2015 Economic Overview

April 2015

Bart A. Pattyn

President & CEO

Coface Latin America

Oil prices: Lower for longer

2

Oil exports (million of barrels per

day, source: OPEC)

Oil price (Brent, source: OPEC)

0

200

400

600

800

1000

1200

World US OPEC

2008

Aug-14

20

40

60

80

100

120

140

01-04 01-06 01-08 01-10 01-12 01-14

Global disinflation and loose monetary policies

Inflation rate (yoy, %)

-2

-1

0

1

2

3

4

5

6

01-10 01-11 01-12 01-13 01-14 01-15

France United-States

Spain Italy

UK Germany

Sources: National central banks

0

2

4

6

8

10

12

14

16

18

01-10 01-11 01-12 01-13 01-14 01-15

Russia

South Korea

China

Brazil

Sources: National central banks

/ 3 Coface Latin America ● Country Risk ● Apr/May 2015

Global growth: A tiny winy pickup this year, but several

risks to be monitored

/ 4 Coface Latin America ● Country Risk ● Apr/May 2015

The US: Fine weather, but some cloud is coming

0

1

2

3

4

5

6

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

New payment defaults, YoY, billions $

Automobile non-performing loans rates,RHS

Source : FED

US car sector

3,3%

2,7%

1,8%

-0,3%

-2,8%

2,5%

1,6% 2,3% 2,2%2,4%

2,9%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Investment Net Exports

Inventories Government Spending

Private Consumption GDP

Forecasts

The US: GDP Growth

/ 5 Coface Latin America ● Country Risk ● Apr/May 2015

Germany: The H2 2014 slowdown was temporary

-70

-60

-50

-40

-30

-20

-10

0

10

20

-30%

-20%

-10%

0%

10%

20%

30%

06 07 08 09 10 11 12 13 14

Germany: Export growth and orders

Exports of goods(yoy)

Export orders(RHS)

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

01-10 01-11 01-12 01-13 01-14 01-15

Germany: Wages

Real Wages (yoy)

Nominal Wages(yoy)

France still lags behind

7

France: corporate gross profit margin (EBITDA / VA, %)

Sources: INSEE, Coface

-2,0 -1,0 0,0 1,0 2,0 3,0

France

Italy

Spain

Germany

US

UK

Capacity Utilization Rate: Gap between Q4 2014 and the 2000-

2014 average

/ 7

Spain’s recovery: Fast and balanced

-70

-50

-30

-10

10

30

50

-20

-15

-10

-5

0

5

10

15

20

14Q

IV

20

13Q

IV

20

12Q

IV

20

11Q

IV

20

10Q

IV

20

09Q

IV

20

08Q

IV

20

07Q

IV

Spain: Housing price and building permits (yoy in %)

Housing price

Residential buildingpermits (RHS)

3,7% 4,2%3,8%

1,1%

-3,6%

0,0%

-0,6%

-2,1%

-1,2%

1,4% 2,2%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Spain: Contributions to Real GDP Growth (Yearly)

Investment

Net Exports

Inventories

GovernmentSpendingPrivateConsumptionGDP

Forecast

/ 8 Coface Latin America ● Country Risk ● Apr/May 2015

Greece: Greek Drama or Greek Drachma?

80

85

90

95

100

105

Greece: Bank Deposits (January 2014 = 100, source: Central bank)

/ 9 Coface Latin America ● Country Risk ● Apr/May 2015

Global growth is picking up, mainly on the back of the US

/ 10 Coface Latin America ● Country Risk ● Apr/May 2015

Country risk according to Coface

Country assessment

Assesses the average risk of payment defaults by companies in a given country

This evaluation combines economic and political prospects of the country, Coface

payment experience and business climate assessment

This evaluation has 7 grades: A1, A2, A3, A4, B, C, D and can be watch listed

Business climate assessment

Assesses overall business environment and more precisely whether corporate

information is available and reliable and whether the legal system provides fair

and efficient creditor protection.

This evaluation has 7 grades: A1, A2, A3, A4, B, C, D and can be watch listed.

