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Global Views

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Global Views is available on scotiabank.com, Bloomberg at SCOT and Reuters at SM1C

March 24, 2016

Contact Us

Economics

What Does Yellen Think? 2-4

Derek Holt

Canadian Federal 2016-17 Budget 5

Jean-François Perrault and Mary Webb

The Fed Should Give Up The ‘Dots’ And End Forward Guidance 6-8

Derek Holt

Trinidad & Tobago’s Economic Outlook For 2016-17 9-10

Erika Cain

Key Data Preview A1-A2

Key Indicators A3-A5

Global Auctions Calendar A6-A7

Events Calendar A8

Global Central Bank Watch A9

Latest Economic Statistics A10-A11

Latest Financial Statistics A12

Global Forecast Update Report

Forecasts & Data

This Week’s Featured Chart Please see the Global Forecast Update, March 2, 2016, for our latest economic, interest and exchange rate and commodity price forecasts and the Foreign Exchange Outlook, March 2016, for more detailed currency forecasts and commentary.

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Economics

Global Views

March 24, 2016

2

What Does Yellen Think?

Please see our full indicator, central bank, auction and event calendars on pp. A3-A9.

Canada — Not A Bad Start, Eh?

What kind of a start the Canadian economy got off to in 2016 and a speech by a Bank of Canada official will be the twin marquee points of interest on the Canadian calendar.

Bank of Canada Deputy Governor Lynn Patterson speaks on “Adjusting to the Fall in Commodity Prices: One Step At A Time” on Wednesday. She will deliver a speech with audience Q&A but no press conference. One hunch in response to the speech title is that she may reinforce the BoC’s argument that the terms of trade shock that hit Canada through the plunge in commodity prices since mid-2014 is a multi-year phenomenon. On the one hand, the BoC has argued that the worst of the cap-ex hit is front-loaded and the benefits to cheaper commodities in other parts of the country typically flow later and with greater uncertainty. On the other hand is chart 1 which is drawn from this study by Bank of Canada economists. BoC research suggests that around or just under half of the negative shock from the drop in commodity prices has worked its way through as a drag on incomes with the negative effects spanning into 2018 before peaking. This obviously holds constant other factors that are evolving in the outlook for the Canadian and global economies but gives a flavour for how the growth drag from the commodity shock evolves over a multi-year period.

Along this path there will clearly be many bumps and wiggles by way of the quarterly composition of growth. A reminder to this effect will arrive on Thursday next week when January GDP lands. We’re expecting it to be a fairly robust start to the year. Most of the higher-frequency activity readings were rather solid in January. Among them was a gain in hours worked during January (+0.3% m/m) that often signals broader economic growth given that GDP equals hours worked times labour productivity. Also recall that retail sales volumes were up 2.1% m/m, manufacturing sales volumes were up 2.4%, and export volumes were up 3.6% m/m. On the downside were housing starts that fell 4.5% m/m but entirely in multiple housing units (i.e., particularly volatile condo projects) which means resilience in the single family category (+0.3% m/m) will translate into less of an immediate drag on construction spending. Wholesale trade was also lower a touch which is somewhat consistent with trend weakness in imports due to the multi-year depreciation of the currency.

With the usual caution that it’s still early for tracking higher-frequency growth readings over Q1, if we’re right in our expectations for January GDP then the first quarter as a whole could be tracking annualized and seasonally adjusted growth on the order of 2½% given the hand-off from Q4 and our estimate for January. Again, we can’t emphasize enough that it’s very early for tracking Q1 growth risks given lags in Canadian data, but if this early tracking sticks, then it points to material upside to the BoC’s forecast 0.8% annualized growth rate in Q1 as laid out in the January MPR. Because of the argument given above regarding the multi-year period of uncertainty, we don’t think the BoC would overreact to a one-quarter upside especially after a soft Q4 last year. Nevertheless, for the time being, it pours cold water on expectations for further BoC easing especially with inflation readings around target (core) or expected to converge in that direction (headline) and in the wake of modest fiscal stimulus introduced in the Federal Budget.

Derek Holt 416.863.7707 derek.holt@scotiabank.com

THE WEEK AHEAD

Next Week's Risk Dashboard

Fed Chair Yellen & other FOMC officials

US nonfarm, ISM, consumer spending, inflation

CDN GDP

Chinese PMIs

European CPI

BoC speech

Japanese macro reports

European consumer spending

Chart 1

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Source: Bank of Canada. The Complex Adjustment of the Canadian Economy to Lower Commodity Prices, Jan. 2016.

Economics

Global Views

March 24, 2016

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United States — April Fool’s?

We’re torn in what advice to give you for next Friday. On the one hand, if you have pranksters in the office and don’t really relish being a potential victim then you might wish to book it off. On the other hand, if you are potentially affected by how first tier data may inform Fed policy risks then you might not want to miss the action. It’s possible this dilemma may be partly solved for you on the basis of guidance from Chair Yellen on Tuesday.

That’s because Friday will be the key day for data risk with nonfarm payrolls and ISM manufacturing on tap. We think the pace of job growth is likely to remain over 200k and ISM could be poised for an upside print. On nonfarm, most estimates within consensus at the point of writing (with quite a number of submissions pending) range from around 170k to 230k. The other key issue will be wage data. Recall that average hourly earnings slipped 0.1% m/m in February which drew headlines for a drop in wages. We’re a little more careful on this point given that this small decline came on the heels of the 0.5% m/m rise in January which was the second single biggest monthly jump (behind January of last year) since just before the crisis blew open. The three month moving average for US wage growth sits at 2½% y/y.

Is an April Fool’s trick in the works for the Fed? ISM Manufacturing gets released on Friday April 1st and the regional surveys are shooting to the moon (chart 2). The earlier Empire gauge released on the 15th that tracks conditions around the NY Fed’s district rose to 0.6 from -16.64 and way above expectations that called for -10.5. The earlier Philly Fed diffusion measure that came out on the 17th hit 12.4 from -2.8 and higher than the -1.5 expected. The Richmond manufacturing gauge soared to 22 from -4 prior and 0 expected. That was the strongest reading in about six years. Together they may be painting a picture of US manufacturing turning a corner. These are large upsides and point to the risk of a large improvement in ISM on the same day as nonfarm. That didn’t show up in the Markit US manufacturing gauge but it hasn’t been well connected with ISM which had plunged by much more than the Markit measure.

Before all of that, we’ll get key consumer and inflation data on Monday. The February report for consumer spending, inflation (the Fed’s preferred price deflator for total consumer spending) and incomes is expected to carry some conflicting messages. Consumption growth may be soft, but note that if so this would follow a fairly hefty gain booked in January so mean reversion wouldn’t be a big surprise. Headline inflation may soften to around 1% y/y as the year-ago base effects of the rise in energy and other commodity prices over recent weeks — if they stick — have yet to flow through. Core consumer prices, however, are expected to continue to trend higher. Core inflation may have bottomed at around 1¼% y/y last summer and has since risen by just under a half percentage point and closing in on the Fed’s target. What is not clear is how transitory factors trade off; it may be that the drag effect on inflation from a strong dollar is dissipating, but other component upsides may not be sustainable. Regardless, what is irrefutable to data is that both inflation and wages have accelerated fairly convincingly (chart 3).

Lower risk releases will include ADP private payrolls on Wednesday that on the first pass at the estimates tracks the private component of nonfarm payrolls fairly poorly over time. Construction spending and vehicle sales are also both due out on Friday, pending home sales arrive on Monday, and both consumer confidence and S&P Case-Shiller house prices on Tuesday.

Derek Holt 416.863.7707 derek.holt@scotiabank.com

THE WEEK AHEAD

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Economics

Global Views

March 24, 2016

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And so back to Fed speak. Chair Yellen speaks on Tuesday before the Economic Club of New York so expect a solid emphasis upon, well, our favourite subject matter. If the Fed has any desire whatsoever to tee up April and for Yellen to do so, then this will be the second-last such opportunity on the calendar ahead of a panel appearance with her three predecessors on April 7th. She could be expected to weigh in on what three other FOMC officials have indicated in the past week by way of the possibility that a hike could occur as soon as April (Bullard, Williams, Lockhart) while a fourth (Evans) lent support to two hikes this year and hence more than markets have priced notwithstanding the fact that he is among the most dovish FOMC members. New York Federal Reserve President William Dudley speaks Thursday. Dallas Fed President Rob Kaplan (alternate), Chicago Fed President Charles Evans (alternate), and San Francisco Fed President John Williams (nonvoting) also speak over the week.

