Ontario's economy will continue to grow modestly this year and next, but the major transit expansion and the new $2.5-billion jobs and prosperity fund could help spur much-needed growth in future.

In his 2014-15 budget tabled Thursday, Finance Minister Charles Sousa predicted the economy would grow about 2.1 per cent this year and 2.5 per cent in 2015 and beyond.

That is less than historical averages and reflects the damage done by the 2009-10 recession, which battered the manufacturing sector and squeezed exports to the province's biggest market, the United States.

A high Canadian dollar also did its damage to exports, which accounts for nearly 80 per cent of the merchandise goods made at Ontario mills and factories.

Sousa said the economy is growing, but the government wants to help it restructure toward advanced manufacturing, renewed research-and-development spending to boost productivity and competitiveness, and help companies focus on exporting to fast growing Asian economies such as China, India, South Korea and Japan.

"Economists say that Ontario is well positioned for continued economic growth over the next 10 years," the Finance Minister said in his budget speech to the House.

"Our investments in skills and knowledge in infrastructure and in business will support even higher growth."

Ontario currently ships only about five per cent of its merchandise exports to fast-growing Asian economies, compared with 9.5 per cent for Canada as a whole, 35 per cent to the U.S., 12.7 per cent to Britain and more than 48 per cent to Australia, a resource-rich country like Canada.

"Emerging markets continue to grow as they benefit from stronger global demand," Sousa said. "This will also benefit Ontario. The global economy is changing."

Then he took a shot at PC Leader Tim Hudak and his million-jobs promise to deal with the "jobs crisis" in Ontario.

"We have entered a new economy, a new industrial age. If we want to make Ontario a global powerhouse, it will take more than the simplistic solutions and sound-bite economics as peddled by some."

The $29-billion, 10-year transit plan according to the government is "a key foundation for the productive economy" and will also help create 100,000 jobs over three years, a strong kick-start to the economy.

Meanwhile, the $2.5-billion, 10-year "Jobs and Prosperity" fund unveiled Thursday aims to subsidize advanced manufacturing and other businesses in the knowledge and export economy to modernize and win new markets domestically and abroad.

The traditional manufacturing sector has been cut in half since the turn of the century, falling from 22 per cent of GDP in 2001 to just 13 per cent in 2011, mainly because of the restructuring of the auto sector and the shutdown of several plants across southern Ontario.

At the same time, the service sector grew to 77 per cent from 70 per cent.

The Ontario economy has lost about 300,000 manufacturing jobs since the recession, which has led Hudak to promise to create one million jobs over eight years by cutting taxes, lowering power prices, boosting skilled trades and cutting red tape.

The NDP is promoting a small-business corporate tax cut and a program of tax credits targeted to companies that create jobs.

But Sousa said the economy has produced 459,000 jobs since the recession in a challenging world economy.

And he promised to continue pushing long-term policies to promote higher productivity, more research spending and a competitive tax climate for the business sector.

"Ontario's economy continues to grow at a moderate pace, contributing to new jobs and business opportunities," the budget document said.

"The global economic environment, however, remains challenging. That is why the government is moving forward with a 10-year plan for the economy, focused on strategic investments in people, modern infrastructure and a dynamic and innovative business climate."

Hudak, as expected dismissed the budget an its measures for the economy.

"There is no economic management here," he said, "and no focus on jobs."

Budget 2014: Ontario economic growth to remain modest

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