TORONTO, ON--(Marketwired - December 23, 2014) -


Scotiabank experts today released their economic and market outlook for 2015 forecasting growth in Canada of 2% to be outperformed by U.S. growth of 3%. Scotiabank's Warren Jestin, Chief Economist, Camilla Sutton, Chief FX Strategist and Vincent Delisle, Portfolio Strategist shared their key themes to watch in 2015.

Warren Jestin, Chief Economist

  • The U.S. is gearing up as China gears down
    "We've seen a substantial decline in energy prices because the emerging world -- China -- is slowing down at a time when supply, particularly in the U.S., is moving up. We expect commodity prices to be relatively soft through the first half of 2015 and to stage a gradual recovery after that. China's growth is set to slow to perhaps below 7%. Europe and Japan remain fairly fragile in terms of overall performance and that softness by itself keeps commodity prices on the weak side."
  • The U.S is set to outperform Canada
    "The U.S. consumer has come alive, balance sheets have improved and, as a result, you are seeing stronger auto sales and a stronger housing market. The important thing to remember is that while low energy prices are bad news for producers of energy, they are good news for manufacturers and consumers who are seeing it at the pumps."
  • Expect moderate, more balanced growth across Canada
    "In Canada, we're going to see the housing market trend generally softer. Prices are not going to be going up significantly and housing starts are going to be moving lower because we have had very buoyant activity for a number of years. On a positive note, slowdowns in western Canada -- Alberta and Saskatchewan -- will be partially offset by stronger performance in Ontario as the U.S. market heats up."
  • Interest rates not going anywhere fast
    "With inflation low and growth relatively slow, we would not expect interest rates to be going anywhere fast. In fact, in the U.S., while the Federal Reserve may begin to raise interest rates in the middle part of next year, they are going to be very cautious."


Camilla Sutton, Chief FX Strategist

  • The U.S. dollar rally is fundamentally driven
    "In 2015, fundamentals, flows and technicals all support a broad appreciation of the U.S. dollar. On a relative basis, the U.S. economy should outperform, the Fed is likely to be one of the first to hike interest rates and investors are increasingly favouring U.S.-based investments. The stars have aligned for the U.S. dollar."
  • The Canadian dollar falls victim to its fundamental story
    "The Canadian dollar is expected to trend lower against the USD in 2015, falling victim to the relative fundamental story that is complicated by the recent drop in oil prices. However, against the more vulnerable euro and yen, the Canadian dollar should perform well."
  • The impact of a depreciating Canadian dollar
    "For Canadians who invest overseas, it suggests higher hedge ratios against European and Asian assets and lower ratios against U.S. investments. For the consumer, it makes travel to the U.S. more expensive, but opens up the potential of more attractive pricing in Europe and Asia. For exporters, it will provide a competitive advantage, which will ultimately support the Canadian economy and all Canadians."

Vincent Delisle, Portfolio Strategist

  • Divergence and discrimination are shaping the investment landscape
    "Asset returns are diverging in light of USD strength and the Chinese economic slowdown. In addition, the weakness in commodity prices, particularly oil, is discriminating between producing regions and users."
  • Lower energy costs should be positive for the markets
    "On oil, though producing regions and countries will suffer more in 2015, for the broader global economy, lower energy costs should actually support growth. This unfortunately puts Canada and the TSX Composite Index at a disadvantage relative to the U.S. and the S&P 500."
  • The time is still right for equities vs. bonds
    "We still prefer equities over bonds for 2015, with a higher degree of confidence in the U.S. compared to Canada. Our Canadian equity sector strategy is focused on the sectors that typically outperform in periods of CAD weakness -- Life Insurance, Lumber, Fertilizers, Industrials, Staples, Technology, and Autos."


Scotiabank's 2015 Economic and Market Outlook, including video commentary and presentations, is available on the Scotiabank Economics website.

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