Asia — Is Resilience in China’s Services Sector Still Waning?

It’s not boring. It’s not boring. It’s not boring. Just keep telling yourself that as markets grapple with first tier risks across most major markets. Asia will be no exception next week.

At the top of the list will be Chinese macro data. If it’s any comfort, then it all spills within about 45 minutes on Thursday evening (Eastern time). That’s when the state versions of China’s purchasing managers’ indices for the manufacturing and services sectors land, along with the private version of the manufacturing PMI. Manufacturing is expected to remain under pressure but the added wrinkle of late has been the services side of the equation. This used to be an area of resilience in the economy. In some respects it still is, as the reading remained in expansion territory in February. Markets will nevertheless be tuned into whether the services PMI continues to decelerate as it has of late (chart 4), and on a longer-term basis. The February reading was the weakest since way back in the depths of the global financial crisis.

While Japanese macro data often carries less of an impact upon the global risk trade than Chinese macro data, it can nevertheless matter to local markets. At a time when the outlook for Bank of Japan policy is being debated with the risk of additional easing over coming meetings, the sensitivities to macro data might be all the greater. Japan releases consumer spending figures, the jobless rate, industrial production, housing starts, vehicle production, and the quarterly Tankan reports on the manufacturing and service sectors for Q1.

Developments of regional interest will be focused upon inflation data from South Korea, Indonesia and Thailand, as well as industrial production and trade figures from South Korea, and Australian new home sales.

Europe — Inflation Watch

Europe’s focus will be upon macro developments abroad, spillover effects of the attacks in Belgium on related debates such as perhaps Brexit, and inflation reports.

It’s pretty obvious that after rolling out fresh stimulus on March 10th, the ECB is unlikely to be overly fussed by the latest inflation readings for March. The lagged effects of monetary policy actions on data would have to be compressed to being measured in minutes and days and possibly a touch retroactively. Nevertheless, markets will be on the watch for signs that inflation readings are carving out a bottom. That wasn’t at all evident in the February readings as both headline and core CPI across the Eurozone slipped in year-ago terms and that was among the factors that reinforced ECB action. If the improvement in commodity prices over recent weeks generally remains intact, notwithstanding recent softness this week, then headline inflation could be on a gradual recovery path over coming months.

Lesser releases will be focused on European consumer spending. They will include French consumer spending, German retail sales and Spanish retail sales. German unemployment, Q4 UK GDP revisions and UK services data complement the release schedule.

Derek Holt 416.863.7707 derek.holt@scotiabank.com

THE WEEK AHEAD

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Economics

Global Views

March 24, 2016

5

Canadian Federal 2016-17 Budget

The No-Surprise Budget

The Budget is largely as expected, focused on the delivery of the government’s election platform commitments.

Deficits of roughly $29 billion (1.4% of GDP) are projected for each of the next two fiscal years, narrowing to a $14.3 billion shortfall (0.6% of GDP) by fiscal 2020-21 (FY21).

The federal debt (narrowly defined as the accumulated deficit) is expected to rise from 31.0% of GDP as of March 2015 through 32% of GDP by March 2017. The debt burden subsequently trends lower every year to FY21, ending up less than 31% of GDP by March 2021.

The government expresses a general commitment to regaining a balanced budget, with a date for achieving this to be determined later.

There is a significant increase in program expenditures in the current plan. From FY16 to FY18, the planned rise in program spending totals almost $51 billion, contrasting with the $5½ billion increase over the five years to FY15. Relative to the February Pre-Budget Update, policy measures total $11 billion in FY17 and $13.5 billion in FY18.

More program spending is likely as the Government develops plans to address its other policy imperatives.

The Government’s estimate of the growth impact of its Budget measures, raising real GDP by 0.5% per year for FY17 and FY18, is likely overly optimistic, but the effect is still probably substantial.

Bottom line: the Budget is well designed to support the middle class and the economic impact may be important. That, and a stronger start to 2016 for the Canadian economy should reduce the odds of a cut by the Bank of Canada. We continue to believe that the next move will be a rise in interest rates, but only in mid-2017.

The federal government’s market debt is expected to rise by $37 billion in FY17, after a $20 billion increase this year. The increase in required financing is met through higher gross bond issuance, spread across the existing nominal bond sectors and the re-introduction of 3-year nominal bonds in the second quarter of FY17.

For a fuller analysis, please see Fiscal Pulse: Canadian Federal 2016-17 Budget (March 22, 2016).

For additional Debt Strategy details, please see Fiscal Pulse: Federal Debt Management Strategy, Fiscal 2016-17 (March 22, 2016).

Mary Webb 416.866.4202 mary.webb@scotiabank.com

FISCAL Jean-François Perrault 416.866.4214 jean-francois.perrault@scotiabank.com

Chart 1

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Source for charts : Finance Canada; Statistics Canada; OMB; nominal GDP forecast: Scotiabank Economics.

Chart 3

Economics

Global Views

March 24, 2016

6

The Fed Should Give Up The ‘Dots’ And End Forward Guidance

Lessons drawn from other central banks lead to the same conclusion.

On the back of yet more conflicting but generally more hawkish sounding guidance that positioned three FOMC officials in support of considering a rate hike at the April 27th FOMC meeting, we offer our updated thoughts on the value of such rate guidance.

First, the Federal Reserve should cease to publish its ‘dot plot’ of fed fund forecasts and end attempts at providing policy rate guidance by returning to the pre-crisis practice that generally avoided explicit longer run rate guidance. We expressed this view earlier in the week and in past writings spanning the years and there is now growing unease within the Fed itself over the volatility surrounding its rate guidance. St. Louis Fed President James Bullard remarked on Wednesday that he is “increasingly concerned” about the dot plot, and “I’ve even thought about dropping out unilaterally from the whole exercise.” Bullard went on to remark that “I am not revealing my dot. I want to get out of the game of how many rate increases this year.”

He has a strong case. The reason is straightforward: the exercise has been marked by significant forecast inaccuracy measured not in mere basis points on individual rate moves but in orders of magnitude on full cycle guidance. Guidance has not helped markets to formulate views on near- to medium-term policy exercises and has provided fodder for questioning policy credibility.

Witness chart 1. Each dashed line represents the median projection by FOMC officials for the fed funds target rate starting in December 2012 when the Fed began to publish the ‘dot plot’. The black solid line is the actual fed funds target rate. For years, the Fed has guided that the target rate would be many, many orders of magnitude higher by now than has turned out to be the case. It has done this while guiding projections for the long-run fed target rate lower but only by 75bps over the past couple of years (chart 2). So the long-run target has changed little relative to the path toward this ever-elusive longer run goal. Some things in life don’t need to be seen. Central bankers forecasting their own policy rates belong on this list. Past market wisdom not to bet against the Fed — if ever valid — is particularly invalid within the rate guidance period.

Point two is that because the Fed cannot forecast its own policy rate, take its latest forecast revision with a shaker or two full of salt. That’s particularly true in light of the trivial forecast changes for growth and inflation that cannot explain why the Fed shifted from projecting 4 hikes this year just three months ago to now projecting only two. This is despite evidence that the USD is less and less of a drag on inflation with each inflation print that hits the tapes all the while that market-based measures of inflation expectations have risen over the past month with the 5y5y US inflation swap over 2%. More critically, it is despite trivial changes to the FOMC’s forecasts for US growth, inflation and labor markets.

These lessons apply globally across other central banks and we’ve cited these examples for years since the Bank of Canada (temporarily and not under current Governor Poloz) and then the Federal Reserve embraced formal rate guidance starting in 2009 and 2012 respectively. In fact, lessons to this effect were provided long ago by smaller central banks with a long history of forecasting their own policy rates and providing formal policy guidance. We’ve frequently cited

Derek Holt 416.863.7707 derek.holt@scotiabank.com

U.S. MONETARY POLICY

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Economics

Global Views

March 24, 2016

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the following cases that unfolded before forward guidance became all the rage across much larger central banks like the Fed.

