The economic forecast for Canada’s provinces from TD Bank has P.E.I. in the top three for growth in 2012, after Alberta and Saskatchewan.
The revised forecast, issued Monday, predicts the Island economy will grow by 2.5 per cent, slightly above the national average.
TD senior economist Jacques Marcil cited three main sources of growth: new and growing international potato markets; the announced reconstruction of the Trans-Canada Highway west of Charlottetown, which he calls a significant project; and immigration.
“Even if some new immigrants to P.E.I. do not all stay, these are still very significant demographic gains compared to the past and that’s supporting strong retail sales in the province,” said Marcil.
Other economists are concerned about the short-term nature of the economic drivers for 2012. Charles Cirtwill, executive director of the Atlantic Institute of Market Studies, notes the highway project and immigrants arriving and then leaving will not provide the longer term gain the Island needs.
“Now on the way in and out they buy a house and a car, which drives your economy, but at some point they’re going to have to flip those things around, sell those houses at a loss,” said Cirtwill.
“That’s going to be a very short-term gain.”
TD Bank agrees P.E.I.’s higher than average growth will likely only last one year. It’s predicting growth in 2013 to be below average, thanks to expected higher interest rates and the draw of shipbuilding jobs in Nova Scotia.