We asked the economists of Canada’s five big banks for their views on the outlook for the coming year.

Warren Jestin, chief economist for Scotiabank, on the global outlook

There will be significant volatility in financial markets, for three main reasons: In the U.S. and in Canada, growth will struggle to be 2 per cent this year. Europe will have no growth, and the emerging world is still on the fast track, but there will be a slowdown in the overall economic activity.

That has an implication for business earnings. It can also create problems for governments, which rely on economic growth for tax revenue.

Then there’s the never-ender in Europe. Remember that they are trying to contain the sovereign debt issue. There is no cure on the table. We will have a number of band-aids put on this over the next little while. But at the end of the day, the longer term problems of dismal growth and the demographic issues Europe faces suggest to me that we will still be talking about the European debt issue five years from now.

The third issue is that the U.S. is not having an adult conversation about its fiscal problems.

When you put those three together, it virtually guarantees a lot of volatility in bond, currency, and commodities markets.

Still, when you look at what exists in Canada, this is still the best country in the world to be in. We are sheltered in many, many ways in our domestic markets from the enormous shifts that are occurring in the rest of the world. » Read more: 2012 economic forecasts: Canada best place to be