FY22 Financial Overview
Slowing Growth, Rising Inflation
The global economic outlook has deteriorated owing to the combined impacts of central bank efforts to tame inflation, the
consequences of Russia's war on Ukraine, pandemic management in China and the impact of higher energy prices. Concerns
about potential slowdown and high inflation have led to very volatile financial markets, which have clouded the outlook further.
Inflation remains a problem almost everywhere in the world, but is expected to decline gradually over coming quarters as the
impact of higher interest rates is felt through economies. The speed at which inflation will decline will be mitigated by the
impact of rising wages and their impact on service sector prices in particular. In Canada, we anticipate inflation will average
6.9% this year, slowing to a still above target 3.9% in 2023, before normalizing to 1.7% in 2024. In the US, we anticipate inflation
will average 8.2% this year, 5.0% in 2023, and 2.1% in 2024. Similarly, continued price pressures support forecast of high and
persistent inflation in Mexico, Chile, Colombia and Peru
The Bank of Canada and Federal Reserve are nearing the end of their monetary policy tightening cycles. We assume that the
Bank of Canada's policy rate peaks at 4.25% by the end of the year and that the Federal Reserve stops raising its target rate
when it reaches 5% early next year. Central banks in the Pacific Alliance Countries have also been raising policy rates
aggressively to counter inflationary pressures. This process is also nearing its end as the pace of economic expansion
moderates.
Canada: Bank of Canada Policy Rate vs
Headline Inflation
25
Canada Unemployment Rate
Latam Unemployment Rates
%, SA
16
Latam PAC Inflation
y/y % change
Chile
14
987654
3 2
%
1
Headline
inflation
forecast
0
-1
Policy rate
18
19 20 21 22 23
24
14
%
12
10
10
Sources: Scotiabank Economics, Ban Rep, DANE.
8
9
4
20
15
10
5
Colombia
Mexico
Peru
4
620 06 +20
12
10
8
-2
Chile
2
Mexico
Colombia
Peru
-4
15 16 17 18
19 20 21
22
0
10
12
14
16
18
20
22
Sources: Scotiabank Economics, Statistics Canada Sources: Scotiabank Economics, Haver Analytics.
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
Sources: Scotiabank Economics, Haver Analytics.View entire presentation