TORONTO - Finance Minister Dwight Duncan expressed confidence Thursday that Ontario will avoid a recession even though fresh numbers indicate the province is already halfway there.

Newly released government figures show Ontario's economy sputtered into negative territory in the first quarter of 2008 as real GDP dropped 0.3 per cent, which Duncan blamed on a slowing U.S. economy and the high price of oil.

It's the first real sign that the province is edging closer to a recession, which is generally defined as at least two consecutive quarters of negative growth.

But there are no plans to change course from the current strategy of investing in skills training, infrastructure and innovative technologies while lowering business costs, Duncan said.

"The plan works. It's working well," he said.

"You know, we can't fix the value of the U.S. dollar. We can't the price of oil. We can't fix the state of the U.S. economy. What we can do is invest to help our workers get the skills they'll need to match the jobs."

Ontario has become a tale of two economies, with declines in some sectors -- such as the hard-hit auto industry where thousands of workers have been laid off in recent months -- and increases in others, Duncan said.

The government is facing "contradictory signals" with this fresh set of figures, which show employment and housing starts were up despite a drop in exports and business investment, he said.

"There's no good news for a family that loses its job. There's no good news right now for anybody, any family that is struggling," Duncan said.

"From a financial perspective, we're seeing some signs of health in other parts of the economy. So we're going to continue to make the investments to assist those communities and families who are struggling right now and encourage those who appear to be doing better than others."

The government is also maintaining its projection of 1.1 per cent growth in 2008, significantly higher than current predictions of 0.6 per cent growth, on average, from private-sector forecasters.

If adjustments are needed, they'll be made -- as they traditionally are -- in the fall, Duncan said.

Many economists agree the Canadian economy is poised to grow this year, with no recession on the horizon.

RBC's latest economic forecast predicts growth of 0.7 per cent this year for Ontario, the weakest pace of expansion since its last recession in the early 1990s. The last time Ontario posted negative growth was in the third quarter of 2006.

The province's exports were pounded by the high Canadian dollar and the U.S. economic downturn, which will continue to plague international sales this year, said chief economist Craig Wright.

Its poor performance in the first quarter isn't a surprise, given that Canada also posted its first quarterly decline in five years in the January-March period, he said. But the manufacturing sector is expected to bounce back in the second quarter.

"One could hold open the hope that will be reflected in the next quarterly numbers for Ontario," Wright said.

Opposition critics have warned for months that the province may already be in a recession, saying the governing Liberals have done little to lift the province out of its troubles.

In Vaughan, the latest victims of the auto sector's deepening troubles gathered outside a suddenly idled auto parts plant Thursday after learning Progressive Moulded Products Ltd. would close 11 Toronto-area plants, throwing about 2,000 people out of work.

Yet the Liberals are still ignoring the warning signs, when they should be taking urgent action to stem the tide of layoffs that have devastated communities across the province, said Progressive Conservative Leader John Tory.

"I think the house is fully ablaze when it comes to the economy, and that (Premier Dalton) McGuinty and Mr. Duncan are sitting around discussing whether or not they can smell smoke," he said.

The Liberals are naive to think they can just wait the bad times out, hoping that things will suddenly improve, warned NDP critic Peter Kormos.

"There are no signs whatsoever that things are getting better," he said.

"On a daily basis, at the very beginning of this summer, we're seeing more and more job losses in the province of Ontario -- up to a quarter of a million good manufacturing jobs lost with no end in sight."