Global Economic Research June 11, 2010

Highlights Index
2 Forecasts
The Week Same, but different. Business cycles
share common features, and this one is no different. 3 The Week
But this cycle also has a number of different
4 Canada
features that are reshaping the global outlook.
Canada The hot housing market chills a 5 United States
bit. 6 Europe
United States U.S. retail sales hit a speed bump
7 Market Metrics / Fiscal Policy
in May, highlighting shaky consumer sentiment.
8 Economic Tables
International Benchmark interest rates on hold in
the euro zone and the U.K. 9 Financial Tables

New Releases
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 Global Economic Research June 11, 2010

Forecasts
Economic Performance (annual % change unless otherwise indicated)
2000-08 2009 2010f 2011f 2000-08 2009 2010f 2011f
Canada United States
Real GDP 2.6 -2.5 3.6 2.7 2.4 -2.4 3.4 2.7
Consumer Prices 2.3 0.3 1.9 2.3 2.9 -0.3 2.1 2.0
Pre-tax Profits 7.8 -32.3 27.5 14.0 5.3 -3.8 25.0 13.0
Federal Budget Balance ($bn) 8.4 -48.0 -43.0 -28.0 -197 -1413 -1380 -1220
Current Account Balance ($bn) 20.5 -43.5 -31.3 -29.2 -601 -420 -510 -556
Merchandise Trade Balance ($bn) 58.1 -4.6 6.5 7.5 -655 -517 -642 -710
Motor Vehicle Sales (000s)* 1,605 1,461 1,525 1,570 16.4 10.4 11.5 12.2
Motor Vehicle Production (000s)* 2,590 1,425 2,000 2,200 11.5 5.6 7.4 7.7
Housing Starts (000s)* 207 149 190 175 1.65 0.55 0.68 1.00
Employment 1.9 -1.6 1.3 1.5 0.7 -4.3 -0.3 2.2
Jobs Created (000s)* 301 -272 227 261 0.86 -5.87 -0.37 2.86
Unemployment Rate (%) 6.9 8.3 8.1 7.9 5.1 9.3 9.6 9.0

Mexico Euro zone

Real GDP 2.8 -6.5 4.8 3.5 1.9 -4.1 0.8 1.0
Consumer Prices 5.1 3.6 5.0 4.6 2.2 0.9 1.3 1.7

Latin America (Excl. Mexico) Asia

Real GDP 3.8 -0.3 3.9 3.7 5.2 1.4 5.5 4.8
Consumer Prices 8.1 7.0 7.9 4.5 1.6 0.8 2.0 2.0
*In the United States, millions.

Commodity Prices (US$ annual average)

2000-08 2009 2010f 2011f
Pulp (tonne) 662 720 970 800
Newsprint (tonne) 574 560 600 670
Lumber (mfbm) 286 178 258 265
Copper (lb) 1.72 2.34 3.15 3.20
Zinc (lb) 0.73 0.75 0.93 0.98
Nickel (lb) 7.16 6.50 9.25 9.25
WTI Oil (bbl) 49.93 62 79 80
Nymex Natural Gas (US$/mmbtu) 6.15 4.15 4.75 4.75
Wheat (tonne) 223 454 305 290

Financial Markets (end of period, % unless otherwise indicated)

10Q1 10Q2f 10Q3f 10Q4f 11Q1f 11Q2f 11Q3f 11Q4f
CANADA
3-month T-bill 0.30 0.49 1.15 1.55 2.00 2.55 2.85 2.80
5-year Canada 2.90 2.70 2.95 3.30 3.55 3.80 3.75 3.65
10-year Canada 3.57 3.32 3.45 3.85 4.20 4.15 4.10 4.10
UNITED STATES
3-month T-bill (Yield) 0.15 0.15 0.30 0.45 1.00 1.55 2.15 2.40
5-year Treasury 2.54 2.10 2.45 2.90 3.40 3.70 3.65 3.55
10-year Treasury 3.83 3.30 3.55 4.10 4.60 4.50 4.40 4.40
CANADIAN-US SPREADS
3-month T-bill 0.15 0.34 0.85 1.10 1.00 1.00 0.70 0.40
5-year 0.36 0.60 0.50 0.40 0.15 0.10 0.10 0.10
10-year -0.26 0.02 -0.10 -0.25 -0.40 -0.35 -0.30 -0.30
Canadian Dollar (USDCAD) 1.02 1.02 1.01 1.00 0.99 0.98 0.97 0.97
Canadian Dollar (CADUSD) 0.98 0.98 0.99 1.00 1.01 1.02 1.03 1.03
Yen (USDJPY) 93 91 93 95 97 98 99 100
Euro (EURUSD) 1.35 1.20 1.17 1.19 1.21 1.22 1.24 1.26
Sterling (GBPUSD) 1.52 1.44 1.46 1.50 1.51 1.52 1.54 1.55
Mexican Peso (USDMXN) 12.5 12.4 12.7 12.8 12.9 13.0 13.1 13.2