1. One is Sweden’s Riksbank which regularly forecasts its own repo rate and publishes 50%, 75% and 90% confidence intervals around this forecast based upon interest rate volatility measures. The result is chart 3. By the end of 2016, the 90% confidence interval covers a range of outcomes from -1.95% to +0.89% for a nearly three percentage point difference in where the policy rate might wind up by the end of the year. At this time, the 90% confidence interval surrounding the policy rate runs from about -3.01% to +4.09% by the end of 2019 for about a seven percentage point gap from the low to high estimates for where policy might go.

2. Another is the Reserve Bank of New Zealand. Chart 4 shows the longer run experience at this pioneer in the field of explicit forward guidance. Each dashed line is the central bank’s projection for the policy rate at a particular point in time versus the solid line that is the path taken by the actual policy rate. The central bank has persistently forecast excessive tightening cycles and, to a lesser extent, easing cycles and missed most of the turning points in the policy rate.

3. A third example was a brief experiment conducted by the Bank of Canada in 2009-10. The BoC does not formally issue forecasts for its own policy rate but its so-called ‘conditional commitment’ promised to keep the overnight lending rate unchanged from April 2009 through to the end of the second quarter of 2010. The result was temporarily successful in tamping down front-end yields at a time when bond yields were materially higher than what has since unfolded, but markets turned well ahead of the central bank as two-year yields soared by about 75bps from February to April of 2010 when it became clearer that the commitment was looking indefensible (chart 5). The BoC came under enough pressure on its inflation target to have to hike just before the expiration of this commitment. The BoC could not guarantee rate stability even within the very short commitment period relative to the forecast horizons of the other central banks that have provided explicit guidance, and the BoC then went on to raise its policy rate by a cumulative 75bps to a 1% threshold. Today, Governor Poloz is loath to provide formal or informal policy rate guidance.

Fed policy guidance has induced a credibility problem whereby markets have not and arguably may never believe Fed rate guidance. If the Fed is frustrated by bond market positioning in relation to the dot plot, then

U.S. MONETARY POLICY Derek Holt 416.863.7707

derek.holt@scotiabank.com

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Economics

Global Views

March 24, 2016

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clearly a state of disbelief has merit. When the time comes to turn more abruptly, the Fed could well have a tough time convincing markets and the destabilizing effects could be more acute. Worse, efforts to justify its longer run policy path have been mired in often contradictory communications from Federal Reserve officials that induce excess market volatility and uncertainty.

Which ties things back to the latest shift by FOMC officials that brought down the forecast number of rate hikes from 4 to 2 this year. It is frankly not clear to us what framework of inputs guides the rate forecasts of FOMC officials. Changes to FOMC forecasts for growth, inflation and unemployment were inconsequential in nature, and on their own didn’t appear to be material enough to merit backing off the it’s-not-a-forecast-forecast for the fed funds rate. They told us in the weeks leading up to the decision that if financial market and international conditions continued to demonstrate downside risk then that would have to be taken into account in terms of forecasts for the US, and yet markets had healed by the eve of the FOMC meeting and international risks (particularly stemming from Chinese policy developments) had also settled down. Go here for our assessment of FOMC member guidance leading up to the March FOMC. This was accurately reflected in part by way of forecast changes for the US economy and inflation. It was inaccurately reflected in lowered rate guidance.

My bias is that the FOMC may be misinterpreting the causes of global financial market instability earlier this year. It may be assuming that it was caused by Fed action in the aftermath of the December hike as opposed to poor policy efforts led by China’s government and central bank that have calmed down since the start of the year. The US is close to the Fed’s full employment mandate and on the path to achieving its price stability goals first through core and then through headline inflation. I think the transmission of foreign market instability into consequences for the US economy is being overestimated, and the Fed is continuing the moral hazard problem it started years ago by signaling to foreign governments and central banks particularly in the EM space that they need not get their policy acts together and can simply ride along the Fed’s security blanket. Today’s Fed has created a dangerous foreign dependence upon its actions that has detracted from a reform mandate abroad. This is not constructive to the world economy and future market imbalances. The greatest danger to world markets may not be a tightening Fed that sticks to the gradual course; it could well be a Fed that has induced the largest Treasury bond bubble on record while falling behind the inflation curve and sowing seeds of instability abroad.

U.S. MONETARY POLICY Derek Holt 416.863.7707

derek.holt@scotiabank.com

Economics

Global Views

March 24, 2016

9

Trinidad & Tobago’s Economic Outlook For 2016-17

Economic growth prospects remain weak due to the country’s ongoing vulnerability to sustained weakness in global energy prices, which will continue to dampen export receipts, lower fiscal revenues, and increase public sector debt levels.

After an estimated 1½% contraction in 2015, real GDP in Trinidad and Tobago is forecast to decline by 1% this year, weighed down by subdued oil and gas prices, fiscal tightening, and delays in the construction of a major petrochemicals project and production from the Starfish field. We expect a gradual recovery to materialize in 2017 as modest improvements in energy prices, billions of dollars of investment slated for energy projects, and higher natural gas output from the Juniper field lifts real GDP growth to around 1%.

Inflationary pressures in Trinidad and Tobago are expected to remain contained, but should gradually improve over our forecast horizon. After averaging 7.2% y/y in 2010-14, headline retail price growth has moderated sharply, at 2.4% y/y in January 2016, mainly due to declining food prices, while core inflation has edged up slightly to 2.0% alongside the increase in government-controlled fuel prices. We expect annual average headline inflation to hover around 4% in 2016-17 as tax reforms, improving commodity prices and currency devaluation feed-through to prices. However, with energy prices set to remain well below levels prior to the 2014 collapse, Trinidad and Tobago’s current account surplus is forecast to remain very low by historical standards, at 1¼% of GDP this year and 1¾% in 2017.

Given the prevailing economic climate, the Central Bank of Trinidad and Tobago (CBTT) decided to pause its monetary tightening cycle, holding its benchmark repo rate at 4.75% in January, following eight consecutive hikes since September 2014. The CBTT has also shifted its stance towards greater currency flexibility after maintaining the Trinidad and Tobago dollar’s (TTD) quasi-fixed exchange rate of 6.3-6.4 per US dollar (USD) for several years. Indeed, foreign exchange reserves have declined by over 15% since the end of 2014 to US$9.5bn in February 2016 as policymakers have fought to defend the peg amidst the sharp downturn in global energy prices and USD strength. In this context, the CBTT has allowed USDTTD to weaken to 6.59 in recent months and is expected to permit a further depreciation to 7.0 at end-2016 and to 7.5 through end-2017. Monetary policymakers, however, will likely resume a gradual pace of tightening later this year in order to mitigate adverse capital flows and stabilize interest-rate differentials with the US as Fed monetary normalization continues. The CBTT’s repo rate will likely end 2016 at 5.25%.

Trinidad and Tobago’s elevated budget deficit will spur ongoing fiscal consolidation. The sharp decline in oil and gas export prices is expected to continue to weigh heavily on the government's energy revenue. This loss of income is unlikely to be offset to the extent the government has planned by way of expenditure cuts to capital spending, transfers and subsidies (particularly fuel) as well as efforts

Erika Cain 416.866.4205 erika.cain@scotiabank.com

CARIBBEAN

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Global Views

March 24, 2016

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to boost non-energy revenues including a widened VAT base, the reintroduction of property taxes, an increase in the business levy, and better compliance through the creation of a new revenue authority. As such, after nearly doubling its original deficit target in FY2015, at 3.9% of GDP, the government’s plan to lower its fiscal shortfall to 1.6% in FY2016 and balance the budget by FY2018 is likely unachievable. We believe that Trinidad and Tobago’s public deficit will remain around 4% this year before easing to 3% next year, which should lift gross government debt to roughly 60% of GDP by 2017.

Net assets in the Heritage and Stabilization Fund (HSF) remain at roughly US$5.7bn or 20% of GDP. The government plans to separate the HSF into two distinct funds and draw approximately $1.5 billion from the Stabilization fund to cover some of its fiscal shortfall in FY2016-17.

CARIBBEAN Erika Cain 416.866.4205

erika.cain@scotiabank.com

0.0

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11 12 13 14 15 16f 17f

Elevated Budget Deficits To Support Ongoing Fiscal Consolidation

% of GDP

Source: Central Bank of Trinidad & Tobago, Scotiabank Economics.

