P.E.I. has yet to have a COVID-19 hospitalization but hasn't dodged the economic impact of pandemic

This story is part of The COVID Economy, a CBC News series looking at how the uncertainty of the coronavirus pandemic is affecting jobs, manufacturing and business in regions across Canada.

Prince Edward Island has so far gotten off lightly on the public health front of the COVID-19 pandemic, but it's anticipated that the province will suffer along with other Canadian provinces economically.

At the end of April, the province had seen just 27 cases of COVID-19, with no hospitalizations. Bank economists, generally, are forecasting the island's GDP will drop less than the Canadian average this year, but the corresponding recovery will not be as strong in 2021, either.

Figures from Statistics Canada showed a big drop in employment in March, and provincial projections suggest it'll be worse in April. Those projections estimated lockdown restrictions to control the coronavirus will mean one in four people working at the beginning of March would have lost those jobs some time in April.

The provincial economy is cushioned somewhat by a large public service, not just with local governments but also the Department of Veterans Affairs in Charlottetown and a federal tax centre in Summerside, P.E.I.

Three of the four main private industries faced significant issues immediately. The fourth, aerospace, has reported it is still busy, with its biggest problem being accommodating physical distancing in the workplace.

The province's three traditional economic pillars — agriculture, fisheries and tourism — have not fared so well.

With restaurant dining rooms closed across the continent, demand for french fries has collapsed. That leaves Cavendish Farms, P.E.I.'s biggest private employer, short on markets for its products, and it's telling farmers it will not be buying so many potatoes this year.

Three of the Island's biggest exports — lobster, oysters and mussels — also rely heavily on the restaurant market. Season starts have been delayed in hopes that markets will recover.

While the downturn in those markets is dramatic, it is likely short term. For tourism, not only will the dip likely be deeper, the questions about recovery are more complicated.

Tourism has been hot on the Island since 2014. The industry posted records in total overnight stays in five of the six years. It was expecting another record this year.

"There was all kinds of great plans in place based on what was going to happen this year," said Kirk Nicholson, president of the Tourism Industry Association of Prince Edward Island.

Everything was looking good. So we had a plan based on that. And now it's plan based on, 'We don't know.'- Kirk Nicholson, president of Tourism Industry Association of Prince Edward Island

"Airport seat capacity was going to be up. All indications were rubber tire traffic was going to be strong. Everything was looking good. So, we had a plan based on that. And now it's a plan based on, 'We don't know.'"

Even in the deep off-season of January and February that optimism was apparent. Job numbers in accommodations and food service were up more than seven per cent over the same period in 2019, according to Statistics Canada. The crash in March took them 17 per cent lower than the previous year.

Unlike potatoes and fisheries, which can scan around for other markets, tourism is stuck. The province is closed. Non-essential travellers are banned by a state-of-emergency order. An infrastructure that served 1.6 million visitors in 2019 has only the 158,000 Island residents to rely on.

'Not a lot of them would survive'

On Tuesday, the province released a plan for easing restrictions. It did not include any relaxing of border controls until at least early July.

Currently, even the small local customer base is highly constrained. With restaurants relying on pickup and delivery only, the P.E.I. Restaurant Association estimates the sector is running between five and 10 per cent capacity.

Association president Carl Nicholson (no relation to Kirk) said it is probably just as well that some restaurants have just chosen to close down temporarily, rather than eke what they can out of the market.

"If everybody was in the marketplace right now that had been open," he said, "I would think that not a lot of them would survive."

Even when dining rooms do open, Nicholson said, with many Islanders having lost income in the pandemic eating out may not be a priority.

What happens when province does open?

While international borders may not open in time for this tourist season, several provinces have begun to discuss easing restrictions.

International markets have been an important source of growth for P.E.I. tourism in the last six years, but Canadian travellers remain the bread and butter of the industry. In 2019, visitors from Canada accounted for 89 per cent of total overnight stays.

There are several hurdles to getting people from other provinces to visit the Island this summer. First, and perhaps most importantly, is it a good idea to even allow it?

Epidemiologists interviewed by CBC News said the Island's ability to control borders is a huge advantage in keeping infections down, and one the province should not give up lightly.

Second, if the borders are open, will people come?

A poll this month by Angus Reid found that pandemic restrictions have people missing more homey things than travel.

"We had presumed that lots of folks would be eager and keen to maybe book a vacation, book a trip," said Sachi Kurl, executive director of Angus Reid Institute.

Canadians got the message

"But that's fairly low on the list relative to going back to work, hugging friends and family members, going to a restaurant. So the lifting of restrictions with the so-called return-to-normal is something that is predicated very much, I think, on initially for Canadians a fairly small circle of movement."

Part of the difficulty, Kurl says, is that governments in Canada have done such a good job of convincing Canadians that the restrictions are necessary.

It was not a lesson that took immediately. Early polls found Canadians skeptical about the restrictions, but within weeks public opinion had turned around to support them.

"Canadians got the message very thoroughly from their public health officials. They've been scared straight, and it will take some time to unwind them from that," said Kurl.

"Don't travel. Don't even leave your house. [Consider] the steps involved in taking a trip and trying to preserve hygiene. So leaving your house, standing on a plane, sitting next to somebody on a plane, staying in a hotel. These are all things that are quite antithetical to what we have made the new normal."

Governments will have to be as convincing that it is now safe to go out in public as they were in telling people they had to stay home, she said.

Government support

Carl Nicholson says he believes most restaurant operators will be in survival mode in 2020, just trying to get through the year and hoping for better in 2021.

"Cover off your rent and your insurance and your wages and your food costs and, you know, all of those fixed things. There's no excess in the marketplace," he said.

The provincial government is providing assistance to small businesses in the form of low-interest loans. Fred Bergman at the Atlantic Provinces Economic Council said business owners will have to think carefully before they take advantage of that offer.

"Let's say in 18 months everything does go back to normal, somehow, and we all will be back to 100 per cent. Even in that world, they normally have to borrow working capital," said Bergman.

"Now they're loaded up with more debt. You see the financial issue that that can create for some businesses — the ones that aren't fortunate enough to have some sales over the coming year."

Kirk Nicholson at the tourism industry association is certain some businesses will not survive to see the 2021 tourist season.

And, if travellers remain nervous, even success next year is not a given. University of Prince Edward Island economist Jim Sentance said P.E.I. may be well positioned to take advantage of what market for tourism does exist.

"Given that places like the United States are not going to be attractive destinations, the way things are going down there, you might get more Canadians diverted from going somewhere else to coming here," said Sentance.

"In particular, if P.EI. weathers this fairly well and can have a reputation as being a relatively safe place."

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