Download Quarterly Economic Forecast

QUARTERLY ECONOMIC FORECAST
TD Economics
December 17, 2014
CANADIAN OUTLOOK:
FALLING PRICE OF OIL IS THE NAME OF THE GAME
• Decent momentum in the Canadian economy persisted in Q3, despite a backdrop of weaker global
growth and falling oil prices. Data released to date suggest growth in Q4 will also be robust, providing a solid handoff heading into next year. All told, Canadian real GDP is expected to expand at a
respectable 2.4% in 2014, 2.3% in 2015, and 2.2% in 2016.
•
That said, this outlook reflects a moderate downward revision from our last quarterly forecast. Lower
oil prices are expected to weigh on corporate profits in 2015, which is likely to spill over into business investment. The lower Loonie will act as a modest offset, however, helping to boost demand
for Canadian exports.
•
Despite its recent strength, residential investment is also expected to soften next year, as housing
activity slows.
•
Fortunately for consumers, relief at the pumps is on the way, with falling gas prices expected to save
the average household about $300 in 2015. However, core CPI inflation, which excludes the impact
of gas prices, is likely to stay elevated.
•
With this mixed outlook, the Bank of Canada is expected to remain on hold until October 2015.
Since we last published the Quarterly Economic Forecast (QEF) in September, much has changed.
Most importantly, the price of crude oil, as measured by WTI, was around US$95 per barrel, and our
expectation was that it would average roughly US$90 over the coming years. Global oil markets have
since shifted dramatically, with WTI now trading below US$60 per barrel, leading us to cut our forecast
for oil prices substantially. This raises the important question of
CHART 1: WEAKER EXTERNAL OUTLOOK TO
how Canada’s economy will fare over the medium term given
WEIGH ON OUTPUT GROWTH IN CANADA
its status as a leading producer and exporter of oil.
Y/Y % Chg.
September 2014 QEF
Yet as we discuss in our Provincial Economic Forecast (PEF), 3.0
2.7
December 2014 QEF
many of the impacts will play out differently on a regional basis.
2.4
2.4
2.4
2.5
2.3
2.2
From a national perspective, we have scaled back our real GDP
forecast moderately for 2015 and 2016 – to a still-solid 2.3% per 2.0
year (Chart 1). Lower commodity prices will undoubtedly take
a significant bite from corporate profits and overall incomes in 1.5
the near term. This will severely impact Canadian nominal GDP,
1.0
which has been downgraded significantly relative to our view
in September. However, real spending in the economy is likely 0.5
to benefit from several offsetting influences, notably continued
healthy U.S. growth, a further drop in the Canadian dollar to a 0.0
2014
2015
2016
low of 84 US cents and a further delay in the inaugural Bank of
Sources: Statistics Canada, TD Economics.
Canada rate hike until October 2015. Lower gasoline prices are
Craig Alexander, SVP & Chief Economist, 416-982-8064
Derek Burleton, VP & Deputy Chief Economist, 416-982-2514
Randall Bartlett, CFA, Senior Economist, 416-944-5729
www.td.com/economics
@CraigA_TD
TD Economics | www.td.com/economics
delivering a de facto tax cut to households. Lastly, Canada’s
economy and job market were showing solid momentum
in the late summer and early autumn, suggesting that the
economy is in a good position to weather the commodityrelated storm. In this environment, we anticipate continued
modest annual job gains of around 190,000 positions. When
combined with a growing labour force, this should translate
into a relatively stable unemployment rate of close to 6.7%.
Q3 surprises on the upside and tees up a solid Q4
CHART 2: NOT MUCH RESPITE FOR OIL PRICES
AND THE LOONIE IN 2015
USD per barrel
USD/CAD
0.94
Forecast
Price of WTI (LHS)
Exchange rate (RHS)
90
0.92
0.90
0.88
70
0.86
0.84
50
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
Sources: Bloomberg, Bank of Canada, TD Economics.
