There will be a slowdown in economic growth in both 2009-2010 which will result in limited gains in employment.
Recent challenges to growth, including the impact of the higher Canadian dollar, a rise in energy prices and a slowdown in the United States, have been replaced by a global slowdown and weaker commodity prices.
Furthermore, consumer spending, which remained strong in 2008, is expected to slow in 2009.
Recent problems in the agriculture sector, due to wet weather, along with the prospects for weaker demand for the other key sectors including manufacturing and tourism, will also result in weaker economic growth in 2009-2010.
Although the tourism sector will not be hit by the effects of the Canadian dollar or higher gas prices in 2009, notes Marty Lapedus, it is still going to be a challenge for operators to attract tourists to come to the Island.
Market conditions for the agriculture sector will also continue to be challenging as a result of increased global competition. At the same time, announcements of support from both governments regarding aid for the sector, as well as a recent improvement in potato prices, will help support farm incomes.
The rate of employment growth in 2009 and 2010 is expected to rise marginally. Economic growth will remain below the 1.0 per cent level for both 2009 and 2010 with the possibility of close to zero growth in 2009, depending on how global factors continue to impact growth.

In Detail

Single Starts: The pace of construction for single detached homes is expected to slow in 2009 before posting a moderate increase in 2010. The main factors contributing to the decline in 2009 are slowing economic growth and the increasing cost of new homes.
The current forecast calls for 425 units in 2009, and for an additional 450 units in 2010.

Multiple Starts: Increased demand for multiple units targeted towards the homeownership market will keep multiple starts stable over the next two years. This shift in tenure of multiple units will be driven in part by the rising cost of new homes and by empty-nesters looking to down size their households. As a result expect to see 150 multiple units started in 2009 and 175 units in 2010.

Resales: In 2007, the resale market in PEI posted the highest level of unit sales in the association’s history by almost 20 per cent. As was expected, sales returned to more sustainable levels in 2008, and this is expected to moderate further in 2009. The main reason for the expected declines in 2008 and 2009 is that much of the demand for homes was brought forward in the previous years, due to a sense of urgency many households felt regarding their purchasing decision. As such, it is expected that MLS® sales will moderate to 1,300 units in 2009 and 1,325 units in 2010.

Prices: After eight years of price increases that exceeded the inflation rate, this trend is expected to reverse over the forecast period. During the past eight years the average price increased by an average of seven per cent annually. Despite the slowing pace it is still expected that the province as a whole will post positive average growth over the next two years . The average MLS® sales price is expected to increase to $141,500 by the end of 2010.