spur the creation of new housing supply.
Strengthening Ontario’s Critical Minerals Sector
Why This Matters
Ontario is reinforcing its critical minerals strategy by building a made-in-Ontario supply chain that ensures resources from the Ring of Fire and Northern Ontario are mined and processed locally. This approach is aimed at strengthening domestic manufacturing and improving Ontario’s position in global markets, while also driving economic growth and job creation within and across the province.
The Details
- BOF Expansion: In a major mandate expansion, the Building Ontario Fund (BOF) now prioritizes critical minerals, directing investment into the infrastructure needed to support both the mining and processing sectors
- Strategic Focus: The BOF will fund large-scale, revenue-generating projects designed to strengthen Ontario’s critical minerals supply chain and stimulate industry-wide growth
- Key Infrastructure: Investments will target critical infrastructure, including transportation, energy systems, and housing, to support the development and expansion of the critical minerals sector across the province
The Bottom Line
Building on the previous $500 million commitment to the Critical Minerals Processing Fund, Ontario is taking steps to solidify its role in the global critical minerals market. This strategic investment is aimed at economic growth, job creation, and enhancing global competitiveness, while ensuring Ontario remains a leader in clean energy and technology industries, all while strengthening economic ties within Canada.
What Comes Next
The 2025 Ontario Economic Outlook and Fiscal Review was introduced in the legislature as Bill 68, Plan to Protect Ontario Act (Budget Measures), 2025. The Bill is expected to pass before the legislature rises on December 12th.
More: The 2025 Ontario Fall Economic Statement can be read in full here.