% of GDP

Fiscal Deficit RHS

Gross Government Debt LHS

Chart 4

Economics

Global Views

March 24, 2016

11

Key Data Preview

CANADA

GDP for January should be quite strong. We’re anticipating a +0.4% m/m print with risks tilted to the upside. Why? Retail sales expanded at a +2.1% m/m pace in terms of volumes. Manufacturing sales were up by +2.4% m/m in real terms. Export volumes increased by +3.6% m/m. Total hours worked were up by 0.34% m/m. The only fly in the ointment of consequence is that wholesale trade dropped by 0.2% m/m in volume terms. January looks to have been strong and, combined with an uptick in economic activity to end Q4 2015 (+0.2% m/m for Dec.), we’re anticipating a solid overall GDP print for Q1 2016.

UNITED STATES

U.S. personal consumption expenditure figures for February could be soft. We’re looking for a 0% m/m spending number after retail sales on the month were weak (-0.1% m/m) and, moreover, we’ll be watching for revisions to January after Jan. retail sales were marked down to -0.4% m/m from an initially reported +0.2% m/m. In terms of incomes, we’re also looking for a soft print of +0.1% m/m after income figures released with nonfarm payrolls figures for February were soft. The positive news will probably be on the inflation front where we’re expecting the core PCE deflator to print at +1.8% y/y with upside risks as core CPI was strong on the month (+0.3% m/m) and one of the driving factors was medical care costs, which pack more of a punch in terms of index weights in the PCE deflator than they do in CPI.

Nonfarm payrolls should print at a solid level, and we’re looking for a +210k print on the basis of a number of factors: a) ongoing momentum in terms of low initial jobless claims numbers, which averaged 259k during the first three weeks of March, b) momentum in terms of overall jobs gains that have nonfarm payrolls running above 200k/month (i.e., a +210k number isn’t actually that strong — the current three month average is 225k). We’re also looking for the unemployment rate to tick down to 4.8% as the labor force has expanded by more than 1m people over the past two months, and a slow-down in labor force growth combined with even modest gains on the household employment survey would, all things being equal, push down the unemployment rate.

The ISM manufacturing index for March could improve somewhat, and we’re looking for a print of 50.0 after a variety of regional Fed surveys showed more bullish sentiment in the U.S. manufacturing sector. The Philadelphia Fed survey and Richmond Fed survey both accelerated substantially, and the Markit PMI ticked higher (and is already in expansion territory). The ISM Milwaukee, Dallas Fed survey, and Chicago PMI will all be released beforehand, and we’ll see if they echo the shift in sentiment that we’ve seen so far for March.

Dov Zigler 212.225.6631 dov.zigler@scotiabank.com

Derek Holt 416.863.7707 derek.holt@scotiabank.com

A1

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Jan-13 Jan-15

Retail Sales Volumes

Retail Sales Pop to Start 2016

C$,Constant 2007 dollars, Billions

Source: Scotiabank Economics, Statistics Canada

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350

400

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500

10 12 14 16

Initial Jobless Claims

8-Week-Moving Avg.

000s

Source: DoL, Scotiabank Economics

Initial Jobless ClaimsEncouraging Trend

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60

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70

-50

-40

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2010 2011 2012 2013 2014 2015 2016

Philly Fed (LHS)

ISM Manufacturing (RHS)

Index Index

Source: Scotiabank Economics, ISM, FRB.

Manufacturing Rebound?

Chart 1

Chart 2

Chart 3

Economics

Global Views

March 24, 2016

12

… continued from previous page

EUROPE

The euro zone economic calendar is quite busy this week, with preliminary estimates for March inflation to be released in the bloc’s largest economies. Flash inflation figures will be published in Germany on Wednesday, March 30th, followed by France, Italy, Spain and the euro area aggregate on Thursday, March 31th. We expect euro area HICP to edge up slightly to -0.1% y/y in March from -0.2% in February, and core inflation to rise to 1.0% y/y from 0.8% in the prior month. This improvement would be welcome news for the European Central Bank (ECB), however, headline inflation in the euro currency bloc is still set to remain below the ECB’s target of close to, but below, 2% inflation well into 2018. While the ECB’s list of measures announced in its March stimulus package should help narrow the gap, it has done little in terms of lowering the value of the euro (which appears to be influenced more by US Fed policy expectations of late) at a time when the euro zone economic recovery remains too soft to generate sufficient wage growth and domestic price pressures. We expect annual euro zone inflation to end the year below 1%.

LATIN AMERICA

Peru’s inflation figures for the month of March will be released on April 1st. We expect that prices advanced by roughly 4.5% y/y in March on the back of higher food prices due to heavier, El Nino-related, rainfall. The country’s finance minister has stated that these weather cycles were expected, and that price pressures should ease in the second half of the year.

A2

Rory Johnston 416.862.3908 rory.johnston@scotiabank.com

Erika Cain 416.866.4205 erika.cain@scotiabank.com

0

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Mar-10 Mar-12 Mar-14 Mar-16

y/y %change

Source: Scotiabank Economics, Bloomberg.

forecast

Peruvian CPI

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16

Euro Zone Inflationy/y % change

Source: Scotiabank Economics, Eurostat.

Eurozone

forecast

ItalyGermany

Spain

Chart 1

Chart 2

Economics

Global Views

March 24, 2016

1

Key Indicators for the week of March 28 – April 1

Forecasts at time of publication. Source: Bloomberg, Scotiabank Economics.

North America

A3

Europe

Country Date Time Indicator Period BNS Consensus LatestSP 03/29 03:00 Budget Balance YTD (€ mn) Feb -- -- -27520

EC 03/30 05:00 Business Climate Indicator Mar -- 0.1 0.1EC 03/30 05:00 Consumer Confidence Mar F -9.7 -9.7 -9.7EC 03/30 05:00 Economic Confidence Mar 102.8 103.8 103.8EC 03/30 05:00 Industrial Confidence Mar -5.5 -4.2 -4.4GE 03/30 08:00 CPI (m/m) Mar P 0.7 0.6 0.4GE 03/30 08:00 CPI (y/y) Mar P 0.2 0.1 0.0GE 03/30 08:00 CPI - EU Harmonized (m/m) Mar P 0.7 0.7 0.4GE 03/30 08:00 CPI - EU Harmonized (y/y) Mar P 0.0 -0.1 -0.2UK 03/30 19:05 GfK Consumer Confidence Survey Mar -- -1.0 0.0

Country Date Time Indicator Period BNS Consensus LatestUS 03/28 08:30 PCE Deflator (m/m) Feb -0.1 -0.1 0.1US 03/28 08:30 PCE Deflator (y/y) Feb 1.0 1.0 1.3US 03/28 08:30 PCE ex. Food & Energy (m/m) Feb 0.2 0.2 0.3US 03/28 08:30 PCE ex. Food & Energy (y/y) Feb 1.8 1.8 1.7US 03/28 08:30 Personal Spending (m/m) Feb 0.0 0.1 0.5US 03/28 08:30 Personal Income (m/m) Feb 0.1 0.1 0.5MX 03/28 10:00 Trade Balance (US$ mn) Feb -- 358 -3441US 03/28 10:00 Pending Home Sales (m/m) Feb -- 1.2 -2.5US 03/28 10:30 Dallas Fed. Manufacturing Activity Mar -- -26.5 -31.8

CA 03/29 08:30 IPPI (m/m) Feb -- -0.2 0.5CA 03/29 08:30 Raw Materials Price Index (m/m) Feb -- -0.6 -0.4US 03/29 09:00 S&P/Case-Shiller Home Price Index (m/m) Jan 0.6 0.7 0.8US 03/29 09:00 S&P/Case-Shiller Home Price Index (y/y) Jan 5.7 5.8 5.7MX 03/29 10:00 Global Economic Indicator IGAE (y/y) Jan -- 2.5 2.6US 03/29 10:00 Consumer Confidence Index Mar 94.0 93.5 92.2

US 03/30 07:00 MBA Mortgage Applications (w/w) MAR 25 -- -- -3.3US 03/30 08:15 ADP Employment Report (000s m/m) Mar 190.0 195.0 213.8MX 03/30 10:00 Unemployment Rate (%) Feb -- 4.2 4.2

CA 03/31 08:30 Real GDP (m/m) Jan 0.4 0.3 0.2US 03/31 08:30 Initial Jobless Claims (000s) MAR 26 270 -- 265US 03/31 08:30 Continuing Claims (000s) MAR 19 2185 -- 2179US 03/31 09:45 Chicago PMI Mar -- 50.5 47.6

US 04/01 08:30 Nonfarm Employment Report (000s m/m) Mar 210 202 242US 04/01 08:30 Unemployment Rate (%) Mar 4.8 4.9 4.9US 04/01 08:30 Household Employment Report (000s m/m) Mar -- -- 530US 04/01 08:30 Average Hourly Earnings (m/m) Mar -- 0.3 -0.1US 04/01 08:30 Average Weekly Hours Mar -- 34.5 34.4US 04/01 10:00 Construction Spending (m/m) Feb -0.1 0.2 1.5US 04/01 10:00 ISM Manufacturing Index Mar 50.0 50.6 49.5US 04/01 10:00 U. of Michigan Consumer Sentiment Mar F -- 90.5 90.0US 04/01 Domestic Vehicle Sales (mn a.r.) Mar 13.8 13.8 13.7US 04/01 Total Vehicle Sales (mn a.r.) Mar 17.3 17.5 17.4

Economics

Global Views

March 24, 2016

2

Key Indicators for the week of March 28 – April 1

Forecasts at time of publication. Source: Bloomberg, Scotiabank Economics.

