Not So Fast Forward

Warren Jestin SVP and Chief Economist

Vancouver Real Estate Forum Vancouver, April 11, 2012

-2

0

2

4

6

8

10

12

China India Brazil U.S. Canada Euro zone

2011e2012f2013f

annual % change

Source: Scotia Economics, Bloomberg, BEA, Statistics Canada, Eurostat.

Real GDP

2004-07

The Global Economy Has Lost Momentum

Forecasts at April 4, 2012

Source: IMF, Eurostat.

European Debt Concerns are Fueling Market Volatility

General Government Gross Debt

0

20

40

60

80

100

120

140

160

180

Greece Italy Portugal Germany Spain

2011e, % of GDP

Unemployment Rate- Under 25 Years of Age

0

10

20

30

40

50

2004 2006 2008 2010 2012

%

Greece

Portugal

Spain

Italy

Germany

Forecasts at April 4, 2012

-6

-4

-2

0

2

4

6

2004 2006 2008 2010

Economic Performances Very Uneven In Major Developed Nations

-6

-4

-2

0

2

4

6

2004 2006 2008 2010

y/y % change

U.S.

Employment Growth Consumer Spending

U.K.

Canada

Euro zone

y/y % change

U.S.

U.K.

Canada

Euro zone

Source: Statistics Canada, BEA, Scotia Economics, Eurostat.

0

1

2

3

4

5

6

2004 2006 2008 2010

Mortgage Delinquencies

Source: MBA, CBA.

U.S.

Canada

Financial Strains Still Intense in the U.S. – Much Less So In Canada

% of total loans past due three or more months

-12

-10

-8

-6

-4

-2

0

2

FY1995 99 2003 07 11

budget balances

% of GDP Fiscal year-ends: U.S. federal – Sept. 30, Canada – March 31.

U.S. Federal ex. Social

Security

Looking Forward

Source: BEA, Statistics Canada, Budget documents; Nominal GDP and federal forecasts: Scotia Economics.

forecast

Aggregate Provincial

Canada Federal

Forecasts at April 4, 2012

Commodities Prices

0

50

100

150

200

250

300

350

400

450

2004 2006 2008 2010 2012

Gold

prices, index:2004Q1=100

Copper

WTI Oil

Natural Gas

Source: Scotiabank Commodity Price Index, Bloomberg.

Emerging Markets are Driving Global Growth…

80

90

100

110

120

130

140

150

2004 2006 2008 2010

index, 2004 = 100

Emerging Asia

China

United States

Global Oil Consumption

*Includes light trucks in North America. Source: Scotia Economics, Ward’s Automotive, IMF, Bloomberg.

Housing Starts

0

5

10

15

20

25

G7 China

millions of starts, 2011e Motor Vehicle Sales

0

4

8

12

16

20

2004 2006 2008 2010 2012

millions of units

North America*

EU & Japan

Brazil, Russia, India & China

forecast

… Fueled By Strong Domestic Demand

Forecasts at April 4, 2012

0

1

2

3

4

5

6

2004 2006 2008 2010 2012

Source: Bank of Canada, U.S. Federal Reserve, European Central Bank, Scotia Economics.

Central Bank Rates

U.S. forecast

%

Canada

Euro zone

Monetary Policies Will Remain Geared to Reviving Growth

0

1

2

3

4

5

6

2004 2006 2008 2010 2012

Source: Statistics Canada, BLS, Bloomberg, Scotia Economics.

Consumer Price Inflation

U.S.

forecast y/y % change, year-end

Canada Euro zone

Forecasts at April 4, 2012

Source: Scotia Economics, Statistics Canada, Bloomberg.

0

25

50

75

100

125

2004 2006 2008 2010 20120.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10CADUSD

Parity

Canadian Dollar (RHS)

forecast

The Loonie Continues to Fly High…

WTI Oil (LHS)

WTI Oil US$/bbl

-150

-100

-50

0

50

100

150

200

2004 2006 2008 2010

Commodities

…Despite Weaker Trade Balances

C$ billions, s.a.

Merchandise Trade ex. Commodities

$100/bbl

Merchandise Trade

Loonie Strength, U.S. Weakness Hit Canadian Exports

Forecasts at April 4, 2012

60

80

100

120

2004 2006 2008 2010 2012

forecast

Employment

U.S.

Canada

* St. Catharines-Niagara, Hamilton, Kitchener-Waterloo, London, Windsor. Source: Scotia Economics, Statistics Canada, BLS, Global Insight.

Better Job Market Supports Canadian Household Spending

B.C.

index: 2004=100

60

80

100

120

2004 2006 2008 2010 2012

forecast

Motor Vehicle Sales

U.S.

Canada

index: 2004=100

Forecasts at April 4, 2012

B.C.

Canada’s Housing Market Is Hot… But Not Overbuilt

Source: NAR, CREA MLS, Statistics Canada, CMHC, Scotia Economics.

80

100

120

140

160

180

200

220

240

260

280

1990 1995 2000 2005 2010

Canada

U.S.

index, 1990=100

Average Home Prices

0.0

0.5

1.0

1.5

2.0

2.5

1990 1995 2000 2005 2010

Multi-unit

Singles & Semis

total single and multi units per 1,000 households

Unsold New Homes

Canada Average, 1990 to 2011

Price Gains Reflect Strong Regional Fundamentals

0 50 100 150 200 250

Toronto

Victoria

Kitchener

National

Calgary

Sudbury

Vancouver

Edmonton

St. John's

Saskatoon

Regina

cumulative % house price gain since Q4 1999

MLS Average House Prices, SA

Source: CREA MLS, Statistics Canada, CMHC, Scotia Economics.

100

110

120

130

140

150

160

170

180

2004 2006 2008 2010 2012f

Nominal GDP Per Capita index: 2004=100

Ontario

B.C.

Alberta

Saskatchewan

forecast

Newfoundland and Labrador

Forecasts at April 4, 2012

Canadians Have Higher Debt… But Stronger Balance Sheets

* Includes households and unincorporated business. Source: U.S. Federal Reserve, Statistics Canada, MBA, CBA, Scotia Economics.

80

95

110

125

140

155

170

1990 1995 2000 2005 2010

Canada*

U.S.

household credit liabilities as % of disposable income

Canadians’ Debt-To-Income Now Higher…

14

18

22

26

30

1990 1995 2000 2005 2010

Canada*

U.S.

household debt as % of assets

… But Less Debt Used To Buy Assets

Canadians Have More Home Equity & More Real Estate in their Portfolio

* Canada includes households and unincorporated business. Source: U.S. Federal Reserve, Statistics Canada, MBA, CBA, Scotia Economics.

Canadians Have More Home Equity…

30

40

50

60

70

80

1990 1995 2000 2005 2010

Canada*

U.S.

Real estate equity as % of real estate assets

15

20

25

30

35

40

45

1990 1995 2000 2005 2010

Canada*

U.S.

… and More Real Estate Assets

Real estate as % of total household assets

0

1

2

3

4

5

B.C. Alberta Saskatchewan Manitoba Ontario Quebec AtlanticCanada

2011e2012f2013f

real GDP, annual % change

Canadian Growth Prospects Still Best in the West

Source: Scotia Economics, Statistics Canada.

2004-07

Forecasts at April 4, 2012

Disclaimer

TM Trademark of The Bank of Nova Scotia. Used under license, where applicable. This report has been prepared by Scotia 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 its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.