Global Economic Research
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This Report is prepared by Scotia Economics as a resource for the
clients of Scotiabank and Scotia Capital. While the information is from
sources believed reliable, neither the information nor the forecast shall
be taken as a representation for which The Bank of Nova Scotia or
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Last October, the U.S.-led housing recession quickly morphed into a
synchronized global economic downturn as an intensifying credit crunch
short-circuited international trade. Financial and currency markets were in
disarray as global credit taps were effectively turned off, and risk aversion
witnessed a spectacular flight to safety and the U.S. dollar. Confidence turned
sharply lower, and ‘deleveraging’ became a household word as paying down
debt and saving took precedent over spending. And Canada was dragged
down by collapse in our major trading partners, the sharp correction in
commodity prices, and the plunge in financial markets.
The slide into recession proved to be much faster, and the decline in output
much deeper, than was generally expected. But the transition to recovery now
appears to be happening much faster, and is looking to be much stronger,
than was forecast just a few months ago.
This October, the global economy is breaking free from the tenacious grip of
recession. The ‘all-clear’ horn has yet to sound, but the tenor of the times has
definitely changed. Countries that were least affected by the meltdown —
developing nations like China, India, and Brazil, for example, and Australia
among the developed ones — have already begun to register stronger growth.
Throughout most of the developed world that was hardest hit b