P.E.I. has once again outperformed Atlantic Canada in terms of economic growth.
But the Atlantic Provinces Economic Council (APEC) is predicting lower real GDP growth beginning next year, largely due to a slowdown in household spending, tourism and exports.
“We’re expecting the exchange rate to be slightly higher, so that might dampen tourism a little bit. It may also dampen exports. So, we’re expecting the dollar to be around 81 cents U.S. by the end of the next calendar year,” said Fred Bergman, a senior policy analyst with APEC.
On Wednesday, the Canadian dollar was trading at 78 cents U.S., according to the Bank of Canada.
In APEC’s 2018 economic outlook for Atlantic Canada – Diverging Prospects – P.E.I.’s economic growth in 2017 is 2.4 per cent, which is similar to 2016. APEC is also predicting real GDP growth (factoring in inflation) to be 1.9 per cent in 2018. The report was released on Monday.
Bergman explained that some of the factors driving the Island economy are population growth, immigration, residential investment, manufacturing and exports as well as strong employment numbers and salaries and wages.
At the other end of the spectrum is Newfoundland and Labrador. APEC is predicting economic growth to decline by 2.2 per cent this year and real GDP down by 0.5 per cent next year. The report says that the declines are due to less investment and low oil prices, although the Hebron offshore oil field is expected to help offset some of the declines.
The situation is better in Nova Scotia and New Brunswick.
Nova Scotia is forecasted to have 1.5-per-cent economic growth this year but slow down to 1.2 per cent in real GDP growth in 2018. New Brunswick is expected to grow by 1.4 per cent this year and real GDP growth is forecasted to slow down to one per cent. In both provinces, a decline in major project investment is a factor.
In terms of P.E.I., Bergman also says that Bank of Canada interest rates are expected to increase further and contribute to a modest slowdown as well as the conclusion of major project investments, such as the Northumberland Strait Submarine Transmission System, will affect the outlook.
Even so, 1.9-per-cent real GDP growth is expected to lead Atlantic Canada, he said.
“And, it’s slightly below the national growth rate (2.1 per cent) that we’re predicting, but only slightly. So, a pretty good year next year overall for P.E.I.”