WATERLOO REGION — Slower-than-expected population growth in the region is at odds with the escalating growth forecast by the provincial government.

Meanwhile the province has blown up a key assumption upon which its population forecast rests, abandoning an expectation of full economic recovery in coming decades.

Ontario's current forecast — 742,000 residents in this region by 2031 — is meant to help guide spending on roads, water, sewer and transit. By law, local governments must plan for it. But is it reliable?

Regional planning commissioner Rob Horne would not criticize the provincial forecast, pointing out that upturns follow downturns. He knows the economy is not as vigorous as expected.

"The province continues to have great confidence in us as an economic generator," he said. "We're all working hard to support the economy and to make full recovery."

Horne is confident regional government can handle the forecasted population, in part by taking steps to install rail transit, preserve farmland and intensify housing in central areas.

Waterloo Region added 6,600 residents to reach a population of 563,000 last year, including university students, regional government says in a new estimate. That's 3,300 fewer residents than forecast by regional planners.

It's the second year in a row that population growth did not meet expectations. Local planners predicted 17,200 new residents over 2012 and 2013, but the region added 13,600.

Over five years, the regional population has grown 34 per cent more slowly than in the past 15 years. The current growth rate matches 1993-1997, when the Ontario economy tanked.

Despite this, Ontario forecast last June that this region will grow faster than previously predicted, reaching 742,000 people by 2031. This exceeds previous growth estimates by 13,000 people.

The province based its heady forecast on key assumptions outlined in a technical report: we'll live longer, fertility rates will rise, the faltering provincial economy will recover, and Ontario will reassert itself as an immigration magnet.

The rosy assumption underlying the forecast is that the Ontario economy will return to its historic strength, growing by an annual average of 2.6 per cent between 2011 and 2030, measured in real gross domestic product. The Ministry of Finance asserted this in 2010. Planning consultants hired by the province based current population forecasts on it.

Finance Minister Charles Sousa blew up the assumption Wednesday in releasing a new, grimmer economic forecast.

Ontario now predicts annual economic growth averaging 2.1 per cent between 2014 and 2035, well below the historic average between 1982 and 2013. Actual economic growth was even slower in 2011 and 2012, averaging below 1.7 per cent.

Ontario blames economic deceleration on a shrinking workforce, aging population and weak productivity gains.

Where does everyone live?

jouthit@therecord.com