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Growth Plummets, but Atlantic Bubble Helps the Island Avoid the Worst: Prince Edward Island’s Two-Year Outlook—December 2020 The Conference Board of Canada, 11 pages, December 16, 2020 Issue briefing

Growth Plummets, but Atlantic Bubble Helps the Island Avoid the Worst: Prince Edward Island’s Two-Year Outlook—December 2020

The Conference Board of Canada, 11 pages, December 16, 2020
Issue briefing

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This quarterly economic forecast for the province of Prince Edward Island examines the economic outlook for the province, including gross domestic product (GDP), output by industry and labour market conditions. Document Highlights Prince Edward Island is currently in its largest recession in decades, but it appears the worst is behind the province as we expect growth to return to pre-COVID-19 trend levels by early 2022. With the lowest number of COVID-19 cases in the country, the province has been able to welcome visitors from within the Atlantic bubble, which has helped mitigate the worst of the recession. Still, the second-quarter drop of 12 per cent will be the biggest on record and result in an overall annual contraction of 5.6 per cent in provincial GDP this year. The key drivers of recent growth on the Island have been tourism and immigration, both of which were severely hampered by the border closures. However, with the vaccine expected next year, we anticipate that visitors—overnight and permanent—will return to the Island in droves. The government has been an essential source of growth and stability during this economic crisis. Essential stimulus spending combined with a major hit to government coffers will result in a record provincial deficit of $178 million this fiscal year. Table of Contents Key findings Prince Edward Island snapshot Overview Tourism suffers major setback Labour markets take first step on road to recovery Construction benefiting from build-up in housing Government facing significant deficit Pandemic pauses immigration temporarily, but it should return to a record pace Methodology

This quarterly economic forecast for the province of Prince Edward Island examines the economic outlook for the province, including gross domestic product (GDP), output by industry and labour market conditions.

Document Highlights

Prince Edward Island is currently in its largest recession in decades, but it appears the worst is behind the province as we expect growth to return to pre-COVID-19 trend levels by early 2022.
With the lowest number of COVID-19 cases in the country, the province has been able to welcome visitors from within the Atlantic bubble, which has helped mitigate the worst of the recession.
Still, the second-quarter drop of 12 per cent will be the biggest on record and result in an overall annual contraction of 5.6 per cent in provincial GDP this year.
The key drivers of recent growth on the Island have been tourism and immigration, both of which were severely hampered by the border closures. However, with the vaccine expected next year, we anticipate that visitors—overnight and permanent—will return to the Island in droves.
The government has been an essential source of growth and stability during this economic crisis. Essential stimulus spending combined with a major hit to government coffers will result in a record provincial deficit of $178 million this fiscal year.

Key findings

Prince Edward Island snapshot

Overview

Tourism suffers major setback

Labour markets take first step on road to recovery

Construction benefiting from build-up in housing

Government facing significant deficit

Pandemic pauses immigration temporarily, but it should return to a record pace

Methodology

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