Inching forward

“[P.E.I. should have] fairly steady growth this next year,” says David Chaundy, senior economist with APEC, “and our forecast is continued modest but steady growth continuing for the next few years.”

Manufacturing exports, including those in the aerospace and processed foods industries, will help to fuel growth in 2015, according to a report from Toronto-based Royal Bank of Canada, (RBC) although its outlook for manufacturing is slightly lower than the sector’s performance in 2014, which was relatively strong. The report expects P.E.I.’s real GDP to contract slightly in 2015 to 1.2% before picking up in 2016.

“Strong U.S. demand and global demand, generally, should provide further lift to [the manufacturing sector],” says Gerard Walsh, economist with RBC Dominion Securities Inc. in Toronto.

Seafood preparation and packaging and frozen foods made up the lion’s share of last year’s exports from P.E.I., Walsh adds, representing 37% of all trade, an 11% increase from 2013. In particular, the lobster fishery is expected to grow.

Daniel Fields, economist with the Conference Board, notes that there’s rising demand for lobster in China; and a recent deal with Wuhan Lanesync Supply Chain Management Co. and the sale of lobsters through e-commerce giant Alibaba.com Ltd. will help P.E.I.’s lobster industry.

The biosciences industry also has grown quickly in recent years, an APEC report says, and that industry will continue to do so in 2015 with the help of a $3.8- million federal grant over the next five years, which will help startups get to market faster. Another boon is the planned expansion of Charlottetown-based BioVectra Inc., P.E.I.’s largest biosciences firm.

Tourism has been a bright spot for P.E.I. in recent years and is likely to continue to be positive for the economy in 2015. But just how strong that growth will be, given that the industry benefited last year from the 150th anniversary of the Charlottetown Conference, which included several government-sponsored events, is open for debate.

APEC, for one, is not as optimistic about tourism, given last year’s bump. Says Chaundy: “We’re not expecting that to advance much further in 2015.”

Still, the expected growth in biosciences and exports may provide a boost for employment. The RBC report’s forecast for 2015 calls for a 10.2% unemployment rate on the Island. As of January 2015, the unemployment rate was 10.8%, according to Statistics Canada. Reports from both APEC and the Conference Board predict the unemployment rate will drop below 10% in 2015 for the first time since the 1970s. Fields sees new housing starts in 2015 as a reason for the expected dip in unemployment. The Conference Board report predicts roughly 650 new units in 2015, a 25% increase over last year.

But Walsh expects housing starts to remain low in 2015 because of an aging population: “If there’s no net new people of working age on the Island, it’s hard to see how housing starts can grow very quickly.”

P.E.I.’s government is committed to balancing its books on schedule, in the 2015/2016 fiscal year, and is unlikely to announce any new spending this year, given a projected $45-million deficit for the 2014-15 fiscal year.

Prince Edward Island

Population: 146,283

GDP, 2013 ($bil.): 5.8

GDP % change: +4.9

2014-15 deficit ($mil.): 44.7

Estimated net debt ($bil.): 2.2

Per capita wage growth, % change, 2013-14: +4.4

Household disposable income, per capita: $26,462

Figures from latest available reports/estimates

Sources: Conference board of Canada; Province IE chart

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