December 17, 2014
2016Q3
14
12
Corporate profits
before taxes
Forecast
10
Investment in nonresidential structures
8
6
4
2
The recent release of Canada’s economic performance in
the third quarter highlighted the solid underlying economic
momentum in the latter stages of the year. Real GDP growth
was 2.8% annualized in the July-September period. The
expansion in the quarter was concentrated in the sectors
most linked to strong U.S. economic growth and a falling
Canadian dollar, the latter having lost ground steadily since
its recent peak of 94 US cents in July. For example, export
growth was rapid (+6.9%), while investment in machinery
and equipment (M&E) rose to meet the foreign demand for
Canadian exports (+5.2%). At the same time, the gains in
personal expenditures (+2.8%) and residential investment
(+12.5%) were driven by lower borrowing rates, which
helped spur demand for autos and housing.
Real GDP also closed the third quarter with notable
strength, posting a 0.4% monthly advance in September.
While data have been limited so far in Q4, this favourable
handoff, combined with strong employment and housing
data in the September-October period, sets the stage for
another solid real GDP advance of more than 2% in Q4.
Still, the drop in crude oil prices since October has cast a
pall on the economy’s likely performance heading into the
New Year.
110
CHART 3: LOWER PROFITS EXPECTED TO
REDUCE INVESTMENT IN NON-RES
Y/Y % Chg.
STRUCTURES
0.82
0
-2
-4
-6
-8
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
Sources: Statistics Canada, TD Economics.
Oil price forecast has been downgraded…
Since our September forecast, the prices of both Brent
and WTI have fallen by roughly 40%. At the same time,
Western Canada Select (WCS) – Canada’s heavy crude
benchmark – has fallen by a similar amount. Although
the speed of the drop has left many analysts wondering
how low prices will go, we are in the camp that prices will
reach firmer ground over the course of 2015. At the recent
low price levels, oil demand is likely to firm in the coming
months, while some higher-cost production and investment
within the global industry will be curtailed. As such, WTI is
expected to return to the low-to-mid US$60s in the first half
of 2015, before gradually rising to over US$80 by the final
quarter of 2016 (Chart 2). Meanwhile, the price of WCS is
expected to follow a similar profile over the projection, albeit
at a discount of roughly US$15 per barrel. Notwithstanding
this U-shape pattern, our revised baseline forecast for WTI
prices in U.S. dollars has still been significantly downgraded
relative to our prior forecast in September.
... which will weigh on profits and investment
On the plus side, oil producers will continue to benefit
in the near term from a declining Canadian dollar, which
we expect will bottom out at around 84 US cents in 2015.
Moreover, we don’t expect the recent price decline to severely crimp near-term oil production. WTI would likely
have to fall towards US$ 40-50 in order to lead to a material
production contraction in the next couple of years. Consequently, Canadian crude production growth may slow, but
it will probably continue to advance.
While production growth may be curtailed, the drop in
crude oil prices will significantly dampen overall corporate
2
TD Economics | www.td.com/economics
profits over the next few quarters. Following a strong 11.6%
annualized increase in Q3, Canadian pre-tax profits are likely
to drop by 10% or more in Q4 2014 and Q1 2015, before
reaching firmer ground at mid-year (Chart 3).
One victim of the near-term hit to earnings will be investment in the oil sector. Specifically, investment in nonresidential structures can be expected to fall in 2015 (-2.9%),
as new investment in the energy sector is delay or shelved.
Roughly half of the decline in non-residential investment can
be directly tied to falling energy prices. That said, growth in
investment in non-residential structures spending is expected
to resume in 2016 (+0.5%). Energy-related M&E investment
will also suffer a short-term setback.
Exports sector getting a boost
In addition to a weaker Loonie, Canada’s economy is
expected to receive some offsetting benefits from other
potentially powerful forces. Indeed, the recent decline in
the Canadian dollar has made us more steadfast in our view
that Canadian export growth will remain strong. The U.S.
economy is also expected to remain resilient to some of the
broader challenges facing the global economy (U.S. QEF).
Gains in Canadian merchandise export volumes are expected
to run in the mid-single-digit territory in 2015 (+6.2%) and
2016 (+6.0%). Furthermore, prospects for increased U.S.
visitors are likely to spur healthy gains in Canadian tourism activity.
