CHARLOTTETOWN, PRINCE EDWARD ISLAND--(Marketwire - Oct. 9, 2012) - The Prince Edward Island economy will continue to grow at a modest pace, according to the Provincial Monitor report released today by BMO Economics. Real GDP is expected to rise 1.4 per cent in 2012 and 2013, compared to 1.1 per cent in 2011.
"Softer public-sector capital spending will weigh on construction activity, while recently impressive population trends have begun to cool," said Robert Kavcic, Economist, BMO Capital Markets. "Public-sector capital spending is projected to fall substantially as the Province shifts its focus to fiscal restraint."
"Businesses in the province continue to be cautiously optimistic. They are making targeted business investments to strengthen their productivity and future growth prospects," said Allison Hakomaki, District Vice President, New Brunswick and PEI, BMO Bank of Montreal.
Mr. Kavcic noted that population growth has been a key economic support in recent years, running at a 1.5 per cent annualized clip in the three years through mid-2011. "Growth slowed to just 0.7 per cent year-over-year in the second quarter of 2012 amid more normal immigration trends and ongoing out-migration to other provinces. This trend should dampen retail sales growth and housing demand, which have seen solid growth since the recession."
Job growth has levelled off this year, with employment down 1.8 per cent from year-ago levels in September. "While professional and business services have seen solid growth in the past year, manufacturing and construction have weakened," said Mr. Kavcic. "Health care spending growth will be held to 3.5 per cent per after this fiscal year, while education spending will be held flat. At 11.2 per cent, the province's jobless rate is right in line with the average of the past three years."
The full Provincial Monitor can be downloaded at www.bmocm.com/economics.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.