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London’s economy will rank among the best in Canada in a sluggish 2024 and will likely shoot up even higher after that, bolstered in large part by the construction sector and Volkswagen’s upcoming battery plant, a major think-tank forecasts.
After posting the biggest gross domestic product growth in the country last year at 3.2 per cent, London’s GDP is expected to slow down to 1.1 per cent throughout the rest of 2024, the Conference Board of Canada said in its latest projections for major cities across the country.
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That would still place London sixth among the 24 census metropolitan areas analyzed by the economic think-tank and above the national average of 0.8 per cent growth. Between 2025 and 2028, however, London’s economy is expected to grow at an annual pace of 2.5 per cent, good for third place across Canada.
“Despite the slowdown in economic activity, the story is that the London economy is quite resilient,” said David Ristovski, an economist with the board.
“And although it’s slowing down, we do have (London’s economy) outperforming the national average.”
The retraction in 2024 will be the result of tough economic conditions affecting the country, and which are not expected to significantly easy up until next year, Ristovski said.
This includes high interest rates that have reduced demand for big-ticket items, such as cars and homes, and inflation that is still above the Bank of Canada’s target of two per cent.
“Inflation is headed in the right direction, but households are still feeling the pinch of higher borrowing costs and elevated prices across the board,” Ristovski said.
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The board’s optimism for London’s outlook rests mainly in the state of the city’s construction sector, which is expected to give a major boost to the local economy.
Though home construction in Ontario has slowed down significantly this year, London is building more homes in 2024 than it did at this time in 2023, recent figures from the Canada Mortgage and Housing Corp. show.
The Conference Board of Canada also highlighted the $74 million the city will receive as part of the federal government’s housing accelerator fund, which would lead to the construction of about 2,000 homes over the next three years.
The construction of the Volkswagen battery plant in St. Thomas is also expected to give another massive jolt to the local economy, Ristovski said.
The plant “will create around 3,000 direct jobs and thousands of other spin-off jobs in sectors such as transportation and warehousing, not to mention the sheer impact that it’ll have on the city’s manufacturing sector,” he said.
“Once the battery plant is in full swing and production is at maximum capacity, the city’s manufacturing sector will be a growth leader going forward.”
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Kapil Lakhotia, chief executive of the London Economic Development Corp., called the board’s outlook “validation of our economy being on fire” despite the difficult economic environment the country is experiencing.
“We continue to attract a lot of talented workers from various parts of Canada and the rest of the world. We’ve got a lot of campaigns underway in Toronto and other markets in the States to attract people and it is paying dividends,” he said.
“People are moving here with all these economic opportunities around us in a variety of different industry sectors. I think London is really well positioned to continue this growth cycle over the next several years.”
jjuha@postmedia.com
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