Ukraine Business outlook 2015-19 Quarterly update – November 2015 by Dr Daniel Thorniley.

UkraineBusiness outlook 2015-19

Quarterly update – November 2015by Dr Daniel Thorniley

Content

• Executive summary• Debt restructuring • How senior executives see things • Some assumptions • Business outlook • Human resources and salaries • Bad blood? • Where do you put Ukraine in your structure? • Economic outlook • Inflation and interest rate outlook • Currency outlook• Statistics

Executive summary (1)

• Business is still very tough in Ukraine • But there has been an upward surge in expectations in the market for hryvnia sales growth

in 2016 compared with 2015• What is striking is that much of the positive shift has taken place in the last 2-3 months• For example, those predicting double-digit growth 2 months ago numbered 16% and now this

figure has risen to 31% while those bracketed in single digits have increased from 25% to 36% now.

• This may stem from recent economic stabilisation or the perception that the economic bottom has been hit and a slow recovery will now proceed.

• GDP growth is expected to turn positive around Q1-Q2 of next year• At least two factors have provided some recent light:

1. A 20% write-down and extended repayment terms remove some (only a bit) of the total debt load (and the implementation of the deal may prove tricky)

2. The macro-economic numbers have started the slow process of stabilising and we can expect some month on month and quarter on quarter GDP growth in early 2016

Executive summary (2)

• We would also point out (and repeat) that very curiously, while fully 85-90% of companies are struggling badly in the Ukraine market, there is a “strange” scattered number of companies across sectors (pharmaceutical, consumer goods, engineering) who are selling very well in hryvnia and even in dollars and Euros (we examine why this may be so below)

• The recent debt agreement may also have improved the mood as well as the sense that the worst may also be over in eastern Ukraine.

• The 2016 budgets now appear much stronger than 6-7 weeks ago and much better than excepted 2015 results and this applies to a lot more companies

• But 2015 is going to be a tougher/worse year than 2014 because it will not have the relatively good/moderate start that 2014 experienced: in fact just the opposite as the first half of 2015 will be worse than the second half

• And we are seeing this now as the bottom seems to have been hit for a number of indicators in the mid-summer or late spring period

• After a slump of -10.5% this year, we GDP ticking up mildly to +0.8% in 2016• We then see GDP trending later at 4% (or just under) in 2017-2020

Executive summary (3)

• Top-line Inflation surged to over 61% in April after the currency collapse and as gas prices were liberalised (by 800% in April) but the September figure decelerated to 52%

• Top-line inflation will average 50% this year and be down to 18% in 2016• High inflation and weak currency fed off each other with blow-back effects on the economy• If there is further compromise militarily, then there is always the possibility even of some

strong positive upside on the FX rate which would run through positively into business results. But this seems unlikely for now

• Our earlier currency estimates for 2015-16 still seem about right averaging to the US dollar at about 22-24

• We see the hryvnia somewhat weaker at about 26 to the dollar by year-end 2016 • Risks and volatility could be large both to the up or more to the downside • Total merchandise export levels fell from $65bn in 2013 to $55bn last year and to about

$41bn this year and given growth trends eastwards and westwards we see only a slow trade recovery and Ukrainian exporters not fully able to benefit from the weak currency

• Some Russian regulations are blocking Ukrainian exports into Russia while some western companies are no longer supplying Ukraine from Russia. This is by no means a complete freeze on this cross border trade but does indicate that the trend is in the wrong direction

Debt restructuring (1)

• On 11 March the IMF approved a 4-year assistance program of $17.5bn under the so-called Extended Fund Facility (EEF). The new program replaces an earlier two-year program of $17bn (of which some $5bn were disbursed)

• In fact $15bn of the $40bn package is predicted to be saved (by 2018) in on-going debt negotiations: so 40% of the total support is presumed to come from debt restructuring which as we noted several months ago was extremely optimistic or fanciful

• The more recent deal reached with private creditors in September is a step in the right direction and has boosted the economic and corporate mood

• In brief summary the deal to restructure external liabilities meant creditors agreed to a 20% haircut of principal, coupons were adjusted higher and the maturity was extended by 4 years. And in addition the government provided “value recovery” instruments/warrants that are linked to future GDP growth

• There is short-term benefit in the deal for Ukraine and for the creditors especially if the Ukraine economy starts to report moderate GDP growth over the next 5 years

