New World Realities. Warren Jestin SVP & Chief Economist. Atlantic Real Estate Forum. Presentation to:

Transcription

1 New World Realities Warren Jestin SVP & Chief Economist Presentation to: Atlantic Real Estate Forum June 22, 211

2 The Global Economy Is Reviving Real GDP annual % change f 212f China India Brazil Mexico Japan Euro zone Source: Scotia Economics, Bloomberg, BEA, Statistics, Eurostat.

3 Driven By Robust Emerging Market Growth Commodities Prices Motor Vehicle Sales* 4 35 prices, index:24q1=1 WTI Oil 2 millions of units EU & Japan 3 Copper Gold 16 North America NYMEX Natural Gas Wheat Brazil, Russia, India & China f Source: Scotia Economics, Bloomberg. *Includes light trucks in North America. Source: Scotia Economics, Ward s Automotive Reports.

4 But the Recovery is Uneven Employment Growth Construction & Services Lead in 11 employment, Index: 24Q1=1 14 employment, Index: 24Q1=1 13 Construction 15 Maritimes 12 Services Newfoundland 9 8 Manufacturing Source: Statistics, BEA, Scotia Economics.

5 Financial Strains Remain Intense Foreclosures Near Record Highs 16 % of total loans Federal Spending Far Exceeds Revenues 3.6 US$ trillions Total Expenditures 1 8 Subprime Foreclosures Prime Foreclosures 2. Total Revenue FY Source: Bloomberg. Source: Treasury.

6 & Fiscal Repair Will Temper Growth Beyond Mid-Decade Fiscal Deficits 14 General Gov t, 211, % of GDP Net Debt 14 General Gov t, 211, % of GDP Japan U.K. Germany Emerging Economies Japan U.K. Germany Emerging Economies Source: IMF.

7 The Dollar Remains on Shaky Ground Dollar Expected to Edge Lower Again Commodity-linked Currencies Perform Well 16 March 1973 = 1 cents cents Euro, RHS Canadian Dollar Dollar Trade- Weighted, LHS f Australian Dollar f 6 5 Data to June 15, 211: Euro US$1.4165; Cdn$1.23; Australian$1.54. Canadian dollar expected to appreciate further over the next 12 months. Source: Bloomberg, Scotia Economics.

8 Loonie Strength, Weakness Has Hit Our Exports The Loonie Continues to Fly High Despite Weaker Trade Balances 125 WTI Oil US$/bbl CADUSD C$ billions, 4-quarter moving average 1 Parity $1/bbl Commodities WTI Oil (LHS) Tourism Balance 25 Canadian Dollar (RHS) Merchandise Trade ex. Commodities Source: Scotia Economics, Statistics, Bloomberg.

9 Big-Ticket Sales Have Held Up Better In Motor Vehicle Sales 15 index: 24=1 15 Housing Starts index: 24=1 125 Newfoundland Maritimes 125 Newfoundland 1 1 Maritimes Source: Statistics, Scotia Economics. Source: CMHC, NAHB, Scotia Economics.

10 Despite Rising Debt, Canadian Finances Are in Better Shape Canadians Use Less Debt to Buy Assets 3 household* debt o/s as % of assets 28 But the Gap is Closing on Debt to Income 17 household* credit liabilities o/s as % of PDY * Includes households and unincorporated business. Source: Federal Reserve, Statistics, Scotia Economics.

11 Non-res Construction Also More Resilient Here Non-Residential Construction Office Vacancy Rates* index: 24Q1=1 % Saint John Halifax St. John s * Cities = 4-quarter moving average. Source: Statistics, CBRE, Cushman & Wakefield, Scotia Economics.

12 But Inflation Risks Are Rising s Consumer Price Index 4 y/y % change s Inflation Dichotomy 175 index: January 24=1, 12 month moving average 15 3 Gasoline 2 1 Core* Total Food Motor Vehicles Headline 5 25 Personal Computers * CPI ex-8 most volatile components & impact of indirect tax changes. Source: Scotia Economics, Statistics.

13 & Interest Rates Have Nowhere To Go But Up Central Bank Rates 1-year Bond Yields 6 5 % 6 5 yield Source: Bank of, Federal Reserve, European Central Bank, Scotia Economics Source: Scotia Economics, Bloomberg.

14 Growth & Income Prospects Best in Resource Regions 18 Nominal GDP Per Capita index: 24=1 18 Nominal GDP Per Capita index: 24= Saskatchewan Newfoundland and Labrador Manitoba Alberta B.C New Brunswick Quebec 1 Ontario f 11f 12f 1 P.E.I. Nova Scotia f 11f 12f Source: Statistics, Scotia Economics.

15 Disclaimer This report has been prepared by Scotia Economics as a resource for the clients of Scotiabank and Scotia Capital. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank Group nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.