The only constant in life is uncertainty.

The economic development minister implied as much when he sloughed off concerns about an expected Bank of Canada rate hike, pointing to an economy supposedly as solid as the Canadian Shield.

“There are always uncertainties to all economies. We live in an uncertain global world,” Brad Duguid said at a press conference Friday morning.

“The key for Ontario right now is we’re in a position of strength. We’re growing, we’re outpacing the G7 … Whatever fluctuations happen in currencies and interest rates, I’m very confident that Ontario’s economy will be stong enough to withstand it and continue to grow.”

The Fraser Institute wasn't so sure. Ontario, having under-invested in manufacturing, finds itself heavily dependent on housing, which fuelled 29 per cent of its economic growth in 2016, according to a report from the think tank this week.

“With a growing chorus of analysts and the federal government warning that a possible bubble in Toronto’s housing market risks deflating, this leaves Ontario precariously dependent on a potentially unstable and unsustainable source of growth,” wrote report author Philip Cross, a veteran of Statistics Canada.

The Bank of Canada is widely expected to bump up its benchmark interest rate next week, following hints from governor Stephen Poloz. With both home sales and prices now on the decline, a modest hike of 0.25 per cent – predicted by some economists – would likely serve to dampen demand further.

In February, the province’s Financial Accountability Office (FAO) said expected rate hikes would heighten the “risk that Ontario could face a sharper decline in house prices that would negatively impact the broader economy and the province’s fiscal position.”

A drop in house prices and sales numbers would also dry up the pool of government revenue drawn from the land transfer tax and harmonized sales tax. A broader ripple effect might slurp up cash that would have come from personal income and business taxes.

The FAO predicted a decline in house prices of between 10 per cent and 20 per cent over the next four years. That translates into a projected loss between $600 million and $1.2 billion to Queen’s Park in this fiscal year, and up to $2.2 billion by 2020-21.

With many concerned about a steaming hot GTA housing market – with year-over-year increases of up to 33 per cent earlier in 2017 – the cooler projections may come as a breath of fresh air.

Last month, the average price of all homes sold in the GTA sank to $794,000, according to figures released Thursday by the Toronto Real Estate Board. That’s a 13.8-per-cent drop from the April high of $921,000.

That month, Premier Kathleen Wynne announced a 15-per-cent foreign buyers tax on residential real estate in the Greater Golden Horseshoe, which stretches from Peterborough to Barrie, Waterloo and Niagara Falls.

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Twitter: @ChrisAReynolds

Expected Bank of Canada rate hike leaves economic development minister unmoved

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