Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University Fundação Getúlio Vargas CFO Magazine El IMEF PyME

Top Concerns of Latin American CFOs 1. Economic Uncertainty 2. Government policies 3. Weak demand for product/services 4. Employee productivity 5. Regulatory requirements 6. Corporate tax code 7. Access to capital 8. Currency risk 9. Cost of benefits 10. Rising input or commodity costs

Business Optimism Index Latin American CFO optimism increases from last quarter. Global Trends Dec 2017 Outlook Sep 2017 Outlook Country Business Optimism Index Country / Region Country / Region Own-Firm Business Optimism Index CFOs in Latin America have become less optimistic about financial conditions in their home countries, with the average declining by approximately 10 points on a 100 point scale Latam CFOs no longer most optimistic in world Latam optimism has fallen below that in Asia and now equals US optimism Latam optimism still higher than in Europe and Africa Mexican CFOs are most optimistic Among Latam CFOs, those in Mexico, Peru, and Chile are most optimistic Brazilian optimism has fallen almost as low as in Argentina CFOs are relatively optimistic about the futhre for their own firms in Latin America and elsewhere around the world, with own firm optimism equalling about 65 on a 100 point scale Slide edge in emerging own-firm optimism CFO optimsm about their own firms is highest in Asian, Latin America, and in Africa US and European own-firm optimsm is not far behind Own firm-optimism highest in Mexico, Chile, Peru CFOs in Brazil are fairly optimistic about their own firms CFOs in Argentina, Ecuador, and Colombia are less optimistic Own Company Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100

Expected Product Price Inflation Latin American companies expect to increase their prices by a larger amount, relative to last quarter Sep 2017 Outlook Global Trends Dec 2017 Outlook Product Prices Product Prices 17q4: Colombia using mean, median=0.18 Inflationary expectations moderate in Latin America African CFOs expect the highest price increases among all the regions CFOs in Europe expect the lowest inflation Inflation expectations highest in Mexico Prices expected to moderate in Brazil Import prices drive some of the Latin American price inflation Notes: Presented data are the mean or median values for each region or country.

Expected Growth in Sales Revenue Latin America sales revenue expectations fairly flat Sep 2017 Outlook Global Trends Dec 2017 Outlook Revenue Revenue 2017 q3: Brazil and Peru using median; means are 14.75 & 11.48 Latin American revenue growth increases Revenue expectations decrease slightly from last quarter African expected revenue growth up sharply Peru and Mexico expect most rapid revenue growth Overall Latin American revenues pulled down by Chile and Colombia Mexico expects rapid sales growth, due in part to inflation Notes: Presented data are the mean or median values for each region or country.

Capital Spending Plans Latin American capital spending expectations increase this quarter Sep 2017 Outlook Global Trends Dec 2017 Outlook Capital Spending Capital Spending 17q4: peru using median, mean=-4.35% Capital spending plans rebound but still low Latin American CFOs expect business spending growth Business spending is ramping up in Europe, softening in US Business spending varies within Latin America Brazil and Colombia anticipate moderate growth in capital expenditures Small spending increases expected in Peru and Chile Notes: Presented data are the mean or median values for each region or country.

Expected Change in Earnings Earnings expected to increase Sep 2017 Outlook Global Trends Dec 2017 Outlook Earnings Earnings 17q4: Brazil using mean, median=23.65% Latam using median, mean=18.9% Latam CFOs expect strong earnings Asia has the lowest earnings expectations for 2018 Latam expects the highest earnings growth, rebounding from very low levels Strong positive earnings growth in Latin America Brazil and Peru have the strongest earnings expectations Earnings are expected to grow moderately in Chile, flat in Mexico Notes: Presented data are the mean or median values for each region or country.

Fulltime Employment Outlook Latin American CFOs expect little fulltime employment growth in 2018 Sep 2017 Outlook Global Trends Dec 2017 Outlook # FT Employees # FT Employees 17q4: Chile: Median also = Weak employment outlook in Latin America Asia and African CFOs expect no employment growth in 2018. Employment growth stays strong in the US Employment growth varies across L.A. Flat employment outlook in Chile and Ecuador pull down the average for all of Latin America Employment strongest in Mexico and Colombia Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees

Expected Wage and Salary Increases Latin American wages and salaries are projected to increase by 3.5% in 2018 Sep 2017 Outlook Global Trends Dec 2017 Outlook Wages & Salaries Wages & Salaries Dec 2016: Dec 2016 Ecuador median=0, mean = -4.8 Wage growth expectations vary across regions Africa expects wages to grow 8.0% in 2018, which is the highest among all regions Asia expects the lowest wage growth Latin American wages to grow nearly 4% All participating Latam countries expect positive wage growth, lowest in Ecuador Wage growth in Brazil beats inflation Notes: Presented data are the mean or median values for each region or country.

Work-Life Balance Please indicate your work-life balance. That is, during the time you are awake, the percentage of time, energy, and attention focused on work versus the percentage of time, energy, and attention focused on life outside of work. CFOs ideally would prefer to work fewer hours than they currently work.

Work-Life Balance Ideal Work-Life Balance Almost all CFOs would prefer to work fewer hours Ideal Work-Life Balance Current Work-Life Balance 80% work - 20% life 70% work - 30% life 60% work - 40% life 50% work - 50% life 40% work - 60% life 2.9% 26.5% 41.2% 23.5% 5.9% 0.0% 7.0% 40.4% 42.1% 10.5% 3.1% 15.6% 62.6% 8.3% 66.6% 25.0%

Work-Life Balance – By Compensation Type The percentage of time, energy, and attention focused on work is highest when compensation increases the most in response to good corporate performance.

Work-Life Balance – By Age The percentage of time, energy, and attention focused on work is not significantly affected by CFO age.

Work-Life Balance – Around the World CFOs everywhere work long hours

Crowding Out Long-term Corporate Investment Check if spending on the following items “crowds out” or hinders your firm's ability to spend on long-term corporate investment.

Crowding Out Long-term Corporate Investment Check if spending on the following items “crowds out” or hinders your firm's ability to spend on long-term corporate investment.

Fast Pace of Change/Innovation Has the faster pace of change/innovation in recent years … changed overall capital spending by your firm? changed research and development spending by your firm? changed your willingness to take on “moon shot” projects? Did not exclude DK

Fast Pace of Change/Innovation Has the faster pace of change/innovation in recent years … Did not exclude DK

CFO as Decision-Maker At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

CFO as Decision-Maker – Compensation Type At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

CFO as Decision-Maker – by CFO Age At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

Return on Assets (ROA) Profit growth in Latin America is strong compared to US and Europe March 2017: Argentina too high: 21.1 & 23.3 Profit margins are expected to increase in all regions CFOs in Latin America expect profits to grow as measured by ROA

Duke/FGV Latin American Business Outlook in Press The Latin American Business Outlook is frequently reported in the press

Duke/FGV Latin American Business Outlook in Press The Latin American Business Outlook is frequently reported in the press

Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University Fundação Getúlio Vargas CFO Magazine El IMEF PyME