• But the smooth implementation of the deal may prove tricky in the closing months of 2015

Debt restructuring (2)

• There is still some lingering question mark about the proportion of creditors who have accepted the deal in order to make it legitimate (75% of creditors)

• The principal sticking point remains the $3bn Eurobond due to be paid to Russia in December 2015

• If the IMF were to adopt a rigid interpretation of what type of debt this Eurobond entails, then Ukraine could be plunged into official default and IMF funding would have to be halted on technical grounds as the Fund is not eligible to lend “into arrears”

• The IMF ought to redefine its terms so that it can lend into arrears of public debt (which is what this Eurobond is) as well as private debt

• The bottom line in our opinion is a strong one that the IMF will continue lending though the full term of its existing program and the Russian Eurobond issue will prove a temporary distraction

How senior executives see things (1)

• The local MD of a major consumer product firm: “We were seeing a further 50% drop in the Euro top-line and some weeks ago I thought it would be worse but the currency stabilisation has helped a little. But the numbers are still very bad”

• Another MD in the same sector confirmed: “We could see top-line sales fall by 10-25% this year and any consumer resilience could collapse this year compared with some relative support in 2014. I am also seeing the start of a collapse in premium products (which is not surprising) but the speed of the move to value and discounts is extreme now. We and other companies are losing share now to the discounters as the Ukrainian consumers move en masse to the bottom.”

• But not is all bad news• The regional director of a global apparel brand stated last week in Moscow that: “Our Ukraine

business is remarkable. We are up 70-80% in hryvnia which means of course that we are solid in FX when we combine that with some price rises. To be able to stay steady in FX when the currency collapsed and inflation shot through the roof is quite special”.

• The regional MD of one industrial conglomerate also noted: “Our sales are up 50% in local currency and somehow our customers find money somewhere. They have been able to protect their previous FX earnings and not turn them into hryvnia. To be honest I don’t ask them where they get the Euros and we continue a reasonable business against this frightening background”

How senior executives see things (2)

The CEE MD of one western service company spoke for non-attribution how they were approached by a large investor in Ukraine to provide support services

“This is a very large operation and a senior manager came to Vienna to discuss with so their needs. These were extensive and aimed at improving the company’s operational efficiency and staffing. The project is very sizeable by Ukraine standards and indeed a big project for us almost anywhere in the CEE region. I asked how his business was developing and he replied, “Very well”. When I said I presumed this was based purely on export growth, he contradicted me and replied that, “Our domestic sales are going very strong as well as export sales”. To be honest I was simply very happily surprised and don't have a full explanation why they are doing so well. Suffice it to say they re doing well, they have money and want to spend it in us!”

Some assumptions (1)

We stick with the following features of our central scenario:

• Crimea has seceded de facto from Ukraine• This will not be accepted by Ukraine or the West and will remain a frozen conflict • The conflict with Russia will not escalate or worsen from here • The entire Donetsk and Lugansk regions (not just separatist bits) are 18% of Ukrainian GDP

and 23% of industrial output. But the separatist parts are smaller than this• Any eventual agreement will not prevent a future poisoned atmosphere remaining• IMF/EU funding will have to be increased in order to rebalance the debt profile • Ukraine will have to restructure or write-off part of its sovereign debt in 2015 (and did so)• But any variant of the IMF program will entail structural reforms which in the short-term will

hurt GDP growth, consumption patterns and western business results• The key to success is for any new regime to tackle genuinely and seriously endemic

institutionalised and socialised corruption and malpractice• Yanukovich’s kleptocracy has destroyed the commercial fibre of the country

Some assumptions (2)

Our economic assumptions for 2016 include:

• GDP grows by 0.8% • Consumer prices rise on average by 18% (after 50% in 2015) • High inflation will mean real wages are still negative by -4.8% (after -33% in 2015)• Consumer spending will rise by 1.3% • Investment will decline by 2.0% (after a fall of -18% in 2015)• The currency is following the path we predicated i.e. deep crash and with IMF support some

stabilisation. It is just possible that the very worst may be over on the currency front as well as on the inflation side of things

Business outlook (1)

• Ukraine is the worst performing market in the CEEMEA region in 2015 excluding only Syria• Many companies were surprised that they survived the first 6-7 months of 2014 in reasonably

good shape as consumers stocked up, “buying against future inflation” and “investing in products” rather than holding on to cash and these were wise measures

