New World Realities. Warren Jestin SVP & Chief Economist. Edmonton Real Estate Forum. Edmonton, May 3, Presentation to:

Transcription

1 New World Realities Warren Jestin SVP & Chief Economist Presentation to: Edmonton Real Estate Forum Edmonton, May 3, 211

2 The Global Economy Is Reviving Real GDP 12 1 annual % change e 211f 212f China India Brazil Mexico Japan Euro zone Source: Scotia Economics, Bloomberg, BEA, Statistics, Eurostat.

3 But the Recovery is Uneven Across Regions and Sectors Employment Growth Construction & Resources Lead in Alberta 6 y/y % change 15 employment, Index: 2Q1= Alberta 1 Natural Resources Construction 11 Services Manufacturing Source: Statistics, BEA, Scotia Economics, Eurostat.

4 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.

5 & Fiscal Repair Will Temper Growth Beyond Mid-Decade Fiscal Deficits 1 General Gov t, 21, % of GDP Net Debt 1 General Gov t, 21, % of GDP U.K. Japan Germany Emerging Economies Japan U.K. Germany Emerging Economies Source: IMF, Scotia Economics.

6 Emerging Markets are Driving Global Growth Commodities Prices Motor Vehicle Sales* 35 prices, index:2q1= WTI Oil 2 millions of units EU & Japan forecast 3 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.

7 Inflation Risks Are Rising s Consumer Price Index y/y % change s Inflation Dichotomy 175 index: January 2=, 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.

8 Low Interest Rates Support Retail Sales and Home Prices Central Bank Rates 6 % 5 s Consumer Spending Surge 175 index: Jan 2= 3-month moving average forecast 15 MLS House Prices Retail Sales Source: Bank of, Federal Reserve, Scotia Economics. Full-time Employment Source: Canadian Real Estate Association, Statistics.

9 Stronger Job Creation & Confidence Underpin Housing Market Consumer Confidence Housing Starts 15 index: 2 Q1 = 15 index: 2= forecast Alberta Source: The Conference Board, Scotia Economics. Source: Global Insight, Scotia Economics.

10 Despite Rising Debt, Canadian Finances Are in Better Shape The Gap has Closed on Debt to Income 17 household* credit liabilities o/s as % of PDY 16 But We Use Less Debt to Buy Assets 32 household* debt o/s as % of assets * Includes households and unincorporated business. Source: Federal Reserve, Statistics, Scotia Economics.

11 Non-res Construction Also More Resilient in Non-Residential Construction Office Vacancy Rates 1 16 index: 2= % forecast Calgary Edmonton Source: Statistics, CBRE, Cushman & Wakefield Scotia Economics.

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

13 Growth & Income Prospects Best in Resource Regions 18 Nominal GDP Per Capita index: 2= forecast 18 Nominal GDP Per Capita index: 2= forecast Saskatchewan Newfoundland and Labrador Manitoba Alberta B.C New Brunswick Quebec Ontario f 11f 12f P.E.I. Nova Scotia f 11f 12f Source: Statistics, Scotia Economics.

14 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.