CHARLOTTETOWN, PRINCE EDWARD ISLAND--(Marketwire - May 3, 2012) - The Prince Edward Island economy will grow slightly more in 2012 compared to last year, according to the Provincial Monitor report released today by BMO Economics. Real GDP is expected to rise 1.4 per cent in 2012, compared to 1.1 per cent in 2011.
"After a disappointing crop year in 2011, we are expecting to see a rebound in the agricultural sector," said Robert Kavcic, Economist, BMO Capital Markets. "Also, 2011 saw the strongest pace of population growth since 1962, with the Provincial Nominee Program being particularly successful in attracting international migrants."
"Businesses in the province continue to be cautiously optimistic and make targeted business investments to strengthen their productivity and future growth prospects," said John Duff, Commercial Area Manager, New Brunswick and PEI, BMO Bank of Montreal. "The U.S. economy and elevated loonie remain top concerns for many businesses, particularly those directly or indirectly tied to the tourism industry."
After rising a respectable 1.8 per cent in 2011, employment growth cooled to 1.7 per cent year-over-year in Q1. "Private-sector employment, however, continued at a solid clip in the first quarter of 2012, up 4 per cent year-over-year on the back of strength in transportation and warehousing and finance," noted Mr. Kavcic. At 11.3 per cent, the province's jobless rate is about in line with the average seen over the past five years."
The provincial government is projecting a $74.9 million budget deficit in fiscal 2012-2013, the sixth straight year in the red. The shortfall weighs in at a relatively large 1.4 per cent of GDP, and is only a small improvement over last year's $78.6 million deficit (1.5 per cent of GDP). The Province will attempt to balance the budget by fiscal 2014-2015 through a combination of spending restraint and additional revenues raised through the harmonization of its sales tax with the Federal government.
The full Provincial Monitor can be downloaded at www.bmocm.com/economics.
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Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.