Firming employment and falling prices prove a mixed
blessing for households
The story surrounding the Canadian consumer remains
one of cross-currents. Recent data on Canadian employment
have been generally positive, with the unemployment rate
CHART 4: PRICE OF GASOLINE TO FALL BUT
NOT AS MUCH AS OIL
Y/Y % Chg.
40
Forecast
30
20
10
0
-10
-20
WTI (USD per barrel)
-30
Regular gasoline
(CAD per liter)
-40
-50
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
Sources: Bloomberg, MJ Ervin and Associates, TD Economics.
December 17, 2014
2016Q3
having fallen to 6.6% in November – nearly the lowest
level since late-2008. Looking ahead, job creation is likely
to remain steady but modest. In addition to softness in
resource hiring, ongoing government restraint – notably at
the provincial level – is expected to put ongoing pressure
on public sector payrolls. Moreover, large exporters tend to
be more capital intensive (and less labour intensive) than
other areas of the economy, suggesting that the transition
to more export-led growth will not result in a significant
hiring boom. The unemployment rate can be expected to
hover around 6.7% for the next few quarters before easing
back to 6.6% in late-2016.
Despite the outlook for rising employment, we have
downgraded our view on personal disposable income gains
for 2015 by 0.8 percentage points relative to our September forecast. This change is consistent to lower aggregate
income growth in the economy, which in turn results from
the substantial hit to Canada’s terms of trade (or export
prices relative to import prices). The projection for growth
in nominal GDP, which is a proxy for aggregate income, has
been slashed to a relatively weak 2.5% in 2015 (although it
is expected to reach 4.3% in 2016). Partly underlying this
downshift is softer gains in personal income, which makes
up nearly 60% of nominal GDP (with corporate profits accounting for 13%). As such, growth in personal disposable
income is expected remain muted in 2015 (+3.6%), before
accelerating to 4.5% in 2016. Government revenues are
anticipated to take a hit as well.
Households can expect to receive some much needed
relief from lower gasoline prices. We estimate that weaker
prices at the pump should save the average Canadian household about $300 per year in 2015 relative to 2014 or the
equivalent of $4.0 billion across all households in Canada
(Chart 4). As pump prices continue to fall in the near term,
headline CPI inflation is expected to fall to an average
of 1.5% in 2015 before edging back up to 2.1% in 2016.
Meanwhile, core CPI inflation can be expected to remain
somewhat more resilient, as output remains near its potential
level while higher import prices are passed through into the
cost of consumer goods. As a result, core inflation is forecast
to accelerate to 1.9% in 2015 before reaching 2.0% in 2016.
Looking ahead to 2015 and 2016, real consumer spending
is likely to moderate from this year’s estimated clip of just
under 3%. Other potential headwinds in addition to weaker
incomes include a gradual increase in interest rates over the
next few years as well as a slowdown in purchases of both
auto- and housing-related goods, where pent-up demand has
been largely satisfied. These factors are projected to contrib3
TD Economics | www.td.com/economics
ute to a gradual deceleration in durable goods consumption
over the next couple of years (averaging +3.3%) from the
5.8% growth expected in 2014. All told, real consumer
spending growth is expected to remain modest but steady,
rising in the range of 2.0-2.5% in 2015 and 2016.
Housing market to soften sooner rather than later
Interest rates to stay on hold for longer
Despite the recent uptick in inflation, expectations for
CHART 5: SOFT LANDING EXPECTED IN THE
HOUSING MARKET
thousands
thousands
130
Forecast
Housing starts (LHS)
200
Existing home sales (RHS)
125
195
120
190
185
Yield, %
4
3-month Treasury bill
10-year Government bond
3
The housing market has continued to raise eyebrows
this year, as sales reach the highest level since the period
just following the recession while average prices turned in
another brisk increase of around 6%. Still, this strength has
primarily reflected three large markets – Toronto, Calgary
and Vancouver. Elsewhere, activity has been weakening in
an orderly fashion. Signs of a broadening in this so-called
soft landing are expected to be revealed as 2015 progresses,
reflecting a gradual increase in government bond yields and
slowing activity in resource-driven markets. In the near term,
weaker residential building activity is likely to precede a
softening in resale prices, which is not unusual in housing
market slowdowns (Chart 5).
