The debt rating agency said the province continues to have a large, wealthy and well-diversified economy, though it still faces a large deficit.
Standard and Poor's had cut its outlook for Ontario last year from "stable" to "negative"
The agency said the outlook reflected its view that there was at least a one-in-three chance it could lower the long-term rating one notch in the next year.
"While recognizing that the sluggish growth in the U.S. and the European recession pose risks to the economic outlook, we believe that the government's forecast for real GDP growth that underpins its fiscal plan is reasonably cautious," Standard and Poor's credit analyst Mario Angastiniotis said.
The Ontario government deficit is expected to come in at $9.8 billion in 2012-13, down from $11.9 projected four months ago and $14.8 billion projected in last year's budget.
For 2013-14, however, the deficit projection climbs to $11.7 billion.