News Releases

CHARLOTTETOWN, PRINCE EDWARD ISLAND--(Marketwire - Oct. 12, 2011) - As with most of Atlantic Canada, economic growth in PEI looks relatively soft this year as stimulus spending winds down, according to the Provincial Monitor report released today by BMO Capital Markets Economics.

"Real GDP is expected to grow 1.9 per cent, a shade below the pace seen in 2010, before cooling further in 2012 when capital spending begins to contract," said Robert Kavcic, Economist, BMO Capital Markets.

"While public-sector capital spending is expected to level off this year, overall building permits have remained strong," noted Mr. Kavcic. "In particular, non-residential permits were up 38 per cent year-over-year over the past 12 months, outweighing a decline in the residential sector."

"Non-residential construction remains a good news story in PEI," said Christine Cooper, District Vice-President, New Brunswick and PEI, BMO Bank of Montreal. "With an increase of nearly 40 per cent over the past 12 months, we expect continuing strength in this sector to support growth."

A still-cautious U.S. consumer could have a negative impact on tourism activity, even though the Canadian dollar has fallen sharply in recent weeks. "The number of U.S. residents entering Canada fell to the lowest level on record in the first half," said Mr. Kavcic.

Prince Edward Island's Public Accounts reported a deficit of $52.5 million in fiscal 2010-2011 (1.1 per cent of GDP), $1.2 million lower than the $53.7 million originally forecast. Both revenue and expenses came in higher than estimated (the former more so). The Government said that it remains "on track for a return to balance in fiscal 2013-2014." From this spring's Budget, the province is projecting a shortfall of $42 million this fiscal year (0.8 per cent of GDP), which falls further to $30 million next fiscal year before achieving balance in fiscal 2013-2014.

The full Provincial Monitor report can be downloaded at bmocm.com/economics.