2
Global Economic Research
The Week Past, Present & Prospects
Aron Gampel
(416) 866-6259
aron_gampel@scotiacapital.com
Same, But Different
Business cycles follow a typical pattern. Recessions, and the rare
depressions, eventually trough, and recoveries ensue. At some point,
output growth peaks, and the cycle re-plays. The confidence, earnings,
and spending of consumers and businesses increases and then
decreases. Co-incidentally, a similar pattern emerges for prices, where
inflation pressures eventually build upon disinflation or even deflation
trends until macro-economic and policy conditions change. Public
policy shifts from firming and tightening, to easing, and then back
again. Investors typically lead the cycle shifts, selling as the
economies turn down and then buying as the cycles turns up.
This cycle is no different, but at the same time, it is. Although the
recession was deep, and virtually every region was impacted to varying
degrees, the economic toll was most evident in the developed world. The
United States was again a major drag on global economic activity, but
was joined by a number of European countries that also suffered from
debt overload. But unlike past U.S. housing/real estate cycle busts which
pulled down a bank Franklin National, First Penn, Continental Illinois,
and the myriad of S&L firms this cycle was noteworthy because of the
simultaneous failure of a number of large financial institutions, not only
in the United States, but throughout Europe as well. The resulting short-
circuiting of credit flows internationally probably did as much, or even
more, to drag the rest of the world down than just the trade-related
consolidation that would have normally occurred.
Exaggerated policy responses generational lows in short-term
interest rates and massive fiscal deficits were needed to reverse the
severe economic and financial strains. And although the ensuing
rebound has been comparatively more moderate than prior cyclical
recoveries, the results have generally been in line with past
performances. Countries that were least impacted by the implosion in
real estate and banking are the ones that are experiencing the strongest
recoveries in domestic demand, though external trade is being
constrained by the deleveraging underway in the United States and in
many European nations that is dragging on these respective countries.
An inventory restocking cycle has helped to generate the renewed and
stronger momentum that is helping to revive the global economy. After
June 11, 2010
a significant compression on costs and expenditures,
profitable businesses are again moving to expand
output, productive investments, and hiring. And
consumers are again in a buying mood, taking
advantage of discounting, low borrowing costs, and
an important stabilization in financial well-being.
While most of these traditional factors should continue
to support the expansion, one of the different aspects of
this recovery is that the developing countries are
playing a much greater role in the global economys
revitalization. There has been a much greater focus in
these nations to promote domestically-generated
activity that in turn has buoyed commodity prices and
expanded imports. Collectively, these large and
heavily-populated developing nations can be expected
to remain the key drivers of global growth, especially
since many of the developed nations must beef up their
savings, investments, and exports. This rebalancing
from surplus to deficit nations is critical to the
magnitude and sustainability of the recovery, and must
continue to be nurtured during the unprecedented
period of deleveraging underway in the United States,
the U.K., throughout Europe, and even Japan.
In the same, but different category, are the policy
responses that the developed nations pursue to
rebalance their own economies. In the past, relatively
small counter-cyclically induced fiscal imbalances
were eventually reduced or eliminated by renewed
growth. However, fiscal adjustments have taken on a
greater sense of urgency in the wake of the sovereign
debt crisis that has enveloped Europe. Throughout the
region, the transition from fiscal stimulus to
consolidation is being brought forward, with spending
cuts and restraint supplemented with revenue
enhancing measures. With inflation pressures
evaporating under the weight of slow growth and
fiscal drag, normalizing ultra-low interest rates has
been put on hold. Monetary policy favours
unconventional easing, and euro/sterling depreciation
has become a relief valve. Eventually, the United
States will likely be forced to move accordingly, since
repeated trillion dollar deficits may be on the verge of
becoming counterproductive if consumers,
businesses, and investors believe that a growing tax
burden will overpower expenditure restraint.
3
Global Economic Research June 11, 2010

