GLOBAL ECONOMICS SCOTIABANK S FORECAST TABLES

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1 Recovery Remains on Track CONTACTS The synchronous global recovery remains robust, as all signs continue to point to strong and mutually beneficial growth. Indicators of investment activity remain, by and large, positive as do developments in the household sector. As a result, our forecasts remain essentially the same as we published last month. We believe that the very strong expansion in economic activity observed this year will continue into Though the flattening of the yield curve is being interpreted by some as a signal of weakening economic prospects in the United States, indicators remain strong. Moreover, the still massive balance sheets of the main central banks muddy the signals sent by changes in the yield curve. Jean-François Perrault, SVP & Chief Economist Scotiabank Economics jean-francois.perrault@scotiabank.com Chart annual % change World GDP forecast Our forecasts do not incorporate any impacts from the tax package currently being negotiated in the United States. We will update our forecast when there is more clarity on the final measures to be legislated. If the package does in fact lead to the significant increase in the US deficit currently estimated by a number of researchers, we may marginally increase our forecast for US growth in 2018 as well as our Federal Reserve rate call. If so, our current view is that this might pose an upside risk to our Canadian growth forecast, given that stronger growth in the US almost always leads to stronger growth in Canada Previous Scotiabank Economics Forecast New Scotiabank Economics Forecast Sources: Scotiabank Economics, IMF. 1

2 International f 2018f 2019f f 2018f 2019f Real GDP (annual % change) Consumer Prices (y/y % change, year-end) World (based on purchasing power parity) Canada United States Mexico United Kingdom Euro zone Germany France China India Japan South Korea Australia Thailand Brazil Colombia Peru Chile Commodities (annual average) WTI Oil (USD/bbl) Brent Oil (USD/bbl) Nymex Natural Gas (USD/mmbtu) Copper (USD/lb) Zinc (USD/lb) Nickel (USD/lb) Aluminium (USD/lb) Iron Ore (USD/tonne) Metallurgical Coal (USD/tonne) Gold, London PM Fix (USD/oz) 869 1,251 1,265 1,300 1,300 Sources: Scotiabank Economics, Statistics Canada, BEA, BLS, IMF, Bloomberg. 2

3 North America f 2018f 2019f f 2018f 2019f Canada (annual % change, unless noted) Real GDP Consumer spending Residential investment Business investment Government Exports Imports Nominal GDP GDP deflator Consumer price index (CPI) CPI ex. food & energy Pre-tax corporate profits Employment Unemployment rate (%) Current account balance (CAD, USD bn) Merchandise trade balance (CAD, USD bn) Federal budget balance* (FY, CAD, USD bn) percent of GDP Housing starts (000s, mn) Motor vehicle sales (000s, mn) 1,657 1,949 2,030 2,000 1, Industrial production Mexico (annual % change) Real GDP Consumer price index (year-end) Current account balance (USD bn) Merchandise trade balance (USD bn) Sources: Scotiabank Economics, Statistics Canada, CMHC, BEA, BLS, Bloomberg. * Finance Canada forecast for FY18 and FY19. United States (annual % change, unless noted) Quarterly Forecasts Canada Q3 Q4f Q1f Q2f Q3f Q4f Q1f Q2f Q3f Q4f Real GDP (q/q ann. % change) Real GDP (y/y % change) Consumer prices (y/y % change) CPI ex. food & energy (y/y % change) Avg. of new core CPIs (y/y % change) United States Real GDP (q/q ann. % change) Real GDP (y/y % change) Consumer prices (y/y % change) CPI ex. food & energy (y/y % change) Sources: Scotiabank Economics, Statistics Canada, BEA, BLS, Bloomberg. 3

4 Central Bank Rates Q3 Q4f Q1f Q2f Q3f Q4f Q1f Q2f Q3f Q4f Americas (%, end of period) Bank of Canada US Federal Reserve (upper bound) Bank of Mexico Central Bank of Brazil Bank of the Republic of Colombia Central Reserve Bank of Peru Central Bank of Chile Europe European Central Bank Bank of England Asia/Oceania Reserve Bank of Australia Bank of Japan People's Bank of China Reserve Bank of India Bank of Korea Bank of Thailand Currencies and Interest Rates Americas (end of period) Canadian Dollar (USDCAD) Canadian Dollar (CADUSD) Mexican Peso (USDMXN) Brazilian Real (USDBRL) Colombian Peso (USDCOP) 2,938 3,005 3,100 3,100 3,050 3,000 3,000 3,050 3,100 3,100 Peruvian Nuevo Sol (USDPEN) Chilean Peso (USDCLP) Europe Euro (EURUSD) UK Pound (GBPUSD) Asia/Oceania Japanese Yen (USDJPY) Australian Dollar (AUDUSD) Chinese Yuan (USDCNY) Indian Rupee (USDINR) South Korean Won (USDKRW) 1,145 1,120 1,100 1,100 1,080 1,080 1,060 1,060 1,040 1,040 Thai Baht (USDTHB) Canada (Yields, %) 3-month T-bill year Canada year Canada year Canada year Canada United States (Yields, %) 3-month T-bill year Treasury year Treasury year Treasury year Treasury Sources: Scotiabank Economics, Bloomberg

5 The Provinces (annual % change except where noted) Real GDP CA NL PE NS NB QC ON MB SK AB BC f f f Nominal GDP f f f Employment f f f Unemployment Rate (%) f f f Housing Starts (units, 000s) f f f Motor Vehicle Sales (units, 000s) , , f 2, f 2, f 1, Budget Balances, Fiscal Year Ending March 31 (CAD mn) * -2, , , , ,191-3, , ,770-1, , ,354-10,784 2, f** -19, , f** -18,000 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Sources: Scotiabank Economics, Statistics Canada, CMHC, Budget documents. * MB:FY04 FY16; AB:FY05 FY16; SK:FY15 FY18f: ex. accrual adjustment for pension expense. ** Provinces' FY18: Budget documents. 5

6 This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. 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 nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a call to action or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report. Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations. Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment. This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank. Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank, together with Global Banking and Markets, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including, Scotiabanc Inc.; Citadel Hill Advisors L.L.C.; The Bank of Nova Scotia Trust Company of New York; Scotiabank Europe plc; Scotiabank (Ireland) Limited; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Scotia Inverlat Casa de Bolsa S.A. de C.V., Scotia Inverlat Derivados S.A. de C.V. all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorised by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorised by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority. Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V., and Scotia Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law. 6