1. Master Template1 Global forecasting service Economic forecast summary – June 2014 www.gfs.eiu.com

2. The Economist Intelligence Unit has lowered its forecast for real GDP growth in 2014 to 2.5% from 3%. The US economy stalled at the start of the year as severe winter weather hampered housing, construction and business spending. Our outlook remains upbeat: debt levels are falling and the unemployment rate in April, at 6.3%, was the lowest in six years. We expect a strong rebound in the second quarter, and have raised our 2015 GDP growth forecast to 3% from 2.6%.

3. We have raised our 2014 forecast for economic growth in Germany to 2% from 1.6%. Germany’s economy in the first quarter grew at twice the rate of the prior quarter, led by strong construction spending. The picture is more subdued elsewhere in the euro zone: France stagnated in the first quarter and Italy’s economy contracted. We reaffirm our forecast for 2014 euro zone growth of 1.1%. Low inflation poses a threat to the euro zone's recovery. The ECB is likely to respond to deflationary pressures by further easing monetary policy in June.

4. Japan’s economy expanded by 5.9% at an annualised rate in the first quarter. Some of that growth was a one-off as consumers and businesses spent heavily early in the year to pre-empt an April 1st tax increase. We are for now maintaining our current 2014 GDP outlook of 1.5%, but the risks to this forecast are to the upside. A weak yen is helping Japan’s exporters and contributing to an uptick in inflation. Real interest rates have become negative for the first time in years. The ageing of the population and disorderly public finances will constrain economic growth in the medium term.

5. Sentiment towards emerging markets remains skittish but investors are showing more discrimination between countries than in the mid-2013 sell-off. We have again cut our forecast for economic growth in Russia, to 0.5% from 1.8%. Western sanctions, capital flight and rising interest rates put the economy at risk of outright recession. In China the authorities are trying to curb credit growth while maintaining growth of around 7.5%. India’s elections gave an outright majority to the BJP, which should facilitate implementation of the party’s pro-business policies.

6. Oil consumption will slow in 2014 as demand in some major developing economies has started the year at a soft pace The US is on course to record another year of positive demand growth as the economic recovery gains traction Geopolitical risks weigh on the supply picture, particularly civil unrest in Iraq and Libya. North American output is growing rapidly, helping to offset the negative impact of supply outages in a number of OPEC producers.

7. A heavy supply picture in many major commodity markets will weigh against prices in 2014-15. Our industrial raw materials (IRM) index will fall by close to 3% in 2014 as weakness in the aluminium, copper and rubber markets drags down the index. We expect the food, feedstuffs and beverages (FFB) index to fall by 1.4% in 2014 thanks to a sharp upward revision to coffee prices over supply concerns in Brazil, the leading producer Population growth and urbanisation will support industrial and soft commodity prices in the medium and long term.

8. We expect the US Fed to reduce its asset purchases by US$10bn at each Federal Open Market Committee meeting. This would conclude QE3 by October. Bond yields have fallen so far in 2014 but we expect them to rise later in the year. This could lead to further capital flight from emerging markets. We do not expect US policy rates to rise until the second half of 2015. The ECB is likely to cut rates in June in response to concerns about deflation in the euro zone.

9. The euro is receiving support from the region’s emergence from recession and from the eurozone’s strong balance of payments position. We expect monetary tightening by the US Fed to lead to US dollar strength in the second half of 2014. For 2014 as a whole we expect the euro:dollar exchange rate to average of US$1.34:€. EM currencies remain vulnerable to US monetary tightening. Over the medium term they should gain support by positive growth and interest rate differentials with OECD economies.

10. - Tensions over currency volatility lead to a rise in protectionism - Deflation derails the economic recovery in the euro zone - The emerging market slowdown drags the world back into recession - US economy stumbles in the face of monetary tightening + A sustained decline in oil prices provides a global economic fillip 15 16 15 12

11. - Russia’s intervention in Ukraine leads to Cold War-era tensions - Tensions over disputed islands ruptures Sino-Japanese ties + A rapid recovery in parts of the OECD drives global growth higher - Economic upheaval leads to widespread social and political unrest - Civil war in Syria escalates into a wider regional conflict 12 9 8

13. 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 www.eiu.comwww.eiu.com 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 www.eiu.comwww.eiu.com 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: +1 212 698 9717 Asia: +852 2585 3888 Europe, Middle East & Africa: +44 (0)20 7576 8181 www.gfs.eiu.com

14. 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. www.gfs.eiu.com 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

15. Master Template15 Media Enquiries for the Economist Intelligence Unit www.gfs.eiu.com Europe, Middle East & Africa Grayling PR Jennifer Cole Tel: + 44 (0)20 7592 7933 Sophie Kriefman Tel: +44 (0)20 7592 7924 Ravi Sunnak Tel : +44 (0)207 592 7927 Mobile: + 44 (0)7515 974 786 Email: allgraylingukeiu@grayling.comallgraylingukeiu@grayling.com Asia The Consultancy Tom Engel +852 3114 6337 / +852 9577 7106 tengel@consultancy-pr.com.hk Ian Fok +852 3114 6335 / +852 9348 4484 ifok@consultancy-pr.com.hk Rhonda Taylor +852 3114 6335 rtaylor@consultancy-pr.com.hk Americas Grayling New York Ivette Almeida Tel: +(1) 917-302-9946 Ivette.almeida@grayling.com Katarina Wenk-Bodenmiller Tel: +(1) 646-284-9417 Katarina.Wenk-Bodenmiller@grayling.com Australia and New Zealand Cape Public Relations Telephone: (02) 8218 2190 Sara Crowe M: 0437 161916 sara@capepublicrelations.com Luke Roberts M: 0422 855 930 luke@capepublicrelations.com