Canada Neil Tisdall (416) 866-6252

neil_tisdall@scotiacapital.com

Adrienne Warren Review

(416) 866-4315 Merchandise Trade Canada reversed its trade
adrienne_warren@scotiacapital.com deficit into a surplus in April due to price related
declines in imports, as volumes were up for both
imports and exports for the third consecutive month;
the trade balance moved from -$236 million to $175
Canadas Hot Housing Market Chills A Bit million. Imports fell at a faster pace than exports, at
Softening resale markets and pricing are beginning to spill over to the -2.2% m/m and -1.0% m/m respectively. Exports to the
United States grew 0.7% m/m or by $177 million, but
new home market. Housing starts eased back to an annualized rate of that was not enough to balance out a sharp 47.1% m/m
189,100 units in May, down from an average of roughly 200,000 over decline in exports to the U.K., which is $880 million less
the prior three months. Starts were lower for both single-family and than in March. Imports from the United States also
multi-unit residences, and in all regions of the country with the grew on a monthly basis, by 0.9%, but this was also
against the trend, as declining imports from the rest of
exception of Atlantic Canada. While a bit weaker than expected, the
the world dragged the overall figure into the negative.
report is largely consistent with recent residential permit data which
suggest the pace of new residential construction is peaking after a Capacity Utilization Canadian industries continue
to ramp up their capacity use, though the 2010Q1 rate
steady recovery over the past year. was still well below normal, pre-recession levels.
Industries were operating on average at 74.2% of
HOUSING STARTS & PERMITS Builders are responding to shifting resale
300 capacity, up almost 3 percentage points from the
(000s OF UNITS, 3MMA) market conditions, which help to previous quarter, and up over 6 percentage points from
determine the relative demand and pricing the 2009Q2 low. The manufacturing sector had a
250 PERMITS for new homes. While resale markets strong quarter, increasing from 70.7% to 75.0%.
remain quite healthy, they have Manufacturing capacity utilization is rebounding from a
decades low 65.5% reading in 2009Q2 thanks to
200 nonetheless become much better balanced
improving domestic and international demand. Of the
in recent months alongside some softening subsectors, computer and electronics manufacturing
150
in demand and a sharp rise in listings. increased the most, jumping from 89.1% to 95.8%.
STARTS Some centres, including Vancouver and
Preview
Calgary, are already beginning to favour
100
buyers over sellers, while others such as Manufacturing Shipments, Productivity (06/15)
2007 2008 2009 2010
Toronto are becoming far less competitive. Wholesale Trade (06/17)

Leading Indicator (06/18)

This in turn will begin to erode new
homebuilders pricing power, and the incentive to add additional
inventory. Average selling prices for new homes have been edging up
steadily since last summer amid tight resale market conditions.
Statistics Canadas index of new home prices (NHPI) rose 0.3% m/m
(+2.5% y/y) in April, matching the prior months increase.
A number of factors are combining to cool off Canadas housing
market, including modestly higher interest rates, reduced affordability
as a result of significant price increases in recent years, slightly more
restrictive lending criteria, and the July 1st introduction of the HST in
Ontario and British Columbia (transition rules applicable to new home
purchases have been in place for some time). Both construction and
sales remain at historically high levels, but we expect this cooling off
trend to continue through the latter half of 2010 and
into next year, with the overall level of starts moving
back towards its underlying sustainable demographic
and replacement rate of about 175,000 units annually.
(Statistical note: As the NHPI excludes value-added
taxes, the HST shift will have no direct impact on the
index. However, to the extent that builders pass on tax
savings on building materials to consumers, it could
lower the index. The house-only component of the
NHPI (i.e. excluding land) feeds directly into the
replacement cost shelter component of the CPI.)

4
Global Economic Research June 11, 2010

United States

Alex Koustas
Neil Tisdall (416) 866-6252
(416) 866-4212
neil_tisdall@scotiacapital.com
alex_koustas@scotiacapital.com
Review
Merchandise Trade Both imports and exports
Cautious Consumers Rein In Spending
shrank in April, with exports decreasing at a faster
Retail sales figures for May disappointed, with headline sales pace, widening the trade deficit to $40.3 billion. This is
dropping 1.2% m/m. The past six months have marked a period of the largest trade gap there has been since the end of
2008 when the deficit was at -$41.0 billion. The
recovery for the sector, but Mays drop highlights the continued
decreases in imports and exports both follow months
cautiousness of American consumers. with large gains, so the drop-off is partially due to a
correction of last months strength. Other factors that
108 REAL CORE RETAIL SALES* Sales at building material stores and slowed U.S. trade were the credit troubles in Europe,
autos accounted for the bulk of the which played towards lessening demand, and a
106
decline, down 9.3% m/m and 1.7% m/m stronger U.S. dollar relative to other currencies, making

104
respectively, while clothing and apparel U.S. goods less attractive to foreign buyers.

