Global Economic Outlook 2013: Roller-coaster or Derailment?

Global Economic Outlook 2013:Global Economic Outlook 2013:RollerRoller--coaster or Derailment?coaster or Derailment?

A Growth PerspectiveA Growth Perspective

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Today’s Presenters and Agenda

Speaker Description

2

Speaker Description

Vinnie Aggarwal

Art Robbins

Jan E Kristiansen

Manoj Menon

Neil Wang

Aroop Zutshi

Introduction

Outlook for North America

Outlook for Europe

Outlook for Asia Pacific

Outlook for China

Outlook for India, Latin America and Rest –of the World and Wrap-up

Moderator

Questions and Answers

Global Economic Outlook: What’s in store for 2013?

3

North America

4

Art Robbins, President, North America

America’s back on the global manufacturing map

5

Shale riches deliver cascading effect on the manufacturing and chemical industry

Global Economic Tracker: Quarterly IIP Growth Rates, United States, 2008 Q1 – 2012 Q4

Shale oil shift to change the world oil market as U.S.crude oil imports drops

Increased natural gas production and low energy costs todrive manufacturing and create jobs

(5.0)

0.0

5.0

10.0

Gro

wth

Rate

(%

)

6

Note: Values for 2012 Q4 is estimated .

Source: GET-IT, Frost & Sullivan

“Five years ago, we were on the verge of becoming a chemical importer. Now the industry is back, competitively serving the

emerging markets. This is a great story, but it’s just the beginning”- Senior Executive, Integrated oil, gas and petrochemical major

Chemical feedstock ethane, derived from shale gas,provides cost competitiveness for US based chemicalcompanies

Increase in investments in manufacturing sector as costcompetitiveness tilts in favor of U.S.

(20.0)

(15.0)

(10.0)

2008Q1 2009Q1 2010Q1 2011Q1 2012Q1

Gro

wth

Rate

(%

)

Energy Manufacturing

Food and Beverages Chemicals

Mining Pharmaceuticals

Europe

7

Jan KristiansenPartner & Director, Europe

Increasing global interest in the acquisition of European distressed assets

8

Eastern Europe slows down as Western Europe’s woes continue

Global Economic Tracker: GDP Growth Rates, Europe, 2011 – 2013

Spain

Italy

United Kingdom

Germany

France

Series14

Series13

Hungary

• The auto sector will see little reprieve in 2013

• Concerns of closure and job cuts over excess capacityand low export demand

• New legislation in Ukraine to promote domesticmanufacturing, possible slow down of imports

• Private healthcare services in Russia will see significantgrowth

EasternEurope

2013

WesternEurope

Western Europe

Eastern EuropeWesternEurope

9

Note: Values for 2012 is estimated .


(5.0) 0.0 5.0 10.0

GDP Growth (%)

Hungary

Ukraine

Turkey

Russia

Romania

Poland

Czech Republic

"We believe the worst is behind us but will observe with

prudence how H1 unfolds before making bold moves."

-Senior Strategy Executive, world leader in chemical niche products

• European chemical producers to focus on energyefficiency to regain competitiveness

• Asian companies actively investing in Europe

• Shale gas development gains momentum in UK asproduction from North Sea declines

• Russia unveils $25 billion East Siberia-Pacific Ocean(ESPO) oil link

EasternEurope

2012

EasternEurope

WesternEurope

2011

Europe

Asia Pacific (APAC) & China

Manoj Menon

10

Neil WangPartner & Managing Director China

Manoj MenonPresident Asia-Pacific

As the global economy still remains fragile, governments in Asian countries need to step up to spur growth

11

Look East- ASEAN leads the pack, time to look beyond India

• End of eco-car subsidy will squeeze Japanese auto-makers’ margins

• Thailand’s automotive production capacity will seehigher volumes in 2013

• Investment in oil and gas set to increase in Malaysia

• Malaysia’s 100% tax and stamp duty exemption for tenyears for public- private projects will see pendingprojects come to fruition in 2013

Global Economic Tracker: GDP Growth Rates, APAC, 2011, 2012 and 2013

2012

2013

Vietnam

Thailand

Malaysia

Indonesia

ASEAN Countries

12

• Slowing China and competition from lower-cost mininghubs to see normalization of mining production inAustralia

• New orders in the manufacturing industry will marginallypick up in 2013

• Domestic demand will provide further growth traction

“Economic growth and increased consumer spending in ASEAN is a good basis for investment opportunities in Southeast Asian companies in 2013. Consumer goods companies, healthcare industries are most attractive.”