A4

Europe (continued from previous page)

Asia Pacific

Country Date Time Indicator Period BNS Consensus Latest

GE 03/31 02:00 Retail Sales (m/m) Feb -- 0.3 -0.1FR 03/31 02:45 Consumer Spending (m/m) Feb 0.0 0.1 0.6FR 03/31 02:45 CPI (m/m) Mar P 0.7 0.5 0.3FR 03/31 02:45 CPI (y/y) Mar P -0.2 -0.2 -0.2FR 03/31 02:45 CPI - EU Harmonized (m/m) Mar P 0.7 0.7 0.3FR 03/31 02:45 CPI - EU Harmonized (y/y) Mar P -0.1 -0.1 -0.1FR 03/31 02:45 Producer Prices (m/m) Feb -- -- -0.8SP 03/31 03:00 CPI (m/m) Mar P -- -- -0.4SP 03/31 03:00 CPI (y/y) Mar P -- -- -0.8SP 03/31 03:00 CPI - EU Harmonized (m/m) Mar P 2.0 -- -0.4SP 03/31 03:00 CPI - EU Harmonized (y/y) Mar P -1.0 -- -1.0SP 03/31 03:00 Real Retail Sales (y/y) Feb -- -- 2.0TU 03/31 03:00 Real GDP (y/y) 4Q -- 5.0 4.0GE 03/31 03:55 Unemployment (000s) Mar -5 -5 -10GE 03/31 03:55 Unemployment Rate (%) Mar 6.2 6.2 6.2SP 03/31 04:00 Current Account (€ bn) Jan -- -- 4.5UK 03/31 04:30 Business Investment (q/q) 4Q F -- -- -2.1UK 03/31 04:30 Current Account (£ bn) 4Q -- -21.8 -17.5UK 03/31 04:30 GDP (q/q) 4Q F -- 0.5 0.5UK 03/31 04:30 Index of Services (m/m) Jan -- 0.2 0.2UK 03/31 04:30 Net Consumer Credit (£ bn) Feb -- 1.4 1.6EC 03/31 05:00 Euro zone CPI Estimate (y/y) Mar -0.1 -0.1 -0.2EC 03/31 05:00 Euro zone Core CPI Estimate (y/y) Mar A 1.0 0.9 0.8IT 03/31 05:00 CPI (m/m) Mar P -- 0.1 -0.2IT 03/31 05:00 CPI (y/y) Mar P -- -0.3 -0.3IT 03/31 05:00 CPI - EU Harmonized (m/m) Mar P 2.3 2.3 -0.4IT 03/31 05:00 CPI - EU Harmonized (y/y) Mar P 0.0 -0.2 -0.2

UK 04/01 02:00 Nationwide House Prices (m/m) Mar -- 0.5 0.3IT 04/01 03:45 Manufacturing PMI Mar 52.7 52.4 52.2FR 04/01 03:50 Manufacturing PMI Mar F 49.6 49.6 49.6GE 04/01 03:55 Manufacturing PMI Mar F 50.4 50.4 50.4EC 04/01 04:00 Manufacturing PMI Mar F 51.4 51.4 51.4UK 04/01 04:30 Manufacturing PMI Mar -- 51.2 50.8EC 04/01 05:00 Unemployment Rate (%) Feb 10.3 10.3 10.3IT 04/01 Budget Balance (€ bn) Mar -- -- -9.9IT 04/01 Budget Balance YTD (€ bn) Mar -- -- -5.4RU APR 1-4 Real GDP (y/y) 4Q -- -3.8 -4.1

Country Date Time Indicator Period BNS Consensus LatestCH MAR 27-31 Leading Index Feb -- -- 98.1SK MAR 27-31 Discount Store Sales (y/y) Feb -- -- 11.0SK MAR 27-31 Department Store Sales (y/y) Feb -- -- 9.0

SK 03/28 17:00 Consumer Confidence Index Mar -- -- 98.0JN 03/28 19:30 Household Spending (y/y) Feb -- -1.5 -3.1JN 03/28 19:30 Jobless Rate (%) Feb 3.2 3.2 3.2JN 03/28 19:50 Large Retailers' Sales (y/y) Feb -- -- 0.9JN 03/28 19:50 Retail Trade (y/y) Feb -- 0.5 -0.2

HK 03/29 04:30 Exports (y/y) Feb -- -5.8 -3.8HK 03/29 04:30 Imports (y/y) Feb -- -7.0 -9.0HK 03/29 04:30 Trade Balance (HKD bn) Feb -- -30.7 -17.5JN 03/29 19:50 Industrial Production (y/y) Feb P -- -1.7 -3.8

Economics

Global Views

March 24, 2016

3

Key Indicators for the week of March 28 – April 1

Forecasts at time of publication. Source: Bloomberg, Scotiabank Economics.

A5

Latin America

Asia Pacific (continued from previous page)

Country Date Time Indicator Period BNS Consensus LatestJN 03/30 00:00 Vehicle Production (y/y) Feb -- -- -5.8SK 03/30 17:00 Business Survey- Manufacturing Apr -- -- 66.0SK 03/30 17:00 Business Survey- Non-Manufacturing Apr -- -- 67.0SK 03/30 19:00 Industrial Production (y/y) Feb -- -- -1.9AU 03/30 20:00 HIA New Home Sales (m/m) Feb -- -- 3.1AU 03/30 20:30 Private Sector Credit (y/y) Feb -- 6.5 6.5HK MAR 30-31 Govt Monthly Budget Surp/Def (HKD bn) Feb -- -- 46.6IN MAR 30-31 Fiscal Deficit (INR Crore) Feb -- -- 44096PH MAR 30-31 Bank Lending (y/y) Feb -- -- 15.6

JN 03/31 01:00 Housing Starts (y/y) Feb -- -2.8 0.2JN 03/31 01:00 Construction Orders (y/y) Feb -- -- -13.8TH 03/31 03:30 Exports (y/y) Feb -- -- -9.3TH 03/31 03:30 Imports (y/y) Feb -- -- -17.8

Country Date Time Indicator Period BNS Consensus LatestCL 03/30 08:00 Industrial Production (y/y) Feb -- -1.0 -4.6CL 03/30 08:00 Retail Sales (y/y) Feb -- 3.2 3.4

CL 03/31 08:00 Unemployment Rate (%) Feb -- 5.8 5.8CO 03/31 11:00 Urban Unemployment Rate (%) Feb -- 12.3 14.1

PE 04/01 01:00 Consumer Price Index (y/y) Mar 4.5 -- 4.5BZ 04/01 08:00 Industrial Production SA (m/m) Feb -- -- 0.4BZ 04/01 08:00 Industrial Production (y/y) Feb -- -- -13.8BZ 04/01 09:00 PMI Manufacturing Index Mar -- -- 44.5BZ 04/01 14:00 Trade Balance (FOB) - Monthly (US$ mn) Mar -- -- 3043

Economics

Global Views

March 24, 2016

4

Global Auctions for the week of March 28 – April 1

North America

Europe

Source: Bloomberg, Scotiabank Economics.

