BMO Financial Group

BMO Financial Group

October 16, 2014 09:18 ET

BMO Economics: PEI Economy to Benefit from Stronger U.S. Growth, Weaker Dollar

- Real GDP growth of 1.3 per cent expected in 2014, 1.7 per cent in 2015 (Canadian real GDP growth of 2.3 per cent expected in 2014, 2.4 per cent in 2015)

- Tourism stronger, weaker loonie figures

- Exports rose 20 per cent year-over-year in August, led by aerospace, food and agriculture

CHARLOTTETOWN, PRINCE EDWARD ISLAND--(Marketwired - Oct. 16, 2014) - The PEI economy continues to grow at a moderate pace, with real GDP expected to cool slightly to 1.3 per cent this year from a 1.4 per cent pace in 2013, according to the Provincial Monitor report released today by BMO Economics.

"Firmer U.S. economic growth and a weaker Canadian dollar will help offset ongoing public-sector restraint and more normal agricultural output this year," said Robert Kavcic, Senior Economist, BMO Capital Markets.

Exports are expanding at a strong clip, up nearly 20 per cent year over year through August, led by still-lofty aerospace shipments and higher exports of farm, fish and food products. "With U.S. demand expected to strengthen this year and the Canadian dollar in decline, trade and tourism could be a positive for the province through 2015," noted Mr. Kavcic. "Indeed, many tourism indicators point to positive year-over-year growth this year, in part because of the weaker loonie, but also thanks to celebration of the 150-year anniversary of the Charlottetown Conference, which set the stage for Confederation."

Meanwhile, population growth has slowed significantly in the past two years amid more normal immigration trends and continued migration to other provinces-the latter is running just below the 44-year high set last year. "Total population was up 0.5 per cent year over year from year-ago levels in the third quarter of 2014 after growing as fast as 1.7 per cent year over year - a 40-year high - early in 2011," stated Mr. Kavcic. "Despite the slowdown, population growth is running ahead of PEI's Atlantic Canada peers, with all of the others in outright decline."

Job growth has faded in recent months, with employment 0.8 per cent above year-ago levels in the third quarter of 2014. Public-sector employment has fallen sharply since peaking last spring, offsetting encouraging gains in the private sector. The unemployment rate has fallen in the past year, sitting at 9.5 per cent in September.

"Businesses in PEI are optimistic about the state of the economy heading into 2015, particularly those organizations operating in the aerospace, pharmaceutical, and bioscience industries," said Carolyn Booth, Senior Vice President, Atlantic Provinces Division, BMO Bank of Montreal. "Our clients have indicated they expect the travel and tourism industry will undergo a boost heading into the new year."

The full Provincial Monitor can be downloaded at

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.

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