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. Weak demand for product/services 3. Government policies 4. Employee productivity 5. Regulatory requirements 6. Cost of borrowing 7. Access to capital 8. Currency risk 9. Corporate tax code 10. Difficulty attracting/retaining qualified employees

Business Optimism Index Latin American CFO optimism increases from last quarter. Global Trends March 2018 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 moderate price increases Sep 2017 Outlook Global Trends March 2018 Outlook Product Prices Product Prices 18Q1: Peru using median, mean=-0.01 Inflationary expectations moderate in Latin America Asian 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 rise Sep 2017 Outlook Global Trends March 2018 Outlook Revenue Revenue 2017 q3: Brazil and Peru using median; means are 14.75 & 11.48 Latin American revenue growth increases Revenue expectations increase from last quarter African expected revenue growth drops sharply Peru and Mexico expect most rapid revenue growth Overall Latin American revenues pulled down by Peru 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 March 2018 Outlook Capital Spending Capital Spending 18q1: peru using meam, median=0 Capital spending plans rebound but still low Latin American CFOs expect slow spending growth Business spending is ramping up in Europe, growing strong in US Business spending varies within Latin America Brazil and Chile anticipate moderate growth in capital expenditures Flat or negative spending increases expected in Peru and Colombia 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 March 2018 Outlook Earnings Earnings 18q1: Chile using median, mean=40% Mexico using mean, median=8.82% Latam CFOs expect strong earnings Asia continues to have 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 Chile have the strongest earnings expectations Earnings are expected to grow moderately in Peru Notes: Presented data are the mean or median values for each region or country.

Fulltime Employment Outlook Latin American CFOs expect moderate fulltime employment growth in 2018 Sep 2017 Outlook Global Trends March 2018 Outlook # FT Employees # FT Employees 18q1: peru using median, mean=-4.86 Weak employment outlook in Latin America Asia and Latam CFOs expect rising employment growth in 2018. Employment growth stays strong in the US Employment growth varies across L.A. Flat employment outlook in Peru and Colombia pull down the average for all of Latin America Employment strongest in Brazil and Mexico 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 5% in 2018 Sep 2017 Outlook Global Trends March 2018 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 6.6% in 2018, which is the highest among all regions Europe expects the lowest wage growth Latin American wages to grow 5% All participating Latam countries expect positive wage growth, lowest in Peru Wage growth in Brazil beats inflation Notes: Presented data are the mean or median values for each region or country.

Fintech/Blockchain Do you have a good understanding of the following technologies?

Fintech/Blockchain Do you have a good understanding of the following technologies?

Fintech/Blockchain Which of the following innovations will affect your company and its operations in the next 5 years?

Fintech/Blockchain Which of the following innovations will affect your company and its operations in the next 5 years?

Fintech/Blockchain Impact on Labor Outcome Do you anticipate that your company will reduce the number of employees in the finance function because of innovations in financial technology?

Attractive After-tax Returns on US Investment The U.S. reduced its corporate income tax rate from 35% to 21%. Does the reduced U.S. tax rate make it more or less attractive for your company to do business in the U.S.?

Corruption as a Risk Factor How big a risk factor is business corruption (fraud, bribery, other ethical violations) in the country where you are located?

Major Effect of Corruption To the extent that corruption exists, what would you say are its major effects?

Return on Assets (ROA) Profit growth in Latin America is strong 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