Economic impact of COVID-19 pandemic on P.E.I. 'a whole new world'
Efforts to slow the spread of COVID-19 on P.E.I. are certain to have an enormous economic impact, but trying to get a handle on how bad it will be is perhaps an equally large challenge.
There are a lot of unknowns, said Fred Bergman, senior policy analyst at the Atlantic Provinces Economic Council. How much can the virus be contained, and how long will it take to develop a vaccine so that people feel comfortable about going back to work are two key ones.
A further issue is the lack of past examples.
There are some lessons from the impact of SARS and H1N1, but those were much smaller events. You have to go back a century to the Spanish flu for something similar to COVID-19. But there is not much data available from those times, said Bergman, and even if there was that early-20th-century economy bears little resemblance to today's.
"It's very difficult to speculate on," said Bergman.
"It's a whole new world for us on that front and so it does present a number of challenges."
APEC has set aside much of the work it normally does to try to make sense of what the crisis is doing to the economy in Atlantic Canada, he said.
Some of P.E.I.'s biggest industries affected
One primary industry where the impact was large and immediate is tourism.
The shoulder season is still some weeks away, so significant revenue from the industry has not started to flow yet — but under current public health restrictions, there is no way for the season to start.
Even if restaurant dining rooms were open, all unnecessary travel to P.E.I. is prohibited.
And while this is not the best time of year for Island restaurants, it is not insignificant. Last year restaurant revenue in the second quarter, April through June, was a little over $70 million.
"There's a good chance that a lot of that will be lost sales due to those closures," said Bergman. "You're probably talking about upwards of $55 million in lost sales."
Bergman said he has talked with Restaurants Canada, and there is concern that the bounce back when restaurants do reopen could be slow.
"We're now all cooking at home more, and we're all staying at home more, and we're getting kind of used to that," he said.
Add to that how many Canadians are seeing incomes fall in the pandemic, or their savings fall in value as the stock market drops. Recovery from that will not be quick, and luxury items like restaurant meals may have to wait that much longer.
Triple threat to government finances
The industry that employs the most people on P.E.I. is also largely shut down: retail.
The latest jobs report from Statistics Canada, for February, showed 11,500 Islanders working in wholesale and retail. With only essential services, largely grocery and pharmacies, remaining open, many of those would now be laid off.
Those layoffs affect the provincial government in three ways.
Reduced collection of HST from retail sales.
Reduced income tax from laid off workers.
The necessity to create incentive programs to support laid off workers and closed businesses.
Premier Dennis King has already said a projected surplus budget plan that was in the works early this month is now off the table. With attacks on both the revenue and expenditure side, the deficit is likely to be large.
But Bergman said this is no time to be worrying about the deficit.
"It's important to support households, Canadian households and Canadian businesses, in the manner that the federal government and provinces are doing," he said.
"How important is deficit and debt … at this time versus keeping our households whole and keeping our businesses whole?"
If families and business fall into bankruptcy, recovery on the other side of the crisis will be very slow, he said. If when the crisis ends people have money to spend and there are businesses ready to sell them things, the chance of a quick bounce back and return to growth will be far better.
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