1991 sales slid 1.3% m/m. The dramatic drop
102 at building material retailers was
2007 expected, as first-time home buyer tax
100 credits expired in April. Although the
headline total sales figure is rather
98 Y-axis - Index (100=Start of Recession)
X-axis - quarters
negative, losses were not broadly based
Wholesale Sales Wholesales inventories increased
0.7% m/m in April, and sit poised to break into positive
y/y territory. Total business inventories rose 0.8% m/m
and are at -2.8% y/y, the smallest y/y decline since
December 2008, while wholesale inventories are at
-3.2% y/y. The wholesale inventory-to-sales ratio,
which measures the time in months it would take to

96 * Input for real GDP across retail segments. Eight of the
1 2 3 4 5 6 7 8 9 10 thirteen retail segments experienced
modest gains, and sales ex-autos, gas and
building supplies climbed slightly by 0.1% m/m. Preliminary
estimates from the International Council of Shopping Centers point
to better results at chain stores and mall retailers in June, with
Fathers Day arriving later in the month and warmer weather
boosting traffic and clothing sales.
However, Mays results are a further indication that the recovery in
retail sales will be measured and slightly volatile. Consumer loan
data released earlier in the week showed households continuing to
deleverage their balance sheets. Credit card debt fell 1% m/m,
leaving total credit card debt outstanding at its lowest level since
2006. Tepid employment growth and Europes debt woes added
further nervousness and prompted consumers to increase personal
savings by 16% in April raising the savings rate 50 basis points
to 3.6%. While far more confident than last year, a large share of
consumers are still carefully managing their budgets and hunting for
bargains, as evidenced by continued positive sales results at discount
retailers.
exhaust current levels of stock, dropped to 1.13
months, the lowest level in almost 20 years. This is due
to slow sales and an unwillingness of companies to
hold large inventories of goods (to the vexation of
retailers), not because of strong sales and quick
inventory turnover.
Preview
Empire State Manufacturing Index, Trade Price
Indices, Foreign Portfolio Flows (06/15)
Housing Starts & Building Permits, PPI, Capacity
Utilization, Industrial Production (06/16)
CPI, Current Account, Leading Indicators,
Philadelphia Fed Index (06/17)
Overall, Mays decline will likely prove to be a
small deviation off a continued period of growth for
the sector. However, it serves as a reminder that the
recovery will be rocky until more pronounced
employment gains materialize and household debt is
brought down to more comfortable levels.

