Tenth annual Ontario Economic Report: A resilient economy in need of renovation

(TORONTO — February 19, 2026) — Business confidence in Ontario is stalled but stable, and trade turbulence is reshaping business decisions, according to the Ontario Chamber of Commerce’s 10th annual Ontario Economic Report.

This year’s report finds that while Ontario’s economy has shown strength, prosperity depends on lowering costs and risk for business, incentivizing investment, expanding to new markets, building infrastructure and developing talent.

“At a time of turbulence, Ontario’s economy is showing remarkable resilience – but that’s no guarantee of growth,” said Daniel Tisch, president and CEO of the Ontario Chamber of Commerce. “It’s time to move from resilience to renovation of our economic foundations: a more attractive investment climate, diversified trading relationships, and additional supports to help businesses move from surviving to thriving.”

Only 23 percent of businesses are confident in the Ontario economy, according to the report, down slightly from last year’s 26 percent, but far stronger than during the pandemic and its inflation highs.

In 2026, businesses are also slightly more confident in their own prospects than they were a year ago (52 percent, up from 49 percent). Confidence is lowest among small businesses (20 percent), and higher among mid-sized and large businesses (34 and 35 percent respectively).

“CUSMA has protected most Ontario businesses from the worst shocks, but it can’t be our only plan, especially with uncertainty around this year’s review,” said Vincent Caron, vice president of policy at the OCC. “Reducing business risk, streamlining regulation, developing the skilled talent our economy needs, and building the infrastructure and healthy communities that support growth are essential to our success.”

Key findings

• Business confidence sits at 23 percent, down 3 percent from a year ago; 52 per cent are not confident in Ontario’s economic outlook, up 4 percent.
• Businesses are responding to U.S. trade and tariff policies by increasing prices (25 percent), diversifying suppliers (22 percent) and absorbing costs (20 percent).
• Only 19 percent of firms report increasing their business investment in 2025, and only 26 percent plan to increase their investment in 2026. Many firms are neither increasing nor decreasing investment, as high costs and trade uncertainty have prompted many to pause or scale back capital projects.
• Nearly half (49 percent) of businesses headquartered outside Ontario plan to expand here, more so than in the U.S. (45 percent), but also cite concerns about costs, political and economic stability, and talent gaps in key industries and regions.
• Business policy priorities reflect the need for near-term relief and longer-term certainty, including strengthening domestic demand (e.g., through reducing interprovincial trade barriers and buy local campaigns), targeting financial supports, simplifying tax incentives, and improving coordination between decision-makers.
• Ontario’s real gross domestic product (GDP) is projected to grow by 1.2 per cent in 2026, following a subdued 1.4 per cent in 2025, as the economy adjusts to U.S. tariff impacts and weaker economic conditions.
• Inflation is expected to remain within the 1-3 percent target range, supported by softer demand and slower growth, though global supply-side pressures may keep some business costs elevated.
• Ontario’s unemployment has stabilized but remains high at 7.6 per cent heading into 2026, among the highest in Canada, as employment growth cools and population growth slows.
• Technology adoption is advancing, but unevenly. Just over half (52 per cent) of businesses report moderate or extensive use of emerging technologies, including artificial intelligence (AI). Barriers cited include cost, skills gaps, and uncertainty around return on investment.
• Diversity, Equity Accessibility and Inclusion (DEAI) actions are growing marginally: Almost half of firms (48 percent) now have diversity and inclusion strategies – up 2 percent from a year ago, and up 7 percent in the last two years.
• Workforce and mental health pressures continue to weigh on productivity, retention, investment readiness, and community safety, but only 49 percent offer mental health resources and supports.
• Trade uncertainty persists, even with the Canada‑U.S.-Mexico Agreement in place. , but tariff volatility continues to disrupt pricing, supply chains, and long‑term planning. In this context, recent government efforts to leverage domestic demand are creating greater optimism.

Read the 2026 Ontario Economic Report here.

Partners

This year’s report was developed with Presenting Partner Bruce Power and Research Partners BMO and Leger.

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About the Ontario Chamber of Commerce

The Ontario Chamber of Commerce (OCC) is the indispensable partner of business and Canada’s largest, most influential provincial chamber. It is an independent, non-profit advocacy and member services organization representing a diverse network of 60,000 members. The OCC convenes, mobilizes and empowers business and local chambers in pursuit of its purpose: to bring inclusive and sustainable prosperity to Ontario’s businesses, workers, and communities.

For more information, please contact:

Michael Thede
Manager, Communications and Marketing
Ontario Chamber of Commerce
michaelthede@occ.ca | Mobile: 647-335-1153

Backgrounder

Now in its 10th year, the Ontario Economic Report (OER) is the OCC’s flagship, evidence-based assessment of Ontario’s economy, combining the province-wide Business Confidence Survey with forward-looking analysis. This year’s edition captures the first full year of tariff impacts and introduces new questions on trade uncertainty and investor confidence. The Business Confidence Survey was conducted online by Leger from October 16 to November 26, 2025, with 1,660 respondents across sectors and regions.

The OER is designed to support evidence-based decision-making across the public, private, and not-for-profit sectors. The OCC looks forward to working with our partners to continue advancing policy solutions, informed by our policy councils and focused on the core priority areas outlined in the report.