A6

Country Date Time EventUS 03/28 11:30 U.S. to Sell USD31 Bln 3-Month BillsUS 03/28 11:30 U.S. to Sell USD26 Bln 6-Month BillsUS 03/28 13:00 U.S. to Sell USD26 Bln 2-Year Notes

US 03/29 11:30 U.S. to Sell USD20 Bln 52-Week BillsUS 03/29 11:30 U.S. to Sell 4-Week BillsUS 03/29 13:00 U.S. to Sell USD34 Bln 5-Year NotesMX 03/29 14:00 Mexico To Sell Bills - 182 DaysMX 03/29 14:00 Mexico To Sell Bills - 364 DaysMX 03/29 14:00 Mexico To Sell Bondes D - 5 YearsMX 03/29 14:00 Mexico To Sell Bonds - 10 YearsMX 03/29 14:00 Mexico To Sell I/L Bonds - 30 Years

US 03/30 13:00 U.S. to Sell USD28 Bln 7-Year Notes

Country Date Time EventIT 03/29 05:00 Italy to Sell EUR6 Bln 183-Day Bills

MB 03/29 05:00 Malta to Sell BillsSZ 03/29 05:15 Switzerland to Sell 91-Day Bills FR 03/29 08:50 France to Sell Up to EUR3.5 Bln 90-Day BillsFR 03/29 08:50 France to Sell Up to EUR1.4 Bln 335-Day BillsFR 03/29 08:50 France to Sell Up to EUR1.4 Bln 153-Day Bills

DE 03/30 04:30 Denmark to Sell 61-Day BillsDE 03/30 04:30 Denmark to Sell 153-Day BillsIT 03/30 05:00 Italy to Sell Up to EUR3 Bln 1.6% 2026 BondsIT 03/30 05:00 Italy to Sell Up to EUR1.5 Bln Floating 2022 BondsIT 03/30 05:00 Italy to Sell Up to EUR3.5 Bln 0.45% 2021 Bonds

SW 03/30 05:03 Sweden to Sell SEK2 Bln 1.5% 2023 BondsSW 03/30 05:03 Sweden to Sell SEK2 Bln 1% 2026 BondsGE 03/30 05:30 Germany to Sell EUR4 Bln 0% 2021 Bonds

UK 04/01 06:00 U.K. to Sell GBP500 Mln 29-Day BillsUK 04/01 06:00 U.K. to Sell GBP1.5 Bln 91-Day BillsUK 04/01 06:00 U.K. to Sell GBP2 Bln 182-Day Bills

Economics

Global Views

March 24, 2016

5

Global Auctions for the week of March 28 – April 1

Source: Bloomberg, Scotiabank Economics.

A7

Asia Pacific

Latin America

Country Date Time EventCH 03/27 22:00 Sichuan to Sell CNY13.8 Bln 3-Yr General BondsCH 03/27 22:00 Sichuan to Sell CNY13.8 Bln 5-Yr General Bonds CH 03/27 22:00 Sichuan to Sell CNY13.8 Bln 7-Yr General Bonds CH 03/27 22:00 Sichuan to Sell CNY4.562 Bln 10-Yr General BondsCH 03/27 22:00 Liaoning to Sell CNY22.7 Bln 7-Yr General Bonds CH 03/27 22:00 Liaoning to Sell CNY7.8 Bln 10-Yr General Bonds

CH 03/28 02:00 Liaoning to Sell CNY22.7 Bln 3-Yr General Bonds CH 03/28 02:00 Liaoning to Sell CNY22.7 Bln 5-Yr General Bonds

AU 03/29 20:00 Australia Plans to Sell AUD900 Mln 2.75% 2027 Bonds

AU 03/30 19:30 Australia Plans to Sell AUD500 Mln 148-Day BillsCH 03/30 22:00 Anhui to Sell CNY2.3 Bln 3-Yr General BondsCH 03/30 22:00 Anhui to Sell CNY6.2 Bln 5-Yr General BondsCH 03/30 22:00 Anhui to Sell CNY6.2 Bln 7-Yr General BondsCH 03/30 22:00 Anhui to Sell CNY6.2 Bln 10-Yr General Bonds

CH 03/31 03:00 Qinghai to Sell CNY3.6 Bln 3-Yr General BondsCH 03/31 03:00 Qinghai to Sell CNY5.2 Bln 5-Yr General BondsCH 03/31 03:00 Qinghai to Sell CNY5.2 Bln 7-Yr General BondsCH 03/31 03:00 Qinghai to Sell CNY5.85 Bln 10-Yr General BondsAU 03/31 20:00 Australia Plans to Sell AUD800 Mln 1.75% 2020 Bonds

Country Date Time EventBZ 03/29 11:00 Brazil to Sell I/L Bonds - 08/15/2026BZ 03/29 11:00 Brazil to Sell I/L Bonds - 05/15/2035BZ 03/29 11:00 Brazil to Sell I/L Bonds - 05/15/2055VZ 03/29 11:00 Venezuela to Sell Bills - 91 days.

BZ 03/31 11:00 Brazil to Sell LFT - 03/01/2022BZ 03/31 11:00 Brazil to Sell Bills LTN - 10/01/2016BZ 03/31 11:00 Brazil to Sell Bills LTN - 04/01/2018BZ 03/31 11:00 Brazil to Sell Bills LTN - 01/01/2020

Economics

Global Views

March 24, 2016

6

Events for the week of March 28 – April 1

Europe

Source: Bloomberg, Scotiabank Economics.

A8

North America

Asia Pacific

Latin America

Country Date Time EventUS 03/26 Alaska Democratic CaucusUS 03/26 Hawaii Democratic CaucusUS 03/26 Washington State Democratic Caucus

US 03/29 05:15 Fed's Williams Speaks in SingaporeUS 03/29 11:30 Fed Chair Yellen Speaks to Economic Club of New YorkUS 03/29 13:00 Fed's Kaplan Speaks in AustinUS 03/29 16:00 Fed's Kaplan Speaks at University of Texas in Austin

US 03/30 13:00 Fed's Evans Speaks on Economy and PolicyCA 03/30 14:20 Bank of Canada Deputy Patteron Speaks in Edmonton

US 03/31 17:00 Fed's Dudley Speaks on Financial Crises in Lexington, VA

MX 04/01 11:00 Central Bank Monetary Policy MinutesUS 04/01 13:00 Fed's Mester Speaks in New York

Country Date Time EventIT 03/28 18:00 Italy's Renzi visits U.S.

UK 03/29 04:30 BOE's Financial Policy Committee Publishes StatementUK 03/29 07:00 ECB's Makuch Speaks in Bratislava

UK 03/31 03:00 BOE Governor Mark Carney Speaks at FSB Briefing in TokyoSZ 03/31 12:30 SNB's Andrea Maechler Speaks in Zurich

SP 04/01 Spain Sovereign Debt to Be Rated by S&PGE 04/01 Germany Sovereign Debt to Be Rated by Fitch

Country Date Time EventSK 03/29 03:00 Bank of Korea Policy Meeting Minutes

Country Date Time EventCO 04/01 14:00 Colombia Monetary Policy Minutes

Economics

Global Views

March 24, 2016

7

Global Central Bank Watch

NORTH AMERICARate Current Rate Next Meeting Scotia's Forecasts Consensus ForecastsBank of Canada – Overnight Target Rate 0.50 April 13, 2016 0.50 0.50

Federal Reserve – Federal Funds Target Rate 0.50 April 27, 2016 0.50 0.50

Banco de México – Overnight Rate 3.75 May 5, 2016 3.75 --

EUROPERate Current Rate Next Meeting Scotia's Forecasts Consensus ForecastsEuropean Central Bank – Refinancing Rate 0.00 April 21, 2016 0.00 --

Bank of England – Bank Rate 0.50 April 14, 2016 0.50 0.50

Swiss National Bank – Libor Target Rate -0.75 June 16, 2016 -0.75 --

Central Bank of Russia – One-Week Auction Rate 11.00 April 29, 2016 11.00 --

Central Bank of the Republic of Turkey – 1 Wk Repo Rate 7.50 April 20, 2016 7.50 --

Sweden Riksbank – Repo Rate -0.50 April 21, 2016 -0.50 --

Norges Bank – Deposit Rate 0.50 May 12, 2016 0.50 --

ASIA PACIFICRate Current Rate Next Meeting Scotia's Forecasts Consensus ForecastsBank of Japan – Policy Rate -0.10 April 28, 2016 -0.10 --