5
Global Economic Research
Europe
Tuuli McCully
(416) 863-2859
tuuli_mccully@scotiacapital.com
Euro Zone & U.K. Benchmark Interest Rates On Hold
The European Central Bank (ECB) and the Bank of England (BoE)
left their benchmark interest rates unchanged at 1.0% and 0.5%,
respectively, following their policy meetings on Thursday. The ECB
will continue with unlimited funding operations as well as
government and corporate bond purchases, while the BoE maintained
the asset purchase program target at 200 billion. The policy decisions
indicate that authorities maintain their view that economic recovery
prospects remain somewhat fragile, requiring continued support from
an accommodative policy stance before emergency stimulus measures
can be withdrawn.
BOE & ECB ON HOLD In announcing the ECBs decision,
3.0 (%)
President Jean-Claude Trichet noted that
2.5 economic recovery will be uneven across
euro zone economies and sectors, while the
2.0 financial environment is characterized by
unusually high uncertainty. Nevertheless,
1.5
Trichet maintained his view that euro zone
ECB
1.0 interest rates remain appropriate.
Although the observation was a repetition
0.5
BOE
from previous months, it turned out to be
euro supportive as market participants
0.0
Jan-09 Jul-09 Jan-10 Jul-10 interpreted it as an indication that the ECB
is not considering additional stimulus
measures. According to Trichet, inflationary pressures will remain
contained; a flash estimate for euro zone inflation shows that
consumer prices increased by 1.6% y/y in May, a slight acceleration
from the 1.5% y/y rate recorded the month before, but remained
comfortably within the ECBs target of below, but close to, 2%. The
ECB assesses that output will continue to expand at a moderate pace
this year, with a growth rate ranging between 0.7% and 1.3%. The
forecast range for 2011 was revised downwards to 0.2%-2.2%. Due to
the increased uncertainties stemming from the ongoing crisis in highly
indebted euro zone economies, we have revised our expectations
regarding the beginning of the euro zone monetary tightening cycle
and expect the first interest rate hike to take place in the final quarter
of 2011.
June 11, 2010
Hungary Confirms Its Commitment To
IMF-Supervised Fiscal Target
Concerns regarding Hungarys fiscal situation are
easing following increased turmoil at the end of last
week when officials of the new governing Fidesz party
hinted that the countrys public finances are heading for
a Greece-like crisis. Prior to the April elections, the
Fidesz campaigned for a speedy economic recovery,
emphasizing that restoring economic growth should have
a priority over improving government finances. Following
the turbulence (intentional or not), the administration
reversed its course regarding its policy ideals and
campaign promises. On Tuesday, the government
outlined an austerity plan which includes a revamp
of the tax system and cuts to the public sector in
order to be able to meet this years fiscal deficit target
of 3.8% of GDP, as agreed under the countrys IMF-
supervised economic program. Hungarian monetary
policy makers left their benchmark interest rate
unchanged at 5.25% last week after reducing it on a
monthly basis since July 2009. The Hungarian
economy is showing stronger signs of recovery than
earlier expected; real GDP increased by 0.9% q/q and
0.1% y/y in the first quarter of the year. According to the
monetary authorities, CPI inflation is unlikely to fall
below the central banks 3% target, but to settle around
it in the medium-term. Inflation slowed to 5.1% y/y in
May from 5.7% the month before.
In keeping with normal BoE practices when there is
no change in policy, there was no further explanation
of the decision to maintain the Bank Rate at 0.5% and
the asset purchase program at 200 billion. We expect
the BoE to keep the benchmark interest rate at the
current level until the second quarter of 2011. The
central bank will be challenged by the task of finding
a balance between restoring growth and limiting
inflationary pressures; consumer price inflation
accelerated to 3.7% y/y in April. Monetary authorities
expect the increase in price pressures to be temporary,
with inflation easing over the course of the year.
While the outlook is complicated by the impact of
increased indirect taxes and higher inflation
expectations, the rebound in oil prices and sterling
weakness will also slow the disinflation process.
While a gradual economic recovery is taking hold in
the U.K., we expect the countrys output to remain
below the long-term norm, with real GDP expanding
by around 1% through 2011 following a 4.9%
contraction in 2009.
6
 Global Economic Research June 11, 2010

Market Metrics Markets The European Central Bank unsurprisingly

held its overnight interest rate steady at 1.0%, but the
non-movement was followed by heartening comments
Neil Tisdall Mary Webb by ECB president Trichet regarding an increased
growth forecast for the euro zone for the remainder of
(416) 866-6252 (416) 866-4202
2010. The euro reacted positively to the comments by
neil_tisdall@scotiacapital.com mary_webb@scotiacapital.com the President, and moved off its multi-year Monday low
of 1.1923 against the USD, rising to 1.2124 on
Thursday. The potential for depreciation of the euro
EURO below 1.19 remains if any more sovereigns declare
CANADIAN DOLLAR 1.65
1.10 (EURUSD)
(CADUSD) policy difficulties in the fashion of Greece and Hungary.
1.60
1.05
1.55 The Canadian dollar closed above 97 cents to the USD
1.00 1.50 on Thursday, marking a 3% gain over four days, putting
it on pace for its largest weekly appreciation since
1.45
0.95 October 2009. At the time of writing, the loonie dipped
1.40
below 97 cents due to Fridays crude oil prices
0.90 1.35 dropping nearly US$2/bbl from Thursdays close of
0.85 1.30 $75.48, but still remains a strong performer.
1.25
0.80 US equities started the week strong, with the Dow
1.20 breaking through the 10,000 mark on Thursday after
0.75 1.15 closing at a low of 9,816 Monday, while the S&P 500
6/13/08 6/12/09 6/11/10 6/13/08 6/12/09 6/11/10 has gained over 2% since the beginning of the week.
Fridays weak U.S. retail sales data and ambivalent
consumer confidence data didnt drag down the main
CANADIAN INTEREST U.S. INTEREST RATES
6.0 6.0 indices as much as they could have, but took a little
RATES (%)
(%) lustre off the weeks momentum.
5.0 5.0
10-YEAR Note: Latest observation taken at time of writing.
10-YEAR T-BOND
4.0 GOC 4.0

