Ontario’s economy is poised to plunge to record lows due to the COVID-19 pandemic.

The Financial Accountability Office of Ontario (FAO) released its Spring 2020 Economic and Budget Outlook report on May 11. The document projects that the province’s deficit will quadruple by the end of the fiscal year. The forecasted total of $41 billion would be the largest in Ontario’s history, while the province’s debt to GDP ratio is forecasted to jump by nine percentage points to a record 48.7 percent.

The effects of the pandemic are being felt across government.

Revenues are projected to drop by nearly $22 billion—or 14 percent. Spending meanwhile is up significantly in the form of relief payments being issued to businesses and workers that are otherwise unable to keep working during the pandemic. The FAO’s deficit projection of $41 billion is poised to eclipse previous record levels of $19.3 billion in 2009–10 and $12.4 billion in 1992–93.

The FAO calls the effects of the pandemic on the province’s economy “severe”, noting that the province’s real GDP, which rose by a modest 1.6 percent in 2019, is projected to plunge by a record 9 percent in 2020. Again, this would represent the largest annual drop in the province’s history.

The provincial government is currently in the early stages of re-opening the economy. While some business have been deemed essential services, and therefore allowed to remain open during the pandemic, the list of those deemed non-essential is far more encompassing. In gradual stages, the province has allowed non-essential companies to open their doors.

The most recent announcement on this front came on May 8 when the province said it would allow garden centres, greenhouses, nurseries, hardware stores, and safety supply stores to open fully over the weekend of May 10. Those retailers with street entrances and that can offer curbside pick-up to customers were allowed to open days later.

The amount of time taken to bring the economy back up to full capacity will be critical to the province’s long-term economic health, says the FAO report.

“Assuming the pandemic shutdown is gradually eased through the summer,” says the report, “Ontario’s economy will steadily strengthen into 2021, helping to reduce the budget deficit to $25.3 billion in 2021–22.”

Under that scenario, the FAO forecasts GDP growth of around 8.5 percent in 2021.

If, however, public-health concerns force the economic recover into a slower gear, the FAO forecasts that budget deficits and provincial debt would be much higher. GDP growth could climb by 4.6 percent in 2021, while the province’s net debt-to-GDP ratio could rise to more than 52 percent.