Reserve Bank of Australia – Cash Target Rate 2.00 April 5, 2016 2.00 2.00

Reserve Bank of New Zealand – Cash Rate 2.25 April 27, 2016 2.25 2.25

People's Bank of China – Lending Rate 4.35 TBA -- --

Reserve Bank of India – Repo Rate 6.75 April 5, 2016 6.75 --

Bank of Korea – Bank Rate 1.50 April 19, 2016 1.50 --

Bank of Thailand – Repo Rate 1.50 May 11, 2016 1.50 1.50

Bank Indonesia – Reference Interest Rate 6.75 April 21, 2016 6.75 --

LATIN AMERICARate Current Rate Next Meeting Scotia's Forecasts Consensus ForecastsBanco Central do Brasil – Selic Rate 14.25 April 27, 2016 14.25 --

Banco Central de Chile – Overnight Rate 3.50 April 12, 2016 3.50 --

Banco de la República de Colombia – Lending Rate 6.50 April 29, 2016 6.50 --

Banco Central de Reserva del Perú – Reference Rate 4.25 April 14, 2016 4.25 --

AFRICARate Current Rate Next Meeting Scotia's Forecasts Consensus ForecastsSouth African Reserve Bank – Repo Rate 7.00 May 19, 2016 7.00 --

Fed: The Federal Reserve amended its reaction function at its March meeting and now anticipates that GDP growth in the 2-2.5% area, a modest increase in inflation, and continued declines in the unemployment rate will only necessitate two 25bps increases in the Fed Funds Rate this year. On the Fed-watching front, this week will bring a BLS Employment Situation report which we think will continue to show progress on the employment front of the FOMC’s mandate. Chair Yellen will speak in NYC on March 29, and it will be interesting to see if her remarks agree with, disagree with, or avoid commenting on a view recently espoused by some Fed hawks to the effect that a rate hike in April would be suitable. BoC: Between the Canadian federal government’s Budget released on March 22 and a strong economic showing to start 2016 (Jan. GDP will be released on March 31), we think that the BoC might find cause to upgrade its growth outlook somewhat in its April MPR. Aside from the GDP number, BoC Deputy Gov. Patterson will speak in Edmonton on March 30.

North America

Europe

Asia Pacific

Latin America

Africa

Forecasts at time of publication. Source: Bloomberg, Scotiabank Economics.

A9

Economics

Global Views

March 24, 2016

8

North America

Canada 2015 15Q3 15Q4 Latest United States 2015 15Q3 15Q4 Latest Real GDP (annual rates) 1.2 2.4 0.8 Real GDP (annual rates) 2.4 2.0 1.0 Current Acc. Bal. (C$B, ar) -65.7 -61.2 -61.5 Current Acc. Bal. (US$B, ar) -484 -520 -501 Merch. Trade Bal. (C$B, ar) -24.0 -20.3 -18.7 -7.9 (Jan) Merch. Trade Bal. (US$B, ar) -759 -762 -749 -765 (Jan) Industrial Production -0.9 -0.3 0.1 1.7 (Jan) Industrial Production 1.3 1.3 -0.8 -1.3 (Feb) Housing Starts (000s) 194 213 194 213 (Feb) Housing Starts (millions) 1.11 1.16 1.14 1.18 (Feb) Employment 0.8 0.9 0.8 0.7 (Feb) Employment 2.1 2.1 2.0 1.9 (Feb) Unemployment Rate (%) 6.9 7.0 7.0 7.3 (Feb) Unemployment Rate (%) 5.3 5.2 5.0 4.9 (Feb) Retail Sales 2.2 2.0 2.6 6.4 (Jan) Retail Sales 1.5 1.6 1.3 2.7 (Feb) Auto Sales (000s) 1898 1952 1954 1976 (Jan) Auto Sales (millions) 17.3 17.8 17.8 17.4 (Feb) CPI 1.1 1.2 1.3 1.4 (Feb) CPI 0.1 0.1 0.5 1.0 (Feb) IPPI -0.9 -0.3 0.1 -1.7 (Jan) PPI -3.3 -3.3 -3.3 -1.9 (Feb) Pre-tax Corp. Profits -15.2 -16.4 -18.6 Pre-tax Corp. Profits 2.0

Mexico Real GDP 2.5 2.8 2.5 Current Acc. Bal. (US$B, ar) -32.4 -32.7 -30.8 Merch. Trade Bal. (US$B, ar) -14.5 -25.9 -15.8 -41.3 (Jan) Industrial Production 1.0 1.3 0.2 1.1 (Jan) CPI 2.7 2.6 2.3 2.9 (Feb)

Euro Zone 2015 15Q3 15Q4 Latest Germany 2015 15Q3 15Q4 Latest Real GDP 1.3 1.3 1.3 Real GDP 1.4 1.7 1.3 Current Acc. Bal. (US$B, ar) 351 403 461 82 (Jan) Current Acc. Bal. (US$B, ar) 257.0 307.3 280.0 172.4 (Jan) Merch. Trade Bal. (US$B, ar) 357.9 364.9 391.9 153.7 (Jan) Merch. Trade Bal. (US$B, ar) 274.5 278.6 270.1 175.2 (Jan) Industrial Production 1.6 1.9 1.3 2.8 (Jan) Industrial Production 0.6 1.2 -0.3 2.3 (Jan) Unemployment Rate (%) 10.9 10.7 10.5 10.4 (Jan) Unemployment Rate (%) 6.4 6.4 6.3 6.2 (Feb) CPI 0.0 0.1 0.2 -0.2 (Feb) CPI 0.2 0.1 0.3 0.0 (Feb)

France United Kingdom Real GDP 1.1 1.1 1.4 Real GDP 2.2 2.1 1.9 Current Acc. Bal. (US$B, ar) -3.0 4.9 -6.4 -58.3 (Jan) Current Acc. Bal. (US$B, ar) -69.8 Merch. Trade Bal. (US$B, ar) -40.3 -36.3 -46.1 -41.0 (Jan) Merch. Trade Bal. (US$B, ar) -191.6 -197.3 -202.0 -177.8 (Jan) Industrial Production 1.9 1.5 2.5 2.0 (Jan) Industrial Production 1.0 1.2 0.8 0.2 (Jan) Unemployment Rate (%) 10.4 10.5 10.1 10.2 (Jan) Unemployment Rate (%) 5.4 5.3 5.1 5.1 (Dec) CPI 0.0 0.1 0.1 -0.2 (Feb) CPI 0.1 0.0 0.1 0.3 (Feb)

Italy Russia Real GDP 0.6 0.8 1.0 Real GDP -4.1 Current Acc. Bal. (US$B, ar) 35.1 46.5 66.5 -12.8 (Jan) Current Acc. Bal. (US$B, ar) 65.8 7.5 13.0 Merch. Trade Bal. (US$B, ar) 49.8 53.5 66.7 0.5 (Jan) Merch. Trade Bal. (US$B, ar) 12.2 9.4 10.1 7.9 (Jan) Industrial Production 0.8 1.8 1.4 3.5 (Jan) Industrial Production -3.7 -4.2 -3.9 1.0 (Feb) CPI 0.0 0.2 0.2 -0.4 (Feb) CPI 15.5 15.7 14.5 8.1 (Feb)

Europe

All data expressed as year-over-year % change unless otherwise noted.

Economic Statistics

Source: Bloomberg, IHS Global, Scotiabank Economics.

