Master Template1 Global forecasting service Economic forecast summary – October

We maintain our 2013 GDP forecast at 1.6%. After 1.1% growth in the first quarter, GDP growth accelerated to 1.7% in the second quarter, driven by strong consumer spending and a pick-up in business investment. The tone of recent data has been somewhat weak. Investors have begun pricing in a tapering of the US Fed’s bond buying programme, possibly as early as September. This has pushed up US bond yields: 10- year US Treasury yields have risen from 1.7% in May to 2.9% in mid September. This has led to a sell-off of risky assets.

We have maintained our 2013 GDP forecast for the euro zone at -0.5%. Most economies in the currency bloc performed better than expected in the second quarter, led by Germany. July data disappointed, highlighting the fragile nature of the recovery. We maintain our 2014 euro zone growth forecast at 0.7%. High unemployment, excessive debt levels and fiscal austerity remain constraints on growth. Having cut its main interest rate by 25 basis points to 0.5% in May, the ECB said that rates would remain at low levels for an extended period.

We maintain our 2013 GDP growth forecast at 1.7%. The economy performed well in the first half, as the government implemented aggressive fiscal and monetary stimulus. Sentiment has dulled recently owing to the lack of details about structural reforms, the third, and most politically sensitive plank of Abenomics. A weaker yen will benefit Japan’s exporters and will contribute to raising the annual inflation rate. Over the long term the ageing of the population and disorderly public finances, will make it difficult for policymakers to engineer a self-sustaining recovery in domestic demand.

Capital has fled emerging markets since June as investors anticipate less bond-buying by the US Federal Reserve. More episodes of volatility in global capital markets are in prospect. Emerging markets with large financing requirements could come under strain. The Chinese economy has shown signs of strength in recent weeks, creating a small upside risk to our 2013 GDP forecast of 7.5%. We continue to expect growth to slow over the medium term. We have made further cuts to our growth forecasts for India and Russia.

Oil consumption growth in 2013 will be constrained by the slowdown in developing countries, including China and India. Consumption growth will be constrained in by greater conservation and energy efficiency, as well as substitution by, cheaper and cleaner,natural gas. Geopolitical risks weigh on the supply picture, particularly the Syrian civil war and tensions between the West and Iran. North American output is growing strongly, helping to offset the negative impact of supply of outages elsewhere, particularly Libya.

Demand will remain relatively subdued in 2013, constrained by weak OECD growth and slower Chinese growth. Rising incomes and ongoing urbanisation in the developing world will underpin medium-term demand growth in industrial raw materials. We now expect the food, feedstuffs and beverages (FFB) index to fall by over 8% this year, reflecting in part a bumper maize crop. Prices are expected to slip again in , before some recovery in Nominal commodity prices will remain historically high in , but prices will ease in real terms.

Investors are anticipating a tapering of the US Fed’s programme of bond purchases, possibly as early as September. This has led to a back-up in global bond yields. Emerging markets have been badly hit, with sharp increases in yields on both local- and hard-currency debt. The reining in of US monetary expansion will be gradual: we do not expect rates to rise until Even so a gradual tightening of global liquidity will create headwinds for the world economy. Monetary expansion in Japan will provide only a partial offset to US tightening..

The euro should receive some support from the region’s emergence from recession. But concerns about a resurgence of the debt crisis will remain a potential source of pressure. The outperformance of the US economy and the anticipation of a less expansionary monetary stance on the part of the US Fed are pushing up the US dollar across the board. EM currencies remain vulnerable to monetary tightening in the West. Over the medium term they should gain support by positive growth and interest rate differentials with OECD economies.

- One or more countries leave the euro zone - Tensions over currency manipulation lead to protectionism - The emerging market slowdown drags the world back into recession - US economy stumbles in the face of monetary and fiscal tightening + A sustained decline in oil prices provides a global economic fillip

- Tensions over disputed islands ruptures Sino-Japanese ties - Social and political disorder undermine stability in China - Economic upheaval leads to widespread social and political unrest - A US-led attack on Syria prompts a wider regional conflict + Co-ordinated stimulus kick-starts a global recovery

Master Template13 Access analysis on over 200 countries worldwide with the Economist Intelligence Unit T he analysis and content in our reports is derived from our extensive economic, financial, political and business risk analysis of over 203 countries worldwide. You may gain access to this information by signing up, free of charge, at Click on the country name to go straight to the latest analysis of that country: Further reports are available from Economist Intelligence Unit and can be downloaded at G8 Countries * Canada Canada * FranceFrance * GermanyGermany * ItalyItaly * JapanJapan * RussiaRussia * United KingdomUnited Kingdom * United States of AmericaUnited States of America BRIC Countries * BrazilBrazil * RussiaRussia * IndiaIndia * ChinaChina CIVETS Countries * ColombiaColombia * IndonesiaIndonesia * VietnamVietnam * EgyptEgypt * TurkeyTurkey * South AfricaSouth Africa Or view the list of all the countries.view the list of all the countries Should you wish to speak to a sales representative please telephone us: Americas: Asia: Europe, Middle East & Africa: +44 (0)

Master Template14 Access analysis and forecasting of major industries with the Economist Intelligence Unit I n addition to the extensive country coverage the Economist Intelligence Unit provides each month industry and commodities information is also available. The key industry sectors we cover are listed below with links to more information on each of them. Automotive Analysis and five-year forecast for the automotive industry throughout the world providing detail on a country by country basis Commodities This service offers analysis for 25 leading commodities. It delivers price forecasts for the next two years with forecasts of factors influencing prices such as production, consumption and stock levels. Analysis and forecasts are split by the two main commodity types: “Industrial raw materials” and “Food, feedstuffs and beverages”. Consumer goods Analysis and five-year forecast for the consumer goods and retail industry throughout the world providing detail on a country by country basis Energy Analysis and five-year forecast for the energy industries throughout the world providing detail on a country by country basis Financial services Analysis and five-year forecast for the financial services industry throughout the world providing detail on a country by country basis Healthcare Analysis and five-year forecast for the healthcare industry throughout the world providing detail on a country by country basis Technology Analysis and five-year forecast for the technology industry throughout the world providing detail on a country by country basis

Master Template15 Media Enquiries for the Economist Intelligence Unit Europe, Middle East & Africa Grayling PR Jennifer Cole Tel: + 44 (0) Sophie Kriefman Tel: +44 (0) Ravi Sunnak Tel : +44 (0) Mobile: + 44 (0) Asia The Consultancy Tom Engel / Ian Fok / Rhonda Taylor Americas Grayling New York Ivette Almeida Tel: +(1) Katarina Wenk-Bodenmiller Tel: +(1) Australia and New Zealand Cape Public Relations Telephone: (02) Sara Crowe M: Luke Roberts M: