Exports on the upswing

Prince Edward island: Lobsters, potatoes and pharmaceuticals will benefit from a lower C$ and increased world demand, mostly from the U.S.

By: Fiona Collie
January 29, 2016 November 9, 2019
00:00

Economists estimate growth in real gross domestic product of 1.3%-1.6% for Prince Edward Island in 2016. Much of that increase will be due to a weaker Canadian dollar and a surging U.S. economy, both of which will boost exports.

Seafood and potatoes will make up the majority of those exports. A report from Toronto-based RBC Dominion Securities Inc. (DS) notes that 2015 was a record year for this sector. “[Food exports] were up strongly in 2015 and they likely will be in 2016,” says Gerard Walsh, an economist with DS.

In addition to the U.S., China is a significant market for P.E.I. exports, particularly lobster, says Daniel Fields, economist with the Conference Board of Canada.

A weak loonie also means an increase in tourism as Americans start looking for inexpensive vacations north of the border. “Tourism is always popular in P.E.I. in golfing season,” Fields notes. Tourism had a very strong year in 2014 because of the 150th anniversary of Confederation, then numbers declined in 2015. However, visits should stabilize or grow this year.

Pharmaceutical manufacturing also is expected to give P.E.I.’s economy a boost in 2016.

P.E.I.’s pharma business focuses on agriculture-sourced medicine and manufacturing drug ingredients or diagnostic products that are purchased by larger pharma companies in other parts of the world. “Certainly, the long-term demand for health care will be positive,” says David Chaundy, senior economist with the Atlantic Provinces Economic Council (APEC) in Halifax.

P.E.I.’s population growth slowed to 0.3% over the past three years, according to APEC, and the labour force (individuals aged 18 to 64) has declined. Exactly what this trend means for P.E.I.’s economy in 2016 is uncertain, says Chaundy. Over the longer term, this shift will be a negative factor.

Still, despite relatively high unemployment, P.E.I.’s wage growth is double the national average, possibly due to the buoyant manufacturing sector.

Government spending will remain restrained in the coming year in an effort to balance the books by the 2016-17 fiscal year.

PRINCE EDWARD ISLAND

Population: 146,407

GDP, 2014 ($bil.): 6

GDP, % change: 3.8

2015-16 deficit ($mil.): 33

Estimated net debt ($bil.): 2.2

per capita wage growth, % change, 2015: 2.5

Household disposable income, per capita: $27,695

Figures from latest available reports/estimates

Sources: Conference Board of Canada; Province