Island economy well positioned as 2025 begins
The 2024-2025 Fiscal and Economic Update shows strong employment and labour income, supported by growth in manufacturing, exports and construction, as major contributors to the Island economy. The update also outlines the continuation of a focused investment into social development, healthcare and affordability measures such as energy efficiency programs.
“This update reflects how we have been supporting our senior Islanders, strengthening our healthcare system and investing in our growing economy. We recognize the increased deficit may set us back on our path to a balanced budget, however it is also important to recognize that those increased expenditures are aligned with our key priorities and mandate items. This government believes in the transparency and accountability that fiscal reporting creates but the information must also be as reliable as possible. The economy is doing well and we took some extra time to ensure we had captured the recent changes to the provincial revenue sources.”
- Finance Minister Jill Burridge
The economic and fiscal update is an annual reflection provided after second quarter outlining what the provincial government expects its financial results to be by the end of the fiscal year, based on information known since the release of the spring operating budget. The update also provides an economic outlook for 2025 and beyond.
For more information on the 2024-2025 Fiscal and Economic Update, visit Fiscal and Economic Updates.
Media contact:
Janice Fogarty
Department of Finance
jefogarty@gov.pe.ca
Backgrounder
2024-2025 Fiscal and Economic Highlights:
- The current forecast for the FY2024-2025 is a deficit of $129.5 million, a $44.5 million increase from the budget released in February 2024.
- Provincial expenditures are expected to increase by $38.0 million. This reflects growing caseloads and cost per caseload for social programs, demand for energy efficiency programs, and growth in healthcare costs.
- Total revenues are forecasted to decrease by $6.5 million primarily due to reductions in sales tax revenue of $15.4 million, primarily a result of the two-month HST break.
- Forecasted net debt as a percentage of GDP for FY2024-2025 has increased slightly compared to what was anticipated in the 2024-2025 Operating Budget, tabled February 2024, as a result of slightly weaker than expected GDP growth, a larger forecasted deficit and higher capital expenditures anticipated for 2024-2025 compared to budget.
- Despite the increase in the forecasted deficit, the net debt increase is $14 million less compared to that estimated increase in the original budget due to the better than expected results reported in the Public Accounts for the year ending March 2024, as released October 2024.
- PEI’s population was 178,550 as of July 1, 2024, a new all-time high. The province had the fourth fastest annual growth rate in Canada over this timeframe at 2.8 per cent (4,837 persons).
- Employment on PEI increased 4.1 per cent (3,700 persons) on a year-to-date basis through November 2024. Nationally, employment increased 1.7 per cent over this timeframe.
- Total labour income continues to grow on the Island, up 9.4 per cent through September 2024, the fastest growth amongst provinces.
- Average weekly earnings increased 5.2 per cent to average just over $1,067 on a year-to-date basis through September 2024, while nationally they were up 4.3 per cent to just under $1,251.
- The change in the All-Items Consumer Price Index for PEI slowed to 2.0 per cent on a year-to-date basis through November 2024. Nationally inflation increased 2.4 per cent through November.
- The Bank of Canada has made several cuts to the overnight rate beginning in June 2024 to bring the overnight rate from 5 per cent in June to 3.25 per cent in December.
- The seasonally adjusted value of retail sales increased by 2.3 per cent on a year-to-date basis through September 2024, sales nationally were up 0.8 per cent through the same timeframe.
- The value of manufacturing shipments increased 4.8 per cent on a year-to-date basis through September 2024. Nationally, manufacturing shipments decreased 2.9 per cent through September.
- The value of international exports from PEI increased 8.9 per cent on a year-to-date basis through October 2024, the fastest growth amongst provinces. Nationally, international exports were up 0.6 per cent.
- Housing starts increased 50.9 per cent through the first three quarters of 2024. Nationally, starts were up 1.8 per cent.
- Building permits increased 24.1 per cent on a year-to-date basis through September 2024, with increases in both residential and non-residential permits. Nationally, building permits were up 3.4 per cent through September.
- Farm cash receipts increased 2.0 per cent through the first three quarters of 2024 to $619.4 million, a new all-time high for this period. Nationally, farm cash receipts decreased 3.0 per cent over this time period