Warren JestinSVP & Chief Economist

As The World Turns

Presentation to:

International Society of Hospitality Consultants

Quebec City, October 2, 2009

-8

-6

-4

-2

0

2

4

6

8

10

China India Brazil Mexico Russia

2008

2009f

2010f

Emerging Nations Remain Growth Leaders

-8

-6

-4

-2

0

2

4

6

8

10

Canada U.S. Euro-zone

Japan

2008

2009f

2010f

G7 Set for an Uneven Recovery

real GDP, average annual % change

The Global Economy Is Beginning to Revive

real GDP, average annual % change

The Freefall in U.S. Housing and Autos is Over . . .

0

3

6

9

12

15

02 03 04 05 06 07 08 09

0.4

0.8

1.2

1.6

2.0

2.4months’ supply

Housing Starts (RHS)

mn units

Housing Starts & Inventories

Inventories (LHS)

Vehicle Sales & Inventories

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

02 03 04 05 06 07 08 09

8

9

10

11

12

13

14

15

16

17

18

19

20

21

US New Vehicle Sales

(RHS)

US Dealer Inventories

(LHS)

days’ supply millions of units

0

2

4

6

8

10

12

14

16

02 03 04 05 06 07 08 09

. . . but U.S. Private & Public Financial Strains Remain Intense

U.S. Federal Revenues SlideRising U.S. Foreclosures

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

02 03 04 05 06 07 08 09

12-month moving sum, y/y % change

Personal Income

Tax

Total Revenues

Corporate Income Tax

Source: U.S. Treasury.Source: Bloomberg.

Subprime Foreclosures

(RHS)

Prime Foreclosures(LHS)

% of total loans

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Africa

Europe

India

China

Other America

U.S./Canada

billions, 2008*

Emerging Markets Will Underpin the Recovery . . .

*IMF estimate

CHINA

INDIA

EU-12

JAPAN

CAN-U.S.

% of global GDP, 2008*

Global GDP (PPP)Population

RUSSIA

MEXICO

BRAZIL

Other Asia/Oceania

*IMF estimate

-30

-25

-20

-15

-10

-5

0

5

10

JA

PA

N

ITA

LY

GE

RM

AN

Y

FR

AN

CE

US

RU

SS

IA

CA

NA

DA

UK

ME

XIC

O

BR

AZ

IL

IND

IA

CH

INA

. . . Drive Commodity Prices Higher . . .

Industrial Production

y/y % change, 2009Q2

Blue bar represents price at September 25, 2009. Red bars represent Scotia Economics 2010F (average price).Historical end of day observations; Source: Bloomberg.

Price Fluctuations Since January 2008

HighLow

US$/bbl145.2965.98OIL 33.87

HighLow

US$/mmbtu

13.58NATURAL

GAS

Low High

US$/lb4.082.71COPPER 1.26

Low High

US$/lb24.587.724.00NICKEL

3.97

90.00

2.90

7.45

5.252.51

HighLow

US$/kl1127503

JET FUEL 336

80

90

100

110

120

130

140

150

02 03 04 05 06 07 08 09ytd

index: 2002=100

Europe

Tourist Arrivals Accelerate

Americas

Asia

. . . & Become Increasingly Important To the Tourist Industry

Source: WTO

0

10

20

30

40

50

60

70

80

90

100

Sources of Tourist Dollars – Selected Countries

US$ billions, 2008

GE

RM

AN

Y

UN

ITE

D S

TA

TE

S

UN

ITE

D K

ING

DO

M

FR

AN

CE

CH

INA

ITA

LY

JA

PA

N

CA

NA

DA

RU

SS

IA

NE

TH

ER

LA

ND

S

KO

RE

A

HO

NG

KO

NG

BR

AZ

IL

-1

0

1

2

3

4

5

6

7

02 03 04 05 06 07 08 09 10

Central Bank Rates

Central Banks Will Provide Less Monetary Stimulus in 2010

JapanU.S.

forecast

%

U.K.

Euro zone

-1

0

1

2

3

4

5

6

7

02 03 04 05 06 07 08 09 10

Global Inflation

annual % change

Euro zone

U.S.

Japan

U.K.

forecast

U.S. Fiscal Deficit Soars

-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

02 03 04 05 06 07 08 09 10

-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

US$ billions forecast

Balance ex. Social SecurityFederal Budget Balance

US$ Shows Signs of Weakening

CAD

$

Yuan

元

Yen ¥

Euro

€ Merchandise Trade Balance

Low High

1.030.92

Low

1.601.47

1.26112 89 87

Low

6.816.837.30

High

High

HighLow

1.25

US$ Exchange Rates Since January 2008

0.77

Look for Currency Volatility & Renewed U.S. Dollar Weakness

1.00

1.57

89

6.45

Blue bar represents spot price at September 25, 2009. Red bars represent Scotia Economics 2010F (average).Historical end of day observations; Source: Bloomberg.

On the Horizon – Tourism must adjust to an Older & Greener World

0

5

10

15

20

25

30

35

40

2005 2015 2030

Total Emissions

gigatonnes

0

2

4

6

8

10

2005 2015 2030

World

China

India

Europe

U.S.

gigatonnes

1

6

11

16

21

26

31

36

41

46

51

1990 2015

Median Age (years)

Source: IMF

08 09f 10f

REAL GDP

U.S. 0.4 -2.5 3.0

Canada 0.4 -2.3 2.8

U.K. 0.7 -3.4 1.2

Euro zone 0.8 -3.8 1.5

Japan -0.7 -5.7 1.1

China 9.0 8.0 9.3

INFLATION

U.S. 3.8 -0.5 1.9

Canada 2.4 0.8 2.1

U.K. 3.1 1.0 2.0

Euro zone 1.6 1.0 1.3

Japan 0.4 -0.5 -0.3

China 1.2 -0.5 1.5

08 09f 10f

CURRENCIES & RATES, end of period

USD/CAD 1.22 1.04 1.00

EUR/USD 1.40 1.50 1.60

USD/YEN 91 95 85

USD/YUAN 6.8 6.8 6.3

U.S. Fed Funds Target Rate 0.25 0.25 1.75

U.S. 10-year Treasury 2.21 3.75 4.95

COMMODITIES, annual average

WTI Oil (US$/bbl) 99.62 62 90

Nymex Natural Gas (US$/mmbtu)

8.90 3.90 5.25

Copper (US$/lb) 3.15 2.30 2.90

Disclaimer

This report has been prepared by Scotia Economics as a resource for the clients of Scotiabank and Scotia Capital. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank Group nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.