Source: Government of Prince Edward Island
Today, Finance Minister Darlene Compton provided the fall economic and fiscal update, which outlines for Islanders the province’s current economic position as it enters the new normal phase of living with COVID-19.
Prince Edward Island experienced growth in the first quarter of 2020 and was in a strong economic position, which put it in a better place to weather the impacts of the pandemic. Overall, the province’s economy is anticipated to decrease by 3.9 per cent this year, which is better than the 5.1 per cent decrease projected in June. The collective efforts of Islanders in mitigating and containing the spread of COVID-19 has allowed many public health restrictions to be relaxed and most sectors to re-open sooner than in other areas of the country.
“Prince Edward Island has not been immune to the economic impacts of the global pandemic; however, we have fared better than most provinces and in our initial projections,” said Minister of Finance Darlene Compton.
“We’ve seen some recovery as Islanders return to work and businesses re-open, although we know the service industry – accommodation, food and beverage services – continues to be the hardest hit. Our economy continues to move forward, and the hard work, ingenuity and resiliency of Islanders will allow us to renew and strengthen our economic position for the betterment of everyone.”
The current forecast for 2020-2021 shows a deficit of $178.1 million, a slight increase of $5.4 million from the budget tabled in June. The 2020-2021 budget included contingencies for managing economic recovery and supporting Islanders during a second wave of COVID-19. The fall fiscal update maintains these contingencies for the continued support of Islanders.
Total revenue is forecasted to decrease by $36.8 million, primarily due to decreases in both federal and provincial revenue sources. Offsetting this is an increase in revenues for government business enterprises due to better than anticipated sales as a result of the Atlantic Travel Bubble. Total expenditures are forecasted to decrease by $31.4 million, primarily due to delays in infrastructure projects under the New Build Canada Fund, delays in new hires, and interest savings.
Employment across Prince Edward Island continues to recover from what was seen in April and is projected to reach previous levels by late fall. The reopening of childcare services and return to full-time classroom learning in schools allows even more Islanders, especially women, to return to the workforce.
With the momentum of strong growth in the first quarter of 2020, Prince Edward Island continues to see growth in several key economic areas, including wholesale trade, international exports, housing starts, and farm cash receipts. The bond ratings issued by the three credit rating agencies for the Prince Edward Island remain stable and allow the province to experience favourable borrowing conditions and lower than expected interest rates.
Prince Edward Island’s population grew by 2,363 people in the first half of 2020, bringing the total population to 159,625 – a one and a half per cent annual growth rate, the fastest growth among the provinces. Immigration is also expected to grow to near pre-COVID levels this year, which will further support the residential construction sector.
Moving forward, Prince Edward Island’s economy is expected to rebound significantly in 2021 and will be boosted by factors such as an increase in immigration to the province, federal income supports, and economic improvements among other provinces in the country and for trading partners around the world.
Get more information on the 2020 Economic and Fiscal update.
Department of Finance