Prince Edward Island's economy showing resilience against turbulent North American market, says RBC Economics



    TORONTO, Oct. 8 /CNW/ - Despite a high Canadian dollar, surging gasoline
prices and growing anxiety felt by U.S. households dampening travel to PEI and
slowing tourism, the province's economy has maintained a decent pace,
according to the latest provincial forecast released today by RBC. The growth
rate for Prince Edward Island's economy is projected at 1.9 per cent for 2008
and at a slower 1.4 per cent in 2009, as home resale activity, job creation
and tourism cool.
    "A large inflow of new residents and strong spending on infrastructure
have helped PEI keep a respectable pace of growth," said Craig Wright, senior
vice-president and chief economist, RBC. "Provincial and federal tax cuts
along with an unemployment rate that is hovering around a 30-year low, have
strengthened consumer sentiment and spending, reflected by higher retail sales
so far this year."
    Nonetheless, the report suggests the momentum in PEI's economy is likely
to slow in the period ahead. Job creation has already moderated since the
spring and home resale activity is past its cyclical peak. Home building is
also expected to enter a consolidation phase, as the large inflow of new
residents runs its course and demand for new housing declines.
    The outlook for provinces has generally darkened as a result of the
recent dramatic turn in the year-long financial market crisis. The U.S.
economy now appears to be in recession with Europe, the U.K. and Japan also
sinking fast. While Canada is in better position with its financial sector
less heavily impaired, overall growth will be substantially weaker than
previously anticipated.
    Among the provinces, Saskatchewan will lead the way this year and next in
terms of economic growth, with Manitoba closely behind. The Atlantic region is
expected to display continued resilience and should sustain a moderate pace of
expansion for the most part. Conditions in the most western part of the
country are on a deteriorating path. Eroding housing situations and rapidly
slowing growth in consumer spending have prompted downward revisions to the
forecasts for British Columbia and Alberta. With weak external trade
continuing to exert a toll, cracks have appeared in the domestic foundations
of Ontario and Quebec. Ontario will likely see its growth evaporate.

    The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, personal income
growth, retail sales, housing starts, and the Consumer Price Index.
    According to the report (available online as of 8 a.m. E.D.T., at
www.rbc.com/economics/market/pdf/provfcst.pdf) provincial forecast details are
as follows:

    
                    Real GDP           Housing starts         Retail sales

                                         Thousands
                07     08     09      07     08     09      07     08     09
                --     --     --      --     --     --      --     --     --
    NFLD.      9.1    0.2    1.3     2.6    2.8    3.0     9.0    8.0    4.0
    P.E.I.     2.0    1.9    1.4     0.8    0.7    0.5     7.7    5.5    3.5
    N.S.       1.6    2.0    2.0     4.8    4.2    3.2     4.2    5.5    4.0
    N.B.       1.6    2.0    2.5     4.2    4.1    3.3     5.7    5.5    4.0
    QUE.       2.4    0.7    1.2    48.6   45.7   39.0     4.6    5.5    3.5
    ONT.       2.1    0.0    0.4    68.1   75.0   66.5     3.9    5.0    2.8
    MAN.       3.3    3.1    2.3     5.7    5.4    5.4     8.8    8.0    5.5
    SASK.      2.8    3.9    3.5     6.0    6.8    5.3    13.0   12.0    7.5
    ALTA.      3.3    2.2    3.0    48.3   30.2   31.3     9.3    1.5    6.5
    B.C.       3.1    1.2    2.1    39.2   34.8   26.0     6.7    3.0    6.5
    CANADA     2.7    0.9    1.5     228    209    183     5.8    4.7    4.3


                  Employment                CPI

                07     08     09      07     08     09
                --     --     --      --     --     --
    NFLD.      0.7    2.0    0.6     1.4    3.1    2.1
    P.E.I.     1.1    1.7    0.5     1.8    3.8    2.4
    N.S.       1.3    1.1    0.9     1.9    3.6    2.3
    N.B.       2.1    0.9    0.9     1.9    2.2    2.1
    QUE.       2.3    0.8    1.1     1.6    2.5    2.0
    ONT.       1.6    1.5    1.2     1.8    2.6    2.0
    MAN.       1.6    1.8    1.5     2.1    2.5    2.6
    SASK.      2.1    1.6    2.0     2.9    3.4    2.7
    ALTA.      4.7    2.6    2.1     4.9    3.7    2.9
    B.C.       3.2    2.4    1.4     1.7    2.5    2.0
    CANADA     2.3    1.6    1.3     2.1    2.7    2.2
    





For further information:

For further information: Craig Wright, RBC Economics, (416) 974-7457;
Robert Hogue, RBC Economics, (416) 974-6192; Jackie Braden, RBC Media
Relations, (416) 974-2124


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