In light of the housing slowdown, Canadian households
will likely continue to accumulate debt at a slower rate. Despite volatility in Statistics Canada’s quarterly debt numbers,
households have shown more caution in taking on new debt.
The increased share of down payments of 20% or higher and
evidence of more aggressive principal repayment reaffirm
this trend. This said, while Canadian households remain in
a good position to keep up with their debt payments, they
remain vulnerable to a sizeable increase in interest rates as
a result of higher debt levels.
205
CHART 6: CANADIAN INTEREST RATES TO HEAD
NORTH IN THE NEW YEAR
Forecast
BoC rate hike
2
Fed rate hike
1
0
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
Sources: Bank of Canada, TD Economics.
Canadian interest rates have come down markedly throughout this year, with the consensus moving toward the view
that interest rates will remain lower for longer. Reflecting a
more muted economic outlook, TD pushed back its expectation of an increase in the Bank of Canada’s policy interest
rate from its current 1.00% level by one quarter, to October
2015 (Chart 6). By 2018, short-term rates are expected to
return to their 3.00% trend level.
Beyond the policy rate, rates have come down across
the yield curve. We expect the yield on 10-year Canadian
government bond to remain below the comparable U.S. yield
until the end of 2015, after which time they are expected to
move more or less in lockstep. Canadian 10-year government yields are expected to rise gradually, from 1.85% at
the end of 2014 to 2.80% in 2015 and 3.50% in 2016.
Bottom line
Falling oil prices are a dark cloud on the horizon, as lower
profits in the oil sector will weigh on production growth and
overall business investment. However, with trade poised to
continue making strides as households further stabilize their
balance sheets against a backdrop of lower anticipated consumer prices, Canada’s economy appears well-positioned
to weather the storm.
115
180
110
175
170
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
105
Sources: Canadian Mortgage and Housing Corporation, Canadian Real
Estate Association, TD Economics.
December 17, 2014
4
TD Economics | www.td.com/economics
CANADIAN ECONOMIC OUTLOOK
Period-Over-Period Annualized Per Cent Change Unless Otherwise Indicated
Annual Average
4th Qtr/4th Qtr
Q1
Q2
Q3
Q4F Q1F Q2F Q3F Q4F Q1F Q2F Q3F Q4F
14F
15F
16F
14F
15F
16F
1.0
3.6
2.8
2.4
1.8
1.9
2.3
2.2
2.2
2.0
2.1
2.2
2.4
2.3
2.2
2.5
2.1
2.1
1.5
4.4
2.8
2.6
2.1
1.9
1.9
2.0
1.9
2.1
1.9
1.8
2.8
2.4
1.9
2.8
2.0
1.9
Durable Goods
1.6
14.9 12.6
3.4
2.7
2.2
1.9
2.1
2.2
2.1
1.9
1.8
5.8
4.5
2.1