3.0 3.0
Fiscal Policy Washington reports a US$136 billion
deficit for May, US$54 billion narrower than a year
2.0 2.0
earlier, though some of the improvement reflects
3-MONTH technical adjustments. For the first eight months of
1.0 3-MONTH 1.0
BA LIBOR fiscal 2010, the cumulative deficit is US$936 billion,
only slightly narrower than the year-earlier shortfall, in
0.0 0.0
line with our forecast of a US$1.38 trillion FY10 deficit
6/13/08 6/12/09 6/11/10 6/13/08 6/12/09 6/11/10
that only slightly betters the FY09 deficit. The year-
over-year decline in U.S. federal revenues, as
S&P/TSX U.S. TAX REVENUES measured by a twelve-month moving average,
16000 30
(INDEX) (Y/Y % CHANGE, 12-MMS)
continues to contract (bottom right chart). For the
15000
15 twelve months ending May 2010, total revenues are
PERSONAL
14000 just 6.5% below the year-earlier period, following
13000 0 double-digit decreases from April 2009 to March 2010.
TOTAL
In Canada, data for the twelve months of fiscal 2009-10
12000
-15 (ending March 31 before Supplementary Period
11000 adjustments) indicated a 5.5% revenue decline.
10000 -30
Upcoming: Meeting of federal, provincial and territorial
9000 Finance Ministers on June 14th. Among the issues for
-45
CORPORATE
8000 discussion is pension reform.
7000 -60
6/13/08 6/12/09 6/11/10 Jan-07 Jan-08 Jan-09 Jan-10

7
Global Economic Research June 11, 2010

Economic Tables
Canada 2009 09Q4 10Q1 Latest United States 2009 09Q4 10Q1 Latest
Real GDP (annual rates) -2.5 4.9 6.1 Real GDP (annual rates) -2.4 5.6 3.0
Current Acc. Bal. (C$B, ar) -43.5 -40.8 -31.3 Current Acc. Bal. (US$B, ar) -420 -462
Merch. Trade Bal. (C$B, ar) -4.6 1.7 5.7 2.1 (Apr) Merch. Trade Bal. (US$B, ar) -507 -560 -605 -629 (Apr)
Industrial Production -10.0 -7.7 -0.3 2.6 (Mar) Industrial Production -9.8 -4.6 2.5 6.1 (Apr)
Housing Starts (000s) 149 180 198 189 (May) Housing Starts (millions) 0.55 0.56 0.62 0.67 (Apr)
Employment -1.6 -1.4 0.5 -1.5 (May) Employment -4.3 -4.0 -2.4 -5.1 (May)
Unemployment Rate (%) 8.3 8.4 8.2 8.1 (May) Unemployment Rate (%) 9.3 10.0 9.7 9.7 (May)
Retail Sales -2.9 2.3 7.6 9.1 (Mar) Retail Sales -7.1 2.1 6.3 -4.8 (May)
Auto Sales (000s) 1459 1509 1567 1593 (Mar) Auto Sales (millions) 10.3 10.8 11.0 11.6 (May)
CPI 0.3 0.8 1.6 1.8 (Apr) CPI -0.4 1.4 2.4 2.2 (Apr)
IPPI -3.4 -3.4 -0.6 -0.4 (Apr) PPI -2.6 1.4 5.0 5.5 (Apr)
Pre-tax Corp. Profits -32.3 -12.1 16.8 Pre-tax Corp. Profits -2.4 53.9 45.4

Mexico Brazil
Real GDP -6.5 -2.3 4.3 Real GDP -0.1 3.9 8.0
Current Acc. Bal. (US$B, ar) -5.6 -2.6 -3.1 Current Acc. Bal. (US$B, ar) -24.3 -49.0 -48.6
Merch. Trade Bal. (US$B, ar) -4.7 -1.4 0.6 2.3 (Apr) Merch. Trade Bal. (US$B, ar) 25.4 16.5 3.6 41.3 (May)
Industrial Production -7.3 -1.9 5.5 6.1 (Apr) Industrial Production -7.3 6.2 17.3 16.7 (Apr)
CPI 5.3 4.0 4.8 9.7 (May) CPI 5.2 3.9 3.9 10.6 (May)

