Forecast update Schroders Economic Infographic June 2015 Federal Reserve: 2 new risk scenarios Eurozone: forecast on track Bother in the BRICs (2) Tightening tantrum (1) Fed behind the curve Global growth downgraded after disappointing Q1. Inflation expected to remain low in 2015. 2016 2.0% 2016 2.5% 2016 2.9% (prev 2.8%) (prev 3.2%) (prev 1.3%) (prev 1.6%) (prev 3.7%) 2016 4.3% 2016 1.6% 2015 1.4% 2015 2.4% 2015 2.5% 2015 0.9% 2015 3.6% = World U.S.A Europe Japan Emerging Markets Austerity to resume = lower growth Conservative Party election victory Depreciation in € + rebound in energy prices = inflation positive again Fastest quarter of growth since Q4 2007 Economy is out of recession Imports = weighed on total growth Improved growth outcome due to rise in inventories. Pace may not continue into Q2 ECB buying €60bn of assets per month until Sep'16. Eurozone recovery is progressing Germany robust... but French recovery fragile Inflation surges out of control Bond markets sell-off in response to Fed tightening Higher global yields hit growth Emerging markets suffer most Fed delays hike to H2 2016 on growth fears Response to fall in energy costs slower than expected $ remains firm + economy temporarily slows Austerity + credit conditions ease... weak € + energy prices support activity Tighter interest rates, firm $ + weak commodities weigh on growth = 2015 forecast = 2016 forecast Slow start to 2015... however, growth supported by weaker ¥ CHINA INDIA RUSSIA BRAZIL Property + manufacturing to struggle. Weak growth = policy easing measures 5.2% 6.2% 2015 2016 7.8% 2016 7.5% 2015 Oil price remains low Ukraine situation remains tense More aggressive monetary tightening weighs on growth as consumption fades Reforms disappoint market... but modest pace should deliver improvements Growth forecast 2.4% 2.8% 1% 1.6% 2.1% 1.1% 1.2% 0.5% S P A I N G E R M A N Y F R A N C E I T A L Y 6.5% 1.4% 2.0% 6.8% 2015 2016 2015 2016 GDP INFLATION -1.8% 0.7% 2015 2016 5.5% 7.9% 2015 2016 GDP INFLATION -4% 2015 15.1% 2015 6.2% 2016 -0.1% 2016 GDP INFLATION INFLATION GDP