8.0
2.2
2.0
Business Investment
-1.9
0.8
0.5
-1.5
-2.3
-1.4
-0.1
1.0
1.7
1.8
1.9
2.3
-0.6
-0.9
1.2
-0.5
-0.7
1.9
Non-Res. Structures
-0.3
0.5
-1.9
-3.3
-4.7
-3.7
-1.9
0.1
1.2
1.4
1.7
2.3
-0.3
-2.9
0.5
-1.3
-2.6
1.6
Machinery & Equipment
-5.0
1.4
5.2
1.4
1.5
2.2
2.6
2.2
2.5
2.4
2.1
2.4
-1.2
2.2
2.4
0.7
2.1
2.3
Residential Investment
Government Expenditures
-4.2
-0.7
11.4 12.5
1.4
0.3
2.1
-0.4
-0.4
0.0
-2.8
0.2
-3.0
0.6
-1.5
0.8
-2.7
1.2
-2.6
1.2
-1.7
1.5
-0.9
1.5
2.6
-0.2
1.4
0.2
-2.3
1.1
5.2
0.1
-1.9
0.4
-2.0
1.3
Final Domestic Demand
0.1
3.3
2.8
2.1
0.9
0.8
1.0
1.4
2.1
2.0
1.6
1.6
1.6
1.5
2.0
2.1
1.0
1.5
Exports
0.9
19.0
6.9
-0.5
6.1
7.5
7.7
6.7
6.1
5.2
4.7
4.4
5.3
6.2
6.0
6.3
7.0
5.1
Imports
-4.8
9.8
4.0
2.6
3.6
4.1
3.8
4.1
3.6
3.8
3.1
2.9
1.7
4.0
3.7
2.7
3.9
3.4
Change in Non-Farm
Inventories ($2007 Bn)
14.6
7.6
4.5
10.7 10.8 10.9 11.0 11.1 11.3 11.4 11.5 11.7
6.7
11.0 11.4
---
---
---
Final Sales
2.0
6.2
3.9
0.4
2.8
2.1
3.1
2.0
2.1
---
---
---
2014
Real GDP
Consumer Expenditure
International Current
Account Balance ($Bn)
% of GDP
Pre-tax Corp. Profits
% of GDP
2016
2015
1.6
1.8
2.2
2.2
2.2
2.0
2.1
2.1
2.1
-45.0 -39.6 -31.1 -56.1 -66.6 -60.6 -53.7 -48.0 -46.8 -42.9 -39.9 -33.0 -43.0 -57.2 -40.6
-2.3
-2.0
-1.6
-3.3
-3.0
-2.6
-2.3
-2.3
-2.0
-1.9
-1.5
-2.2
-2.8
-1.9
---
---
---
22.9
7.7
11.6 -13.7 -9.6
-2.8
-2.1
4.7
10.0
6.8
6.3
5.8
5.3
9.1
-2.7
6.2
6.2
0.5
6.1
14.0 14.1 14.4 13.9 13.5 13.3 13.3 13.5 13.5 13.6 13.7 13.7 14.1 13.4 13.6
---
---
---
GDP Deflator (Y/Y)
1.9
2.2
2.0
1.2
-0.3
0.0
0.1
1.2
1.9
2.1
2.2
2.2
1.8
0.3
2.1
1.2
1.2
2.2
Nominal GDP
6.7
3.9
4.7
-0.2
1.2
3.4
4.3
4.4
4.4
4.4
4.3
4.5
4.3
2.5
4.3
3.7
3.3
4.4
Labour Force
0.1
0.5
0.9
0.8
1.1
1.0
1.0
0.9
0.8
0.9
0.8
0.7
0.6
1.0
0.9
0.6
1.0
0.8
Employment
0.4
0.3
1.4
2.0
1.0
0.9
1.1
0.9
0.8
1.0
0.9
0.8
0.8
1.2
0.9
1.0
0.9
0.9
Employment ('000s)
18.1 11.4 61.4 90.5 42.5 38.2 47.2 38.3 38.0 47.1 42.7 38.2
Unemployment Rate (%)
7.0
Personal Disp. Income
Pers. Savings Rate (%)
Cons. Price Index (Y/Y)
139
206
166
181
166
166
7.0
6.9
6.6
6.7
6.7
6.7
6.8
6.7
6.7
6.7
6.6
6.9
6.7
6.7
---
---
---
5.1
0.9
5.2
2.5
3.2
4.0
4.3
4.5
4.5
4.4
4.6
4.6
3.7
3.6
4.5
3.5
4.0
4.5
2.5
-2.0
2.6
3.6
3.7
3.8
4.0
4.1
4.3
4.3
4.5
4.7
4.1
3.9
4.5
--
--
--
1.4
2.2
2.1
2.1
1.6
1.2
1.4
1.7
1.9
2.1
2.2
2.1
2.0
1.5
2.1
2.1
1.7
2.1
Core CPI (Y/Y)
1.3
1.7
2.0
2.2
2.0
1.8
1.9
1.9
1.9
2.0
2.0
2.0
1.8
1.9
2.0
2.2
1.9
2.0
Housing Starts ('000s)
175
197
195
189
186
185
185
185
182
180
180
179
189
185
180
---
---
---
Productivity:
Real GDP / worker (Y/Y)
1.3
2.0
1.7
1.5
1.5
0.8
0.8
0.9
1.1
1.1
1.1
1.2
1.7
1.0
1.1
1.5
0.9
1.2
F: Forecast by TD Economics as at December 2014
