P.E.I. economic recovery 'going to be slow': APEC
Employee compensation is a bright spot for the economy
An economic outlook from the Atlantic Provinces Economic Council this week shows some relative bright spots for the P.E.I. economy, but also points to ongoing challenges.
"This recovery is going to be slow. We know it is going to be prolonged," said APEC economist Kevin MacLean.
P.E.I. GDP is expected to be down about four per cent this year. That's one of the smallest declines predicted in the country, but still larger than the one experienced in the 2008-09 recession.
And this downturn is far from even-handed. While some sectors — such as construction — are already at or above 2019 levels, others like accommodations and food services are still a long way from recovery.
Until international air travel starts to return to more normal levels, both tourism and aerospace industries on P.E.I. are going to suffer, MacLean told CBC News.
"[Aerospace] business on P.E.I. is significantly down," he said. "Without the resumption of international air travel this is going to continue to be an issue into '21."
The continuing plight of restaurants across the continent will also have an impact on some of the food production sector — in particular, live seafood will be less in demand as dining rooms shut or have to operate with reduced capacity.
On top of the pandemic, a drought this year has reduced crop yields for key commodities such as potatoes.
A bright spot
Despite reduced employment in the first half of the year, total compensation for employees on the Island in the first half the year increased.
Part of that was due to pandemic wage top-ups in the spring, said MacLean, but he can't fully explain where those extra wages came from. Wherever that money came from, however, it is good news.
"You combine this with the federal support programs, which would not be included in that compensation of employees," he said.
"This is giving us optimism for the retail sector going into next year."
A thousand cuts
While the pandemic has led to some big-picture issues that will slow the recovery, there are also thousands of tiny ways it is having an impact on the economy.
Necessary changes to protect public health are slowing everything down.
"The barber, prior to me sitting down, he takes about 10 minutes," MacLean said, as an example.
"He sweeps the entire area, he cleans the area, he cleans everything he's going to use for the haircut. Then he seats me, he does all that again after I'm done. And meanwhile in his shop with three chairs, only two of them are allowed to be full."
These extra cleaning activities are happening all across the economy and lowering productivity for many industries and sectors. Taken together, they will continue to slow the economy until the pandemic ends.