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EMEA Macroeconomic Outlook April, 2012

EMEA Macroeconomic Outlook April, 2012. G5 and Eurozone Although the outlook for global growth has brightened slightly, the Eurozone forecast has been revised downward. Eurozone manufacturing PMI is at a 34 month low of 45.9 with production falling in the 4 biggest economies.

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EMEA Macroeconomic Outlook April, 2012

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  1. EMEA Macroeconomic OutlookApril, 2012

  2. G5 and Eurozone Although the outlook for global growth has brightened slightly, the Eurozone forecast has been revised downward. Eurozone manufacturing PMI is at a 34 month low of 45.9 with production falling in the 4 biggest economies. Only Austria (51.2) and Ireland (50.1) are in expansion mode Germany’s PMI fell to a 33 month low of 46.2 in April vs 48.4 in March, with investment goods (machinery and plant equipment) being the hardest hit sector. The other Eurozone economies were all below the 50 mark, indicating declining output: France: 46.9 vs 46.7 in March; Italy: 43.8 vs 47.8; Spain 43.5 vs 44.5 in Mar The UK Manufacturing PMI dropped to 50.5 from 51.9 (revised) in March – just barely over the 50 mark The Eurozone core is being dragged down by weak demand both in domestic as well as export markets Economic indicators reflect continued uncertainty about growth expectations in the G-5 & Eurozone. GDP growth outlook for the Eurozone in CY2012 was revised slightly downward to -0.4% from -0.5%., after it was just revised slightly upward in March. Industrial Production growth forecast for the year was revised downward to -1.0 from -0.9% from -1.0% The positive impact of infusion of money into the banking system and political stability in Spain and Italy has faded. Demand has weakened not only within Europe, but also in key export markets., Limited access to credit, lower business confidence and slowly increasing unemployment are drags on economic activity and have cause Europe to diverge from the US and the world. Source: Global Insight / JP Morgan / HSBC / Markit/Credit Suisse/Financial Times/EuroStat Macro Economic View (I) 2

  3. Emerging Markets Relatively high commodity prices have supported growth in commodity exporting countries, especially Russia, the Middle East and Africa, while hurting commodity importing countries such as in Eastern Europe. Russia’s YOY GDP growth will remain strong at 3.7% in 2012, compared to 4.3% in 2011. Forecast for 2013 is 3.9% PMI rose solidly to 52.9 vs 50.8 in Mar Industrial production is forecast to grow at 3.0% in CY2012 vs 4.7% in CY 2011. Middle East’s GDP growth forecast is at 4.0% in CY2012, compared to 5.2% in 2011. Forecast for 2013 is 4.5% Saudi Arabia’s GDP growth forecast for CY2012 is 4.3% vs 6.8% in CY2011. PMI is at 58.7 in Mar vs 59.6 in Feb (for non-oil producing industries.) (Apr results are not yet published) UAE‘s GDP growth forecast for CY2012 is 4.0% vs 5.4% in CY2011. PMI is at 53.5 vs 52.3 in Mar (for non-oil producing industries.) Qatar‘s GDP growth forecast for 2012 is 7.0% vs 14.0% in CY2011. Industrial production is at 10.2% Turkey’s growth forecasts have been raised over the past 2 months. GDP growth forecast has been raised to 1.9% in 2012 (previous forecast was 1.0%). This compares to 8.5% in 2011. Forecast for 2013 is 4.8%. The deceleration vs 2011 is mainly driven by soft demand from Europe, plus fiscal tightening by the government PMI rose to 52.3 in Apr vs 49.6 in Mar Industrial production is forecast to grow 2.6% in CY2012 vs 8.9% in CY2011. Source: Global Insight / JP Morgan / HSBC / Markit/Credit Suisse/Financial Times/EuroStat Macro Economic View (II) 3

  4. Anticipated F12 Headwinds/Tailwinds Headwinds Tailwinds • Although the global economy is expanding, weakness in European economies continues, as a brief period of stabilization now falters, with the euro crisis falring up yet again • The Eurozone is in a mild recession in 2012, with 4 quarters of negative growth averaging -0.4% • Demand has weakened particularly for investment goods in both domestic and export markets • Pricing pressures are mounting. Low demand means manufacturers cannot pass price increases onto buyers • Although economic indicators point to recession in much of Europe, the business conditions index in Germany continues to rise • Economic indicators point to a global economic recovery, with weak spots being the Eurozone and oil prices. • Price pressures are leading businesses to optimize production. There is pent up investment demand • 2013 should show stronger growth, assuming the euro crisis is under control 4

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