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Economics

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9

Asia Pacific

Australia 2015 15Q3 15Q4 Latest Japan 2015 15Q3 15Q4 Latest Real GDP 2.5 2.7 3.0 Real GDP 0.5 1.7 0.8 Current Acc. Bal. (US$B, ar) -56.4 -64.6 -63.6 Current Acc. Bal. (US$B, ar) 137.4 160.2 117.3 52.9 (Jan) Merch. Trade Bal. (US$B, ar) -12.6 -15.1 -21.7 -21.3 (Jan) Merch. Trade Bal. (US$B, ar) -23.2 -28.1 -3.0 17.3 (Feb) Industrial Production 1.6 1.8 1.9 Industrial Production -0.9 -0.4 -0.5 -2.3 (Jan) Unemployment Rate (%) 6.1 6.2 5.8 5.8 (Feb) Unemployment Rate (%) 3.4 3.4 3.3 3.2 (Jan) CPI 1.5 1.5 1.7 CPI 0.8 0.2 0.3 -0.1 (Jan)

South Korea China Real GDP 2.6 2.7 3.0 Real GDP 6.9 6.9 6.8 Current Acc. Bal. (US$B, ar) 105.9 116.4 105.6 84.8 (Jan) Current Acc. Bal. (US$B, ar) 293.2 Merch. Trade Bal. (US$B, ar) 90.3 81.1 95.0 88.6 (Feb) Merch. Trade Bal. (US$B, ar) 594.0 645.1 699.0 391.1 (Feb) Industrial Production -0.9 0.1 0.0 -0.5 (Jan) Industrial Production 5.9 5.7 5.9 5.9 (Dec) CPI 0.7 0.7 1.1 1.3 (Feb) CPI 1.6 1.6 1.6 2.3 (Feb)

Thailand India Real GDP 2.8 2.9 2.8 Real GDP 7.0 7.5 7.1 Current Acc. Bal. (US$B, ar) 34.8 7.2 13.1 Current Acc. Bal. (US$B, ar) -22.6 -8.7 -7.1 Merch. Trade Bal. (US$B, ar) 2.9 3.2 3.2 2.6 (Jan) Merch. Trade Bal. (US$B, ar) -10.5 -11.9 -10.4 -6.5 (Feb) Industrial Production 0.3 0.9 0.3 -3.3 (Jan) Industrial Production 3.2 4.8 1.6 -1.5 (Jan) CPI -0.9 -1.1 -0.9 -0.5 (Feb) WPI -2.7 -4.6 -2.3 -0.9 (Feb)

Indonesia Real GDP 4.8 4.7 5.0 Current Acc. Bal. (US$B, ar) -17.8 -4.2 -5.1 Merch. Trade Bal. (US$B, ar) 0.6 0.9 0.1 1.1 (Feb) Industrial Production 4.6 4.0 4.0 1.0 (Dec) CPI 6.4 7.1 4.8 4.4 (Feb)

Brazil 2015 15Q3 15Q4 Latest Chile 2015 15Q3 15Q4 Latest Real GDP -3.8 -4.5 -5.9 Real GDP 2.1 2.2 1.3 Current Acc. Bal. (US$B, ar) -59.2 -47.1 -38.3 Current Acc. Bal. (US$B, ar) -15.9 -11.5 -8.3 Merch. Trade Bal. (US$B, ar) 19.7 32.1 37.7 36.5 (Feb) Merch. Trade Bal. (US$B, ar) -3.0 -4.0 0.3 7.2 (Feb) Industrial Production -8.3 -9.2 -12.0 -11.3 (Jan) Industrial Production -0.3 -1.7 -1.0 -8.3 (Jan) CPI 9.0 9.5 10.4 10.4 (Feb) CPI 4.3 4.8 4.1 4.7 (Feb)

Peru Colombia Real GDP 3.3 3.2 4.7 Real GDP 3.1 3.2 3.3 Current Acc. Bal. (US$B, ar) -2.4 Current Acc. Bal. (US$B, ar) -18.9 -5.2 -4.3 Merch. Trade Bal. (US$B, ar) -0.2 -0.3 0.0 -0.5 (Jan) Merch. Trade Bal. (US$B, ar) -1.3 -1.5 -1.6 -1.5 (Jan) Unemployment Rate (%) 6.4 6.3 5.8 6.9 (Feb) Industrial Production 0.9 1.7 3.4 8.2 (Jan) CPI 3.5 3.8 4.1 4.5 (Feb) CPI 5.0 4.9 6.4 7.6 (Feb)

Latin America

Economic Statistics

All data expressed as year-over-year % change unless otherwise noted.

Source: Bloomberg, IHS Global, Scotiabank Economics.

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Economics

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March 24, 2016

10

Financial Statistics

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Interest Rates (%, end of period)

Canada 15Q3 15Q4 Mar/17 Mar/24* United States 15Q3 15Q4 Mar/17 Mar/24*BoC Overnight Rate 0.50 0.50 0.50 0.50 Fed Funds Target Rate 0.25 0.50 0.50 0.50 3-mo. T-bill 0.44 0.51 0.46 0.46 3-mo. T-bill -0.02 0.16 0.28 0.28 10-yr Gov’t Bond 1.43 1.39 1.29 1.26 10-yr Gov’t Bond 2.04 2.27 1.90 1.88 30-yr Gov’t Bond 2.20 2.15 2.08 2.05 30-yr Gov’t Bond 2.85 3.02 2.69 2.65 Prime 2.70 2.70 2.70 2.70 Prime 3.25 3.50 3.50 3.50 FX Reserves (US$B) 78.3 79.7 81.2 (Jan) FX Reserves (US$B) 109.2 106.5 106.1 (Jan)

Germany France 3-mo. Interbank -0.06 -0.09 -0.23 -0.23 3-mo. T-bill -0.20 -0.45 -0.43 -0.42 10-yr Gov’t Bond 0.59 0.63 0.23 0.18 10-yr Gov’t Bond 0.99 0.99 0.57 0.53 FX Reserves (US$B) 59.3 58.5 58.5 (Jan) FX Reserves (US$B) 53.1 55.2 56.4 (Jan)

Euro Zone United Kingdom Refinancing Rate 0.05 0.05 0.00 0.00 Repo Rate 0.50 0.50 0.50 0.50 Overnight Rate -0.12 -0.13 -0.35 -0.34 3-mo. T-bill 0.49 0.48 0.48 0.47 FX Reserves (US$B) 332.3 333.9 332.9 (Jan) 10-yr Gov’t Bond 1.76 1.96 1.46 1.45

FX Reserves (US$B) 118.9 119.0 122.0 (Jan)

Japan Australia Discount Rate 0.30 0.30 0.30 0.30 Cash Rate 2.00 2.00 2.00 2.00 3-mo. Libor 0.02 0.02 -0.07 -0.07 10-yr Gov’t Bond 2.61 2.88 2.55 2.58 10-yr Gov’t Bond 0.36 0.27 -0.04 -0.08 FX Reserves (US$B) 48.1 46.5 40.9 (Jan) FX Reserves (US$B) 1221.5 1207.0 1220.7 (Jan)

Exchange Rates (end of period)

USDCAD 1.33 1.38 1.30 1.33 ¥/US$ 119.88 120.22 111.39 112.53CADUSD 0.75 0.72 0.77 0.75 US¢/Australian$ 0.70 0.73 0.76 0.75GBPUSD 1.513 1.474 1.448 1.413 Chinese Yuan/US$ 6.36 6.49 6.48 6.51EURUSD 1.118 1.086 1.132 1.117 South Korean Won/US$ 1185 1175 1173 1166JPYEUR 0.75 0.77 0.79 0.80 Mexican Peso/US$ 16.918 17.208 17.319 17.637USDCHF 0.97 1.00 0.97 0.98 Brazilian Real/US$ 3.948 3.961 3.628 3.691

Equity Markets (index, end of period)

United States (DJIA) 16285 17425 17481 17438 U.K. (FT100) 6062 6242 6201 6121 United States (S&P500) 1920 2044 2041 2028 Germany (Dax) 9660 10743 9892 9881 Canada (S&P/TSX) 13307 13010 13621 13322 France (CAC40) 4455 4637 4443 4340 Mexico (IPC) 42633 42978 45435 45648 Japan (Nikkei) 17388 19034 16936 16892 Brazil (Bovespa) 45059 43350 50914 49147 Hong Kong (Hang Seng) 20846 21914 20504 20346 Italy (BCI) 1179 1218 1072 1076 South Korea (Composite) 1963 1961 1988 1986

Commodity Prices (end of period)

Pulp (US$/tonne) 960 940 940 940 Copper (US$/lb) 2.31 2.13 2.28 2.24 Newsprint (US$/tonne) 510 505 545 545 Zinc (US$/lb) 0.75 0.73 0.81 0.81 Lumber (US$/mfbm) 242 274 299 n/a Gold (US$/oz) 1114.00 1060.00 1266.50 1221.00 WTI Oil (US$/bbl) 45.09 37.04 40.20 38.73 Silver (US$/oz) 14.65 13.82 15.73 15.28 Natural Gas (US$/mmbtu) 2.52 2.34 1.94 1.80 CRB (index) 193.76 176.14 177.66 171.64

* Latest observation taken at time of writing. Source: Bloomberg, Scotiabank Economics.

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Global Views

March 24, 2016