Argentina Italy
Real GDP 0.9 2.6 Real GDP -5.1 -2.8 0.5
Current Acc. Bal. (US$B, ar) 11.3 6.3 Current Acc. Bal. (US$B, ar) -0.07 -0.06 -0.09 -0.09 (Mar)
Merch. Trade Bal. (US$B, ar) 16.9 14.3 8.5 23.2 (Apr) Merch. Trade Bal. (US$B, ar) -5.6 -10.4 -39.4 -21.8 (Mar)
Industrial Production 0.0 5.3 9.0 10.2 (Apr) Industrial Production -18.3 -9.3 3.1 7.8 (Apr)
CPI -26.9 -9.4 35.7 10.2 (Apr) CPI 0.8 0.8 1.4 1.6 (Apr)

Germany France
Real GDP -4.9 -2.2 1.5 Real GDP -2.8 -0.4 1.3
Current Acc. Bal. (US$B, ar) 168.4 280.4 173.9 189.7 (Apr) Current Acc. Bal. (US$B, ar) -59.4 -99.7 -27.9 -38.0 (Apr)
Merch. Trade Bal. (US$B, ar) 190.3 273.5 187.1 211.2 (Apr) Merch. Trade Bal. (US$B, ar) -30.9 -35.2 -32.7 -38.0 (Apr)
Industrial Production -15.9 -8.5 5.4 13.2 (Apr) Industrial Production -13.2 -4.5 5.3 8.5 (Apr)
Unemployment Rate (%) 8.2 8.2 8.1 7.7 (May) Unemployment Rate (%) 9.5 9.9 10.0 10.1 (Apr)
CPI 0.3 0.4 0.8 0.9 (May) CPI 0.1 0.4 1.3 1.0 (May)

Euro Zone United Kingdom

Real GDP -4.1 -2.1 0.6 Real GDP -4.9 -3.1 -0.2
Current Acc. Bal. (US$B, ar) -77.5 41 -109 20 (Mar) Current Acc. Bal. (US$B, ar) -28.7 -11.8
Merch. Trade Bal. (US$B, ar) 54.9 114.6 21.3 99.2 (Mar) Merch. Trade Bal. (US$B, ar) -128.0 -137.9 -135.4 -133.9 (Apr)
Industrial Production -14.9 -7.5 4.3 7.5 (Mar) Industrial Production -10.5 -6.0 0.4 2.1 (Apr)
Unemployment Rate (%) 9.4 9.8 9.9 10.0 (Apr) Unemployment Rate (%) 7.6 7.8 8.0 (Feb)
CPI 0.3 0.4 1.1 1.5 (Apr) CPI 2.2 2.1 3.3 3.7 (Apr)

Japan Australia
Real GDP -5.3 -1.4 4.2 Real GDP 1.3 2.8 2.7
Current Acc. Bal. (US$B, ar) 141.7 151.8 216.5 159.4 (Apr) Current Acc. Bal. (US$B, ar) -40.3 -71.4 -56.5
Merch. Trade Bal. (US$B, ar) 28.3 75.8 87.7 93.6 (Apr) Merch. Trade Bal. (US$B, ar) -3.2 -23.0 -11.6 8.1 (Apr)
Industrial Production -21.8 -5.1 27.1 25.8 (Apr) Industrial Production -2.8 0.6 3.4
Unemployment Rate (%) 5.1 5.2 4.9 5.1 (Apr) Unemployment Rate (%) 5.6 5.6 5.3 5.2 (May)
CPI -1.4 -2.0 -1.2 -1.2 (Apr) CPI 1.8 2.1 2.9

China South Korea

Real GDP 8.7 10.7 11.9 Real GDP 0.2 6.0 8.1
Current Acc. Bal. (US$B, ar) 297.0 Current Acc. Bal. (US$B, ar) 42.7 42.2 5.3 17.9 (Apr)
Merch. Trade Bal. (US$B, ar) 195.7 244.6 57.7 234.4 (May) Merch. Trade Bal. (US$B, ar) 42.3 46.0 13.7 52.4 (May)
Industrial Production 18.5 18.5 18.1 16.5 (May) Industrial Production -1.3 18.0 26.6 19.8 (Apr)
CPI 1.9 1.9 2.4 2.8 (Apr) CPI 2.8 2.4 2.7 4.8 (May)

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

8
Global Economic Research June 11, 2010

Financial Tables
Interest Rates (%, end of period)