/ 11 Coface Latin America ● Country Risk ● Apr/May 2015

Country assessments: Advanced economies

2011 2012 2015

January January January March June October December March

Germany A2 A2 A2 A2 A1 A1 A1 A1 A1

Austria A2 A2 A2 A2 A1 A1 A1 A1 A1

Canada A1 A1 A1 A1 A1 A1 A1 A1 A1

United States A2 A2 A2 A1 A1 A1 A1 A1 A1

Japan A1 A1 A1 A1 A1 A1 A1 A1 A1

Switzerland A1 A1 A1 A1 A1 A1 A1 A1 A1

Australia A1 A1 A2 A2 A2 A2 A2 A2 A1

United Kingdom A3 A3 A3 A3 A2 A2 A2 A2 A1

Belgium A2 A2 A2 A3 A3 A3 A3 A2 A1

Netherlands A2 A2 A2 A3 A3 A3 A3 A2 A1

France A2 A2 A2 A3 A3 A3 A3 A3 A1

Ireland A4 A4 A4 A3 A3 A3 A3 A3 A1

Iceland A4 A4 A4 A3 A3 A3 A3 A3 A1

Spain A3 A4 B B B A4 A4 A4 A1

Portugal A3 A4 B B B B B B A2

Italy A3 A4 B B B B B B A2

Greece A4 C C C C C C C A3

Country Risk

Assessment

2013Business

Climate

2014

Coface Latin America ● Country Risk ● Apr/May 2015

Emerging Markets: Diverging trends within the BRIC

-6

-4

-2

0

2

4

6

8

10

12

Q1

20

01

Q4

20

01

Q3

20

02

Q2

20

03

Q1

20

04

Q4

20

04

Q3

20

05

Q2

20

06

Q1

20

07

Q4

20

07

Q3

20

08

Q2

20

09

Q1

20

10

Q4

20

10

Q3

20

11

Q2

20

12

Q1

20

13

Q4

20

13

Q3

20

14

Private consumption

Retail trade

Sources: IBGE, OECD

Brazil: Household spending

4,2

-0,5

-3,0

7,0

7,0

4,3

0,0

0,6

6,9

7,4

4,6

2,3

1,3

5,0

7,7

-3 -1 1 3 5 7

Emerging

Brazil

Russia

India

China

GDP Growth forecasts (source: Coface)

2013

2014

2015

Russia: Structural economic weaknesses are exacerbated by the political crisis

Net flows from private sector (bn. USD)

RUB vs USD

32

36

40

44

48

52

56

60

64

68

72

76

80

02-1

4

04-1

4

06-1

4

08-1

4

10-1

4

12-1

4

02-1

5

04-1

5

Source: Fxtop

/ 14 Coface Latin America ● Country Risk ● Apr/May 2015

Russia: …and by lower oil prices.

Rubble and oil price (YTD % change, 2014)

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

03

/01

/201

4

02

/02

/201

4

04

/03

/201

4

03

/04

/201

4

03

/05

/201

4

02

/06

/201

4

02

/07

/201

4

01

/08

/201

4

31

/08

/201

4

30

/09

/201

4

30

/10

/201

4

29

/11

/201

4

29

/12

/201

4

28

/01

/201

5

Oil Brent price (YTD % change)

RUB vs USD (YTD % change)

3,2

5

3,3

6,1

11,1

71,3

0 20 40 60 80

Agricultural products

Equipment goods &Machinery

Others

Chemicals

Metals

Mineral products

Export breakdown (% of total)

Source: Rosttat

/ 15 Coface Latin America ● Country Risk ● Apr/May 2015

Russia: Household spending has been resilient in 2014,

but won’t be this year

Retail sales, Industrial production and Investment (yoy growth, %)

7,97,4

5,64,9

4 3,8 4 3,6 3,6

1,91,4

3,1

4,5

2,43,4 3,2

-1,2

0,8 0,61,4 1,1

1,81,5 2,1

13,9

10,6

5,5

3,2

0,1

-1,2-0,3

0,4

-4,8

-1,4-2,4

-3-5

-3

-1

1

3

5

7

9

11

13

15

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

%

Retail

Industrial production

Investment

Wages and pensions (yoy growth, %)

-4

-2

0

2

4

6

8

10

12

Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

% Disposable income (real)

Wages (real)

Pensions (real)

/ 16 Coface Latin America ● Country Risk ● Apr/May 2015

China: Overcapacities are more and more visible

-10

-8

-6

-4

-2

0

2

4

6

8

10

01-2

001

01-2

002

01-2

003

01-2

004

01-2

005

01-2

006

01-2

007

01-2

008

01-2

009

01-2

010

01-2

011

01-2

012

01-2

013

01-2

014

China: Production Price (yoy)

/ 17 Coface Latin America ● Country Risk ● Apr/May 2015

China: Increased Amount of Overdue

19.6% of the respondents

shared that the average overdue

period exceeds 90-days in 2014

(vs only 17.8% in 2013)

55.7%

19.4%

45.0 %

22.6%

56.7%

20 .5%

0 %

10 %

20 %

30 %

40 %

50 %

60 %

Increased Decreased

Trend of overdue amount

20 12 20 13 20 14

% o

f re

sp

on

de

nts

50.34%

22.47%

0.90%

14.83%

2.92% 4.27% 4.27%

0%

10%

20%

30%

40%

50%

60%

Fiercecompetition

impactingmargins

Lack offinancingresources

Rising rawmaterial prices

Slowereconomic

growth in China

Rising laborcosts

Lowerinternational

demand

Others

Main reason under fiannacial difficulties

/ 18

Asia: Well-performing emerging economies are benefiting

from China’s growth rebalancing

Vietnam: inflation and exchange rate (% and level)

