1. A global economic and market outlook Dr Chris Caton March 2015

2. 1 2015 Growth Forecasts (%) Month of Forecast A-14M-14J-14 A-14S-14O-14N-14D-14J-15F-15M-15 Australia2.9 3.02.82.9 2.82.7 2.6 New Zealand 3.0 2.93.0 3.13.02.9 US3.03.1 3.03.1 3.0 3.2 3.1 Japan1.3 1.21.31.21.31.21.31.2 1.31.1 China7.2 7.17.2 7.1 7.0 Germany2.0 1.81.51.41.31.41.51.8 UK2.42.52.6 2.7 “World”3.2 3.33.2 3.13.0 2.8 Source: Consensus Economics

3. Oil prices generally bounce hard 2 Source : ISI Evercore

4. 7.5 is the new 10. China’s growth contribution is still increasing. 3

5. Resources investment (% of GDP) 4

6. The terms of trade have come down a long way (index, 2012/13=100) 5

7. 6 Real GDP growth in Australia and the US Source: Datastream Year to % change

8. Mining exports have been growing rapidly 7

9. Non-mining activity has picked up slightly 8

10. 9 Financial Market Forecasts Now (19 March) End-Jun 2015 End-Dec 2015 AUD/USD 0.777 0.750.72 Official cash rate (%) 2.25 2.00 10 Year Bond yield (%) 2.45 2.702.90 ASX 200 5900 57005800

11. 10 The Australian Dollar and US Trade Weighted Index Source: Datastream IndexAUD/USD US TWI inverted (LHS) AUD/USD (RHS)

12. 11 Australian Share market Performance – ASX200 Source: Bloomberg

13. The Australian market is a little above fair value (forward p/e ratio) 12

14. But the P/E tends to be higher when the cash rate is lower 13

15. The resources sector has been a massive drag on the market 14

16. Australia has kept pace with the developed world ex US 15

17. We have been in almost perfect sync with the United States market, but may now be looking relatively a little cheap. 16 Source :Minack Advisors

18. 17 The labour market data are still soft and unemployment is still rising Source: ABS 000’s% Employment (LHS) Unemployment Rate (RHS)

19. It’s clear where most of the new jobs come from 18

20. Contribution to employment growth over 2014 19

21. Employment growth has been very uneven 20

22. 21 Australian inflation is not an issue Source: ABS % BT Forecasts GST Effect

23. Wage growth has moderated across the board 22

24. Household financial ratios 23

25. House Prices - Australia v Brisbane Source: ABS Index (1987 = 100)

26. Australian houses are the biggest in the world (sq m per capita) 25

27. House prices have risen everywhere, particularly in Sydney ($’000s) 26

28. House price rises have been a capital-city story 27 Source: Minack Advisors

29. Prices have been rising rapidly in just two cities in the past year (% increase year to February 2015) 28 Source : Core Logic RPData

30. Where’s the bubble? Average house price increase in the past ten years 29

31. Credit growth is picking up, driven by investors 30

32. The investors are now in charge 31 source :Goldman Sachs

33. Investors have been piling in in New South Wales 32

34. Not much of the borrowing by investors finances new dwellings! 33

35. 34 Gross Domestic Product Source: ABS % BT Forecasts

36. 35 Source Consensus Economics Ss: Consensus Economics GDPInflation Australia3.02.6 United States2.62.1 New Zealand2.52.1 Norway2.32.0 United Kingdom2.32.2 Canada2.22.0 Sweden2.21.9 Spain2.01.4 Switzerland1.71.1 Germany1.51.8 Netherlands1.41.7 Eurozone1.41.5 France1.31.6 Japan1.11.7 Italy0.91.5 Global Medium-Term Economic Growth and Inflation Prospects (2014- 2024)

37. 36 Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2014-2024) GDPConsumer Prices China6.62.8 India6.55.9 Philippines5.73.8 Indonesia5.65.2 Malaysia5.03.1 Thailand3.92.7 Singapore3.72.1 South Korea3.22.3 Taiwan3.11.6 Hong Kong3.0 Australia3.02.6 New Zealand2.52.1 Japan1.11.7 Source: Consensus Economics

38. 37 Summary  The big question in the US is when will rates begin to rise and how quickly?  The Eurozone is battling deflation.  We will always worry about China.  The Australian economy should continue to experience only moderate growth. The mining investment boom has ended with no significant pickup to date in non-mining capex.  The cash rate is likely to fall again.  The exchange rate may fall further.  The Australian share market is a little above fair value.

39. Disclaimer This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time) 38