Rising momentum trumps policy uncertainty: Scotiabank Economics Global Outlook

TORONTO, April 6, 2017 /CNW/ - The global economy continues to improve. Strong macroeconomic data in many parts of the world suggest that growth is firming as both households and businesses have become increasingly confident. Job growth remains high, there are signs that investment activity is picking up across a range of countries and there is clear evidence of strengthening activity in the manufacturing sector, particularly in the U.S. and Canada.

The strength in incoming data trumps the policy risks coming from the U.S. "It now appears that the Trump administration is less likely to move forward with extreme protectionist policies as well as the destination-based cash flow tax, including the border tax adjustment," said Jean-François Perrault, Senior Vice President and Chief Economist at Scotiabank. "Of course, these risks remain and others still weigh on the outlook. Because of this, we maintain that political and geo-political factors remain the dominant economic risks."

Highlights of Scotiabank's Global Outlook include:

  • Canada: Canadian economic growth continues to accelerate into 2017 largely on strong housing and auto sales; however, investment continues to be inhibited by uncertainty regarding U.S. policy.
  • United States: The U.S. economy continues to see accelerating growth due to improving labour markets, robust consumer demand and rising investment, but policy missteps by the U.S. authorities could represent the greatest threat to continuation of U.S. recovery.
  • Mexico: Heightened uncertainty due to possible changes in U.S. trade policy, which is weakening the outlook for economic growth. Higher fuel prices have led to rising inflation, which has been managed quickly by Banco de Mexico with increased interest rates.
  • United Kingdom: Article 50 is unlikely to have any major new consequences for the U.K. outlook but there is the potential for a negative impact on the economy as negotiating positions become clear.
  • Latin America: 2017 is forecast to be a slow year for the LatAm region as its countries' economies are impacted by events such as adverse weather and upcoming elections in the core economies.
  • Currency: The USD hit a 14-year high in January but spent the rest of Q1 backtracking those gains. USD is expected to regain strength through the coming quarter.

Read Scotiabank's Global Outlook online at:

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

About Scotiabank

Scotiabank is Canada's international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 88,000 employees and assets of $887 billion (as at January 31, 2017), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). For more information, please visit www.scotiabank.com and follow us on Twitter @ScotiabankViews.

SOURCE Scotiabank - Economic Reports

For further information: For media enquiries only: Debra Chan, Public, Corporate and Government Affairs, Scotiabank, (416) 866-6443, debra.chan@scotiabank.com

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