Vietnam: high value-added and electronic exports (% tot. exports)

Coface Latin America ● Country Risk ● Apr/May 2015

Country assessments: Emerging Markets (2)

20

2011 2012 2015

January January January March June October December March

Poland A3 A3 A3 A3 A3 A3 A3 A3 A2

Slovakia A3 A3 A3 A3 A3 A3 A3 A3 A2

Slovenia A2 A2 A3 A4 A4 A4 A4 A4 A2

Rep. Czech A2 A2 A3 A4 A4 A4 A4 A4 A2

Latvia B B B B B B B B A3

Hungary A4 B B B B B B B A2

Romania B B B B B B B B A4

Turkey A4 A4 A4 A4 A4 B B B A4

Kazakhstan B B B B B B B B B

Russia B B B B B C C C C

Ukraine D D D D D D D D C

South Africa A3 A3 A3 A4 A4 A4 A4 A4 A4

Kenya C C C C B B B B C

Senegal B B B B B B B B B

Ivory Coast D D D C C C C C C

Ethiopia C C C C C C C C D

Ghana C C B B B C C C B

Mozambique B B C C C C C C C

Nigeria D D D D C C C C D

Zaire (DRC) D D D D D D D D D

Country Risk

Assessment

2013 2014 Business

Climate

Emerging Europe

CIS

Subsaharan Africa

Coface Latin America ● Country Risk ● Apr/May 2015

Country assessments: Emerging Markets

21

2011 2012 2015

January January January March June October December March

China A3 A3 A3 A3 A3 A3 A3 A3 B

India A3 A3 A4 A4 A4 A4 A4 A4 B

Indonesia B B A4 A4 A4 A4 A4 A4 B

Philippines B B B A4 A4 A4 A4 A4 B

Thailand A3 A3 A3 A4 A4 A4 A4 A4 A3

Sri Lanka C C C C C C B B B

Vietnam B C C C C C C C C

Cambodia D D D D D D D C D

Brazil A3 A3 A3 A4 A4 A4 A4 A4 A4

Colombia A4 A4 A4 A4 A4 A4 A4 A4 A4

Mexico A4 A4 A4 A4 A4 A4 A4 A4 A4

Argentina C C C C C C C C C

Venezuela C C C C C D D D D

Saudi Arabia A4 A4 A4 A4 A4 A4 A4 A4 B

Egypt B C C C C C C C B

Iran D D D D D D D D C

Algeria A4 A4 A4 A4 A4 A4 A4 A4 B

Morocco A4 A4 A4 A4 A4 A4 A4 A4 A4

Tunisia A4 A4 A4 B B B B B B

Middle East - North africa

Emerging asia

Latin america

Country Risk

Assessment

2013 2014 Business

Climate

Country assessments: Ecuador

22

Historical “C” until March 2014 “B” since March 2014

“B” since March 2015

• Linked to dependence of price for Oil exports, with structurally lower prices

• Will be reviewed quarterly

Economic situation

80,%

90,%

100,%

110,%

120,%

130,%

140,%

150,%

2008 2009 2010 2011 2012 2013 2014 2015

ARS BRL CLP COP CRC EUR MXN PEN VEF

/ 23 Coface Latin America ● Country Risk ● Apr/May 2015

Economic situation

/ 24 Coface Latin America ● Country Risk ● Apr/May 2015

Credit Insurance in Latin America - Region

0

50

100

150

200

250

300

De

c 0

4

De

c 0

5

De

c 0

6

De

c 0

7

De

c 0

8

De

c 0

9

De

c 1

0

De

c 1

1

De

c 1

2

De

c 1

3

De

c 1

4

Credit Insurance Latam

Others

Ecuador

Argentina

Colombia

Chile

Brazil

Mexico

0%

5%

10%

15%

20%

25%

30%

35%

40%

Coface Atradius Solunion Cesce Others

36%

27%

21%

5%

11%

Market Shares by Insurer Company

Dec 04

Dec 05

Dec 06

Dec 07

Dec 08

Dec 09

Dec 10

Dec 11

Dec 12

/ 25 Coface Latin America ● Country Risk ● Apr/May 2015

Growth of Credit Insurance 2014 Total written premium: USD 279 mln -3% compared to 2013

In Local currency: different between

countries ranging Mexico +3% to MXN 823 mln Argentina +50% to ARS 238 mln

• Inflation + devaluation… in real numbers ±5%

However in all countries Sharp deterioration of economic situation High level of payment incidents since September

2015 across all countries Specific sectors

• Agro & Agrochemical Mainly linked to weather patters, across the region

• Construction & suppliers to construction

BUT mainly construction linked to government projects

BOTH Domestic and “Imports” into Latin America INCLUDING: Steel, Metal construction, Electrical

supplies, Cement, flooring, Air-conditioning

• Some Consumer sectors Car distribution (Chile) Electronics goods distribution (most countries)