Moderate growth

Much of the boost may come from the tourism sector. A stronger outlook for Canada and especially the U.S. is good news for the province, as citizens of both countries are likely to visit this island province. Says Alicia MacDonald, senior economist with the Ottawa-based Conference Board of Canada: “Economic conditions across North America will really help to boost the tourism sector in P.E.I. next year.”

Although some facets of the tourist sector, such as room nights sold, were a little low in 2013, the growing number of cruise-ship visitors to P.E.I. made up for any losses, says Laura Cooper, an economist with RBC in Toronto. The bank expects cruise-ship tourism to continue to grow in 2014.

P.E.I.’s tourism sector also is likely to get a boost this year from the celebrations and events for the 150th anniversary of the Charlottetown Conference.

“There’s going to be a lot of federal, provincial [and] territorial meetings in P.E.I.,” says Fred Bergman, senior policy analyst with APEC in Halifax. “Any time you hold those meetings in a province, it attracts some tourist spending.”

As well, growing demand in the U.S. for P.E.I. exports is good news for the province’s economy in 2014. After a slow 2013, aerospace, in particular, is expected to do well. A recent 10-year extension of the aerospace tax credit, says Bergman, as well as an expected uptick in orders for aircraft and aerospace parts from the U.S. will give this industry a boost.

And more U.S. consumers are likely to start buying processed food products from P.E.I., says Bergman, particularly french fries from Cavendish Farms (a unit of Dieppe, N.B.-based J.D. Irving Ltd.) and McCain Foods Ltd. of Florenceville, N.B., both of which have operations in the province. As well, a Milbridge, Me.-based blueberry-processing company, Jasper Wyman & Son Inc., is expected to double its P.E.I. operations in 2014.

Seafood processing, however, could be a bit of a drag on the island’s economy, says MacDonald, a result of saturation in the lobster market.

Another strain on the province’s economy in 2014 is likely to be a decline in business investment – and, therefore, construction.

Construction on a number of large-scale projects, such as Target Corp.’s new store in Charlottetown and the Hermanville/Clearspring wind-energy farm, are completed or winding down, says MacDonald, and there are no big projects in the works to replace them.

That said, this should not be a major concern.

“It’s not necessarily an alarming trend,” MacDonald says. “It’s just that [P.E.I.] had so much going on in 2013 that it really boosted the sector. And without that occurring again in 2014, it’s putting a damper on the economic outlook.”

Looking to the public sector, all the economists interviewed say government spending is unlikely to make any kind of contribution to economic growth in P.E.I. the coming year. In fact, public- sector spending is likely to remain low while the provincial government tries to reduce its deficit.

There has been some good news, with the provincial government announcing $7.6 million more in spending for 2013 and 2014, according to an RBC Provincial Outlook report published in December 2013, with $26 million more in the province’s five-year capital plan.

Says Cooper: “That could tell us the net fiscal drag could maybe not be as steep as we initially anticipated.”

Prince Edward Island

Population: 145,237

GDP 2012 ($bil.): 5.5

GDP % change: +3

2013-14 deficit ($mil.): 57.7

Estimated net debt ($bil.): 2

Median after-tax income, all families: $45,500

household disposable income/capita: $26,115

Figures are from latest available reports/estimates

Sources: conference board of canada;

Government reports

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