News Releases

CHARLOTTETOWN, June 25, 2009 – The P.E.I. economy is under pressure as consumer and construction activity have weakened, according to the Provincial Outlook report released by BMO Capital Markets Economics. Real GDP will likely fall 2.0 per cent in 2009, followed by a modest 0.9 per cent recovery next year.

“Housing starts in the province remain soft, and consumer activity has lost its momentum, which was helped by tax cuts,” said Robert Kavcic, Economist, BMO Capital Markets. “Retail sales were down 1.1 per cent year-over-year in the first four months of the year, a stark change from average growth of about 6 per cent in the prior three years. Meantime, a rejuvenated loonie will likely apply pressure on tourism, already facing a tougher environment as travellers hunker down during the recession.”

The Province of Prince Edward Island is projecting an $85.3 million budget deficit in fiscal 2009/10, its third consecutive year in the red and up from $41.4 million last year. Total revenue is projected to grow 6.7 per cent to $1.4 billion in fiscal 2009/10, prodded by an 11.4 per cent surge in federal sources, with increased funding for infrastructure and equalization payments setting the pace. Total expenditure is projected to grow 9.2 per cent in fiscal 2009/10, to $1.5 billion. The government introduced a five-year, $510 million capital plan last autumn, with close to $130 million in outlays slated for fiscal 2009/10.

The complete report can be found at www.bmocm.com/economics.

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