Business advised to address long-term problems.

• Position: Economic forecasts for Ontario

While the short-term outlook for Ontario's economy looks bleak, it would be wiser for business to turn its attention to long-term problems, says Tim Whitehead.

Whitehead, an economist with the Canadian Imperial Bank of Commerce, was a featured speaker last month at the Northern Ontario business conference sponsored by the ministries of Industry Trade and Technology and Northern Development and Mines.

During his presentation on the bank's economic outlook for 1992, Whitehead acknowledged that the business community views interest rates, the Canadian dollar and taxation as its three most serious problems.

"All of these are fairly short-term and also out of the control of business," he commented. "I don't want to belittle them as problems, but we are overlooking things that have to be addressed in the long term."

Whitehead identified service, labor-management relations, government regulations and education as our principal long-term problems. Labor-management relations, he explained, affect our ability to deliver goods as promised.

Calling Canada a "very over-regulated market," Whitehead stated that trade barriers between the provinces must be addressed if our country is going to become a competitive nation.

"We must recognize that we have problems and that the government doesn't have the money to solve them," he concluded.

The CIBC has predicted that Canada's economy will continue on the road to economic recovery next year. However, Whitehead warned that the forecasted three-per-cent growth rate will be "anemic" compared to the recovery from the 1981/82 recession.

The bank has predicted that Ontario's economy will also have a sluggish three-per-cent growth rate, fueled primarily by exports and household spending.

However, Whitehead expressed concern that investment by business is expected to be weak because of excess capacity and poor cash flows in several sectors as well as because of a lack of confidence in the business environment.

"The perception is out there that Ontario is not the place it used to be for investment."

Whitehead said the recession was more severe in southern Ontario than in other parts of the country because of the excesses of the mid and late 1980s and also because weak global markets offered little relief for the province's export-intensive industries.

The economic gap between southern Ontario and the rest of Canada has narrowed, and Whitehead expects that it will remain that way.

The economist's forecast contained...