P.E.I. economy set to improve in 2013 from export sector: RBC Economics

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P.E.I.'s economy is expected to improve in 2013.

Unexpected production disruptions and delays across Atlantic Canada slowed economic growth in 2012 but the region is well positioned to see this improve next year, according to the latest RBC Economics Provincial Outlook.

The outlook notes that despite slowing population growth and fiscal restraint, Prince Edward Island’s economy continued to chug along in 2012, supported by dynamic exports and surprisingly resilient domestic demand.

The emerging aerospace industry has been a key source of strength for the province’s economy in 2012, RBC says, fuelling nominal merchandise export growth to the highest rate in the country. Sales of turbo jets and propellers skyrocketed, making aerospace products the province’s second-largest export commodity group, next to potatoes.

RBC also notes that strong gains in U.S.-bound shipments of lobster and french fries contributed to the biggest increase in P.E.I.’s agricultural and fish exports since 2008. Additionally, cruise ship traffic picked up in October, with the scheduled number of ships reaching a record level and leaving expectations for further gains in 2013.

However, a significant pullback in provincial government spending, both this year and next, will dampen domestic economic activity in P.E.I., says RBC. The provincial government has committed to a three-year plan to return the budget to balance and the public sector, which makes up for 40 per cent of P.E.I.’s economy, will act as a notable drag on growth.

“Despite the strong headwinds facing P.E.I., favourable gusts from south of the border will support the province’s export sectors in 2013 and boost real GDP growth to 1.8 per cent, up from 1.4 per cent in 2012,” said Craig Wright, senior vice-president and chief economist, RBC. “Emerging industries of bioscience, aerospace, and renewable energy provide scope for an even better performance in 2014.”

 

 

Organizations: RBC

Geographic location: Prince Edward Island, Atlantic Canada

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Recent comments

  • mustbe
    December 17, 2012 - 10:00

    Must be Wes Robert and the HSTor Pnp.Get out there and take credit for this.Or do you only play the BLAME GAME.

  • James McGoo Lakeside
    December 16, 2012 - 16:49

    RBC is making a projection. Projection = educated guess. The reference to aerospace is encouraging and representsthe type of activity to revitalize PEI. Lobsters, french fries, and fish exports are critical, but too subjective to outside competition. Using this report as a basis for a plan, what does the government propose and support as additional growth sectors for the island. Without this input from the government, we could be 9 months into 2013 with our Finance Minister informing us what didn't happen and why we are adding to the deficit. Government - please inform us what you are doing to add to the potentials described by RBC.

  • Right . . .
    December 16, 2012 - 15:48

    If the aerospace industry is such a key source of strength for the province’s economy, why doesn't it pay provincial taxes? Cumulatively, small businesses are much more a significant source of economic strength - but we pay taxes! If it's big and shiny or if it has to be paved, this government will support it. The rest of us small business owners can expect to be planb'd in the back of the head.

  • Justine Thyme
    December 16, 2012 - 12:01

    The economy can't get any worse unless we all leave. People start dumping their pets at the Humane Society and start moving west for work, home values have dropped significantly, yens of millions are spent on a road when our healthcare is essentially dead and never fear, the economy is going to get better next year, because anyone on EI will have their checks run out next year so we wont have to include their numbers in the stats.Voila, economy issue solved.

    • sentance
      December 17, 2012 - 09:57

      The unemployment stats have nothing to do with the EI system. If you run out of benefits but are still unemployed and looking for work you still are counted as unemployed. And if you're on fishers benefits or maternity and aren't looking for work because you don't have to, interestingly you don't count as unemployed. Unemployment stats are taken from the monthly Labour force survey, not EI data.

  • Islander
    December 16, 2012 - 11:55

    PEI's largest export right now is people. They are leaving to find work elsewhere.