Source: Statistics Canada, Bank of Canada, Canada Mortgage and Housing Corporation, Haver Analytics
December 17, 2014
5
TD Economics | www.td.com/economics
INTEREST RATE OUTLOOK
2014
Q1
Q2
2015
Q3
Q4E
Q1F
Q2F
2016
Q3F
Q4F
Q1F
Q2F
Q3F
Q4F
CANADA
Overnight Target Rate
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.50
1.50
1.50
1.50
2.00
3-mth T-Bill Rate
0.90
0.94
0.92
0.95
0.95
0.95
1.05
1.40
1.40
1.55
1.85
1.95
2-yr Govt. Bond Yield
1.07
1.10
1.13
1.00
1.15
1.30
1.50
1.80
1.90
2.05
2.20
2.45
5-yr Govt. Bond Yield
1.71
1.53
1.63
1.30
1.55
1.80
2.05
2.30
2.50
2.75
2.90
3.05
10-yr Govt. Bond Yield
2.46
2.24
2.15
1.85
2.10
2.30
2.55
2.80
3.00
3.20
3.40
3.50
30-yr Govt. Bond Yield
2.96
2.78
2.67
2.35
2.60
2.80
3.10
3.25
3.45
3.60
3.75
3.80
10-yr-2-yr Govt Spread
1.39
1.14
1.02
0.85
0.95
1.00
1.05
1.00
1.10
1.15
1.20
1.05
U.S.
Fed Funds Target Rate
0.25
0.25
0.25
0.25
0.25
0.25
0.50
0.75
1.00
1.25
1.50
1.75
3-mth T-Bill Rate
0.05
0.04
0.02
0.05
0.10
0.15
0.40
0.65
0.85
1.10
1.30
1.55
2-yr Govt. Bond Yield
0.44
0.47
0.58
0.50
0.80
1.00
1.25
1.50
1.65
1.90
2.15
2.35
5-yr Govt. Bond Yield
1.73
1.62
1.78
1.55
1.85
2.00
2.25
2.30
2.50
2.70
2.85
2.95
10-yr Govt. Bond Yield
2.73
2.53
2.52
2.20
2.50
2.65
2.90
2.90
3.10
3.30
3.40
3.50
30-yr Govt. Bond Yield
3.56
3.34
3.21
2.85
3.10
3.20
3.40
3.40
3.55
3.70
3.80
3.85
10-yr-2-yr Govt Spread
2.29
2.06
1.94
1.70
1.70
1.65
1.65
1.40
1.45
1.40
1.25
1.15
CANADA - U.S SPREADS
Can - U.S. T-Bill Spread
0.85
0.90
0.90
0.90
0.85
0.80
0.65
0.75
0.55
0.45
0.55
0.40
Can - U.S. 10-Year Bond Spread
-0.27
-0.29
-0.37
-0.35
-0.40
-0.35
-0.35
-0.10
-0.10
-0.10
0.00
0.00
E | F: Estimate | Forecast by TD Bank Group as at December 2014. All forecasts are end-of-period. Source: Bloomberg, Bank of Canada, Federal Reserve.
FOREIGN EXCHANGE OUTLOOK
Currency
Exchange rate
2014
Q1
Q2
2015
Q3
Q4E
Q1F
Q2F
Q3F
2016
Q4F
Q1F
Q2F
Q3F
Q4F
Exchange rate to U.S. dollar
Japanese yen
JPY per USD
103
101
110
119
120
122
125
125
125
125
120
120
Euro
USD per EUR
1.38
1.37
1.26
1.25
1.23
1.22
1.18
1.18
1.20
1.22
1.24
1.24
U.K. pound
USD per GBP
1.67
1.71
1.62
1.56
1.56
1.55
1.53
1.57
1.60
1.63
1.68
1.68
Exchange rate to Canadian dollar
U.S. dollar
USD per CAD
0.91
0.94
0.89
0.87
0.87
0.85
0.84
0.85
0.88
0.88
0.89
0.89
Japanese yen
JPY per CAD
93.2
94.9
97.9
103.5
104.4
103.7
105.0
106.3
110.0
110.0
106.8
106.8
Euro
CAD per EUR
1.52
1.46
1.42
1.44
1.41
1.44
1.41
1.39
1.36
1.39
1.39
1.39
U.K. pound
CAD per GBP
0.54
0.55
0.55
1.80
1.79
1.83
1.82
1.85
1.82
1.85
1.88
1.88
E | F: Estimate | Forecast by TD Bank Group as at December 2014. All forecasts are end-of-period. Source: Federal Reserve, Bloomberg, TDBG.
