TORONTO - The possibility of Ontario falling into deficit amid a worsening global financial crisis was raised Monday by Finance Minister Dwight Duncan as he downplayed the outlook for the province's economy for the second time in a week.

While the latest numbers suggest the government appears on track for a balanced budget, current volatility is making it difficult to gauge future impacts on the economy, Duncan said.

"Part of the challenge ... is how difficult it is to make projections in these times," he said.

"We will have better projections available at the time of the fall statement, but we're going to have to use some intuition and logic as we look out in the world and what impact that can have here in Ontario and in Canada."

While Duncan wouldn't say he could no longer commit to a balanced budget - the last three have been balanced - he did say the world economy is facing challenges "that all of us have to take into account."

"Projections for not just this year but for the years out are now much worse than they were, certainly at the time of the budget," he said.

Duncan's comments came as the Toronto stock market at one point Monday plunged close to 1,200 points - crashing to a three-year low amid a global stock-market slump led by faltering economies and a sharp drop in crude oil prices.

It also comes a week after he warned that "tough times" are ahead for Canada's most populous province, despite slight growth in Ontario's gross domestic product of 0.3 per cent in the second quarter.

But while Duncan acknowledged that the weekend collapse of European banks has made the world "a very different place" than it was just two weeks ago, he urged people not to jump to conclusions about what that will mean for the province's economy this year.

"You've got to reflect not only on what's happening now but when does it hit, if it hits," he said.

"Timing (of spending plans) will be influenced by circumstances. It may mean it takes us longer to do some things as opposed to others."

Investments in the public service and in infrastructure, he added, will be key.

Opposition Leader Bob Runciman said Duncan seems taken aback by the financial crisis and isn't responding quickly enough.

"It's taking him by surprise, day by day," Runciman said.

"We see him changing his story; it wasn't too long ago when he said we were going to have a balanced budgeted. Now he's waffling on that."

NDP Leader Howard Hampton blasted the government for failing to deliver on its promises to fight poverty, saying difficult economic times should be making it a priority.

"The premier finds it easy to talk about employment insurance and laid-off workers, but he's not going to do anything," Hampton said.

But David Docherty, dean of arts at Wilfrid Laurier University in Waterloo, Ont., said the deficit may be unavoidable.

"All the political parties are avoiding the word deficit like the plague, but there's a lot of people out there that if they've lost their jobs, they probably don't mind a government going in the hole a little bit if it means they can help them out," Docherty said.

"People turn to the Liberals and social programs when the economy is in bad times - that's strict Keynesian economics - so people are a little less afraid of deficit in tough economic times, if that's what it takes."

Ontario has already lost more than 200,000 manufacturing jobs since 2002, and the Liberal government has come under fire from the opposition parties for what they call a lack of competitiveness in drawing business.

Premier Dalton McGuinty, meanwhile, argues other provinces have an easier time cutting corporate taxes because they get a better deal from the federal government.

Duncan said Monday his economic statement on Oct. 22 should help reassure Ontario residents that the government's plan "will be the right one."

Runciman also accused the government at the legislature earlier Monday of "rolling the dice" with taxpayers' money by investing in risky asset-backed commercial paper, or ABCP.

Duncan had initially pegged the cost to taxpayers at less than $100 million, but now says that figure is at $107 million, much of which will be recovered.

"Ontario taxpayers can be assured that the cash holdings of the province are appropriately invested, are earning a good return and in fact, given the strength of those returns over the last year, are enabling us to invest more in health care, invest more in education," Duncan said.