Canada 09Q4 10Q1 Jun/04 Jun/11* United States 09Q4 10Q1 Jun/04 Jun/11*
BoC Overnight Rate 0.25 0.25 0.50 0.50 Fed Funds Target Rate 0.25 0.25 0.25 0.25
3-mo. T-bill 0.34 0.30 0.52 0.55 3-mo. T-bill 0.05 0.15 0.12 0.08
10-yr Govt Bond 3.61 3.57 3.29 3.40 10-yr Govt Bond 3.84 3.83 3.20 3.24
30-yr Govt Bond 4.08 4.07 3.72 3.81 30-yr Govt Bond 4.64 4.71 4.13 4.16
Prime 2.25 2.25 2.50 2.50 Prime 3.25 3.25 3.25 3.25
FX Reserves (US$B) 54.2 56.5 56.7 (Apr) FX Reserves (US$B) 119.7 116.5 115.4 (Apr)

Germany France
3-mo. Interbank 0.60 0.49 0.57 0.60 3-mo. T-bill 0.36 0.31 0.17 0.18
10-yr Govt Bond 3.39 3.09 2.58 2.57 10-yr Govt Bond 3.59 3.42 3.01 3.02
FX Reserves (US$B) 59.9 60.2 60.4 (Apr) FX Reserves (US$B) 46.6 48.1 48.5 (Apr)

Euro-Zone United Kingdom

Refinancing Rate 1.00 1.00 1.00 1.00 Repo Rate 0.50 0.50 0.50 0.50
Overnight Rate 0.41 0.40 0.30 0.33 3-mo. T-bill 4.85 4.85 4.85 4.85
FX Reserves (US$B) 283.1 285.1 285.3 (Apr) 10-yr Govt Bond 4.02 3.94 3.51 3.46
FX Reserves (US$B) 55.7 57.6 59.3 (Apr)
Japan Australia
Discount Rate 0.30 0.30 0.30 0.30 Cash Rate 3.75 4.00 4.50 4.50
3-mo. Libor 0.22 0.18 0.18 0.18 10-yr Govt Bond 5.64 5.78 5.42 5.40
10-yr Govt Bond 1.30 1.40 1.28 1.24 FX Reserves (US$B) 39.0 34.9 37.9 (Apr)
FX Reserves (US$B) 1022.2 1015.3 1015.3 (Mar)

Exchange Rates (end of period)

USDCAD 1.05 1.02 1.06 1.03 /US$ 93.01 93.46 91.91 91.63
CADUSD 0.95 0.98 0.94 0.97 US/Australian$ 89.74 91.72 82.34 84.85
GBPUSD 1.617 1.518 1.446 1.452 Chinese Yuan/US$ 6.83 6.83 6.83 6.83
EURUSD 1.433 1.351 1.197 1.207 South Korean Won/US$ 1158 1132 1224 1248
JPYEUR 0.75 0.79 0.91 0.90 Mexican Peso/US$ 13.090 12.361 12.950 12.674
USDCHF 1.04 1.05 1.16 1.15 Brazilian Real/US$ 1.745 1.778 1.865 1.807

Equity Markets (index, end of period)

United States (DJIA) 10428 10857 9932 10130 U.K. (FT100) 5413 5680 5126 5164
United States (S&P500) 1115 1169 1065 1082 Germany (Dax) 5957 6154 5939 6048
Canada (S&P/TSX) 11746 12038 11570 11640 France (CAC40) 3936 3974 3456 3556
Mexico (Bolsa) 32120 33266 30993 32137 Japan (Nikkei) 10546 11090 9901 9705
Brazil (Bovespa) 68588 70372 61676 63209 Hong Kong (Hang Seng) 21873 21239 19780 19872
Italy (BCI) 1138 1138 973 990 South Korea (Composite) 1683 1693 1664 1675

Commodity Prices (end of period)

Pulp (US$/tonne) 830 910 960 960 Copper (US$/lb) 3.33 3.55 3.00 2.93
Newsprint (US$/tonne) 530 565 578 578 Zinc (US$/lb) 1.17 1.07 0.79 0.78
Lumber (US$/mfbm) 203 286 229 215 Gold (US$/oz) 1087.50 1115.50 1215.00 1220.00
WTI Oil (US$/bbl) 79.36 83.76 71.51 73.97 Silver (US$/oz) 16.99 17.50 18.27 18.31
Natural Gas (US$/mmbtu) 5.57 3.87 4.80 4.75 CRB (index) 283.38 273.34 254.89 255.45
* Note: Latest observation taken at time of writing.