COMMODITY PRICE FORECASTS
Crude Oil (WTI, $US/bbl)
Natural Gas ($US/MMBtu)
Gold ($US/troy oz.)
Silver (US$/troy oz.)
Copper (cents/lb)
Nickel (US$/lb)
Aluminum (Cents/lb)
Wheat ($US/bu)
Q1
99
5.17
1294
20.5
319
6.64
77
9.32
2014
Q2
Q3
103
98
4.59 3.94
1289 1282
19.7 19.7
308
317
8.38 8.42
82
90
8.90 8.43
Q4E
76
3.90
1198
16.5
302
7.30
90
8.05
Q1F
60
3.70
1175
15.5
300
8.12
88
7.90
2015
Q2F Q3F Q4F
65
70
75
3.50 3.50 3.70
1200 1250 1275
17.5 18.8 19.5
304
294
295
9.00 9.75 10.00
88
90
90
7.80 8.00 8.15
Q1F
78
3.80
1275
19.5
296
11.00
90
8.25
2016
Q2F
Q3F
80
80
3.40
3.50
1275
1300
19.5
19.8
294
325
12.00 12.50
90
100
8.40
8.55
Q4F
83
3.70
1300
19.8
325
12.50
100
8.75
Annual Average
2014F 2015F 2016F
94
68
80
4.40
3.60
3.60
1265
1225
1288
19.1
17.8
19.6
312
298
310
7.69
9.22
12.00
85
89
95
8.68
7.96
8.49
E | F: Estimate | Forecast by TD Bank Group as at December 2014. All forecasts are period averages. Source: Bloomberg, USDA (Haver).
December 17, 2014
6
TD Economics | www.td.com/economics
CONTACTS AT TD ECONOMICS
Craig Alexander
Senior Vice President and
Chief Economist
[email protected]
CANADIAN ECONOMIC ANALYSIS
U.S. & INTERNATIONAL ECONOMIC ANALYSIS
Derek Burleton, Vice President and
Deputy Chief Economist
[email protected]
Randall Bartlett, Senior Economist [email protected]
Beata Caranci, Vice President and
Deputy Chief Economist
[email protected]
James Marple, Senior Economist
[email protected]
Sonya Gulati, Senior Economist [email protected]
Michael Dolega, Senior Economist
[email protected]
Diana Petramala, Economist, Real Estate
[email protected]
Francis Fong, Senior Economist
[email protected]
Dina Ignjatovic, Economist, Autos, Commodities
and Other Industries
[email protected]
Thomas Feltmate, Economist
[email protected]
Leslie Preston, Economist, Financial
[email protected]
Jonathan Bendiner, Economist, Regional
[email protected]
Brian DePratto, Economist, Environmental
[email protected]
ECONOMIC ANALYSTS Admir Kolaj
[email protected]
Diarra Sourang
[email protected]
Ksenia Bushmeneva, Economist
[email protected]
Andrew Labelle, Economist
[email protected]
Christos Ntantamis, Econometrician
[email protected]
TO REACH US
Mailing Address
66 Wellington Street West
20th Floor, TD Bank Tower
Toronto, Ontario M5K 1A2
[email protected]
Nicole Fillier
[email protected]
December 17, 2014
7
TD Economics | www.td.com/economics
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be
appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and
may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a
solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide
material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD
Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to
be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future
economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent
risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities
that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report,
or for any loss or damage suffered.
December 17, 2014
8