- Senior leader, leading investment and equity firm



-2.0 0.0 2.0 4.0 6.0 8.0

2011

2012

GDP Growth (%)

Indonesia

Japan

India

Australia

China’s recovery based on domestic demand, investment and political reforms

13

Leadership shake up, domestic stimulus to boost economy

• Construction sector will see continued growth

• All eyes on financing local growth

• Moderate growth for automakers, manufacturers willalso focus on brands

• The sector will rebound in H2 2013 with growthbetween 6-8%

• Domestic demand slated to pick up over the first half

Global Economic Tracker: Quarterly GDP and IIP Growth Rates, China, 2008 Q1 - 2012 Q4

15.0

20.0

25.0

30.0

35.0

IIP

Gro

wth

Ra

te (%

)

14

• Fracking activities and the initiation of commercialshale gas production in 2013

• The Government will continue auctioning frackingterritories resulting in an influx of foreign investment

• Domestic demand slated to pick up over the first halfof 2013

• Uptick in metals and mineral demand

(5.0)

0.0

5.0

10.0

IIP

GDP Growth Manufacturing

Food and Beverages Chemicals

Pharmaceuticals Plastics

Mining Electricity



"What everybody wants is growth that's strong enough to

strong enough to trigger inflation. I'm bullish on China still.”

Banking Firm

"What everybody wants is growth that's strong enough to give us peace of mind that revenues will increase and there

is no hard landing risk We are not wishing excessive growth, strong enough to trigger inflation. I'm bullish on China still.”

-Senior economist and strategist at Corporate and Investment Banking Firm

India andLatin America

15

Aroop Zutshi

Global President & Managing Partner

India – Policy Logjam-Investors wary of mixed signals- FDI reforms, inflation and budget deficit

Global Economic Tracker: Quarterly GDP and IIP Growth Rates, India, 2008 Q1 - 2012 Q4

(10.00)

(5.00)

0.00

5.00

10.00

15.00

20.00

20

08

Q1

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08

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Q1

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Q4

Gro

wth

Ra

te (

%)

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20

08

Q1

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Q1

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Chemicals Mining Manufacturing

Electricity GDP



Latin America – Deeper integration, falling unemployment and investment in infrastructure to propel industrial growth

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

IIP

Gro

wth

(%

)

Global Economic Tracker: IIP Growth Rates, Brazil, Chile, Mexico, Colombia, 2008 Q1 - 2012 Q4

17

(20.0)

(15.0)

2008Q1 2008Q4 2009Q3 2010Q2 2011Q1 2011Q4 2012 Q3

Brazil Chile Mexico Colombia



Concluding Thoughts

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Can We Gain from Economic Disorder?

“The inability to predict outliers implies the inability to predict the course of history”

- The Black Swan (The Impact of the Highly Improbable)

Black Swan events and complex system failureCorporations, governments and other entities that are too big, too slow to adapt ,fall

19

“Antifragility is beyond resilience or robustness. The resilient resists shocks and

stays the same; the antifragile gets better.”

- The Anti-Fragile (Things that Gain from Disorder)

Corporations, governments and other entities that are too big, too slow to adapt ,fall and fall hard

Anti-Fragile: Thriving in Volatility

Focusing Beyond the Headlines…

20

• Do you have an Emerging Markets strategy? • Do you have visibility into changing economic and industry indicators?• Are you investing in improving your teams’ capability and monitoring your innovation pipeline?• Has your team looked at Mega Trends and developed a Macro-to-Micro perspective?

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Questions & Answers

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Global Economic Outlook 2013: Roller-coaster or Derailment?