(December 15 – 11:00 ET) – Bank of Nova Scotia economists are joining the chorus of voices calling for a global economic slowdown at the hands of the U.S. slowdown.

“The loss of G7 economic momentum will dampen world trade flows, industrial production and many commodity prices,” says Warren Jestin, Scotiabank’s chief economist. “The decompression in global growth and intensifying profit pressures have already given global equity markets a bad case of the bends, with further consolidation expected in the opening months of 2001.”

Jestin says that U.S. demand has begun to moderate. “After a five-year spending spree, there is little pent-up demand to push Americans back onto a high-spending trajectory. Still, consumers are not going down for the count. Tight labour markets and the enormous wealth generated over the past decade will keep confidence and spending power relatively high,” he says.”

While Canada has resisted the slowing trend so far, Jestin says it will begin to lose momentum in 2001. “While a big dose of fiscal stimulus and pent-up demand will give our economy a performance edge over other G7 nations, more than half of private sector jobs are oriented to global markets which are in the process of gearing down. As a result, Canadian growth is also likely to move below 3.5% over the next year.”

Jestin predicts that all Canada’s regions will contribute to our economic growth: Atlantic Canada will thrive on offshore energy; Quebec and Ontario will be boosted by its diversification, investment in leading-edge technology and solid orders in areas such as aerospace and telecommunications. In Alberta, Saskatchewan and B.C., oil and natural gas development and exports will bolster growth through 2002.
-IE Staff