In a world of volatility, with markets driven by trade wars, Trump tweets and talk of a potential recession on its way, Scotiabank vice-president and deputy chief economist is shining a light of optimism.

“A slight slowing in growth is a very distinct thing from a recession,” said Brett House, speaking at the 2018 Defined Benefit Investment Forum in Toronto on Dec. 10. “We don’t see a recession ahead over the next two years. In fact, we still see a good deal of strength in the Canadian and U.S. economies that will keep the Bank of Canada and the Fed on track to continue raising rates back to neutral territory.”

When considering Organisation for Economic Co-operation and Development countries and large emerging markets, which account for about 93 per cent of global GDP, more economies are slowing rather than accelerating, but this isn’t synonymous with a looming recession, said House.

The U.S. economy is set to record its longest-ever expansion in July 2019, he noted. House attributed Canada’s solid performance in part due to the stimulus provided by Trump, which increased U.S. demand and trumped any slowdown caused by trade protectionism.

When it comes to which countries are leading the way, developing markets are showing the strongest year-over-year changes to GDP, he said.

But trade has dominated the headlines, whether it’s with China or the renegotiation of the North American Free Trade Agreement.

Ultimately, the newly negotiated United States–Mexico–Canada Agreement was a good deal for Canada, said House, noting Canada did better than expected on key U.S. demands. Both Mexico’s and Canada’s governing parties have majorities for the ratification process, so it should move quite smoothly, but the divided Congress in the U.S. and an institutionalized process for ratification could generate uneven headlines — though House said this won’t be derailed.

“There will be terrible headlines ahead over the next year, but we should largely look through them.”

House also doesn’t foresee a further escalation in the U.S.-China trade war after the March 2019 deadline because there’s a threat of adding tariffs to many consumer goods, and he doesn’t think Trump will want to see new taxes on consumer goods going into the 2020 campaign.

“On the trade front, while we have had a number of rather dark developments from the White House, the USMCA, the situation on metal tariffs and the situation on China all provide us, I think, some reasons to think the bark of the White House, despite it having been followed through with a few nibbles in a few cases, remains worse than its bite.”