• But by the autumn 2014 harsh reality had sunk in for the huge majority of companies • Executives turned very pessimistic in early 2015 but became more optimistic this autumn and

we can see from the budgeted figures below that many companies now forecast a rebound in hryvnia sales in 2016

• In 2016 it will “look” a lot better but much of this will be bounce back form depressed levels • Business results will depend on the FX rate and that will depend in part on inflation and the

sovereign debt outlook and the extent of EU/IMF support. This was very bleak/disastrous in February-March. But we have seen the first signs of some potentially solid stabilisation

• There is a growing East-West division in sales with more companies reporting relatively better sales in Kiev and the western regions compared with weak current and future sales outlook in the East and South of the country.

Business outlook (2) – 2015 sales projections

Latest 2015 sales projections main CIS markets (in local currencies)

Russia Ukraine Kazakhstan BelarusGrowth of 10%+ 35% 18% 27%

27%Growth of 5-10% 20% 8% 28%

16%Growth of 1-5% 14% 7% 11%

11%Zero growth 9% 14% 23%

28%Decline 1-10% 11% 31% 11%

16%Decline of 10%+ 9% 22% 0%

1%

Source: Business Russia/CIS Group Surveys

Business outlook (3) – 2016 sales projections

Latest 2016 sales projections main CIS markets (in local currencies)

Russia Ukraine Kazakhstan BelarusGrowth of 10%+ 46 33

30 22Growth of 5-10% 30 22 33

29Growth of 1-5% 8 14

8 14Zero growth 9 23

18 32Decline 1-10% 5 10

10 4Decline of 10%+ 2 0

0 0

Source: Business Russia/CIS Group Surveys

Business outlook (4)

• Ukraine: there has been an upward surge in expectations in the market for hryvnia sales growth in 2016 compared with 2015

• What is striking is that much of the positive shift has taken place in the last 2-3 months• For example, those predicting double-digit growth just 3 months ago numbered 16% and now

(mid-October) this number has risen to 33% while those bracketed in single digits have increased from 25% some 3 months ago to 36% now.

• This may stem from recent economic stabilisation or the perception that the bottom has been hit and a slow recovery will now proceed. The recent debt agreement may also have improved the mood as well as the sense that the worst may also be over in eastern Ukraine.

• The 2016 budgets now appear much stronger than 6-12 weeks ago and much better than excepted 2015 results.

Human resources and salaries (1)

• Generally companies are/were trying to retain staff and keep salaries in tight control • MDs are assessing their 2016 budgets and apparently see some possible market

improvement • We think this may mean that more companies will now NOT take an axe to headcount which

was a probable scenario if the economy had continued to plummet along with the currency • At least 50-60% of companies have already made cuts to headcount but surprisingly (or not)

many of these have not been brutal • Some local mangers face of course demands from headquarters for profit stabilisation or

even profit growth, and then face the choice of deeper and accelerated staff cuts • One CEE regional MD noted: “We have been able to retain nearly all staff in Ukraine and just

a bit of natural attrition. I could keep this situation going for a 12-15 month period after the Crimea incident last March. But now annual numbers are kicking in and there is no place to hide. Regrettably, we will have to let 20-40% of the staff go as there is simply no or very little business”

• However, as we say, the recent relative economical and business improvement could make managers think again before engaging in deeper cut backs

Human resources and salaries (2)

• Another regional MD of a B2B company echoed this: “We will be obliged to let 20 people go in the coming weeks. There is a bit of mini-recovery but it’s tiny and at hugely deflated levels. I am, for what it’s worth, telling our local team to inform people that they should stay in touch and hopefully in 9-15 months we could be hiring again”.

• Most companies (79%) are now not making any salary increases to compensate for the hryvnia depreciation. In 2016, with the longevity of the recession, companies will ensure that any salary increases remain below inflation

• Of course if the hryvnia continues to stabilise (or to avoid further deep crashes) and inflation as an average stabilises or even falls, then local staff will feel much better-off but in the coming 6 months the salary outlook is very tough for employees in western companies, in Ukrainian ones and within the civil service and state sector

• Then again, many will be glad to hold on to their job with a western company and be willing to wait for a rally in 2016

Bad blood?

• There are no moral, value judgments in the following remarks, just business analysis• There are mixed messages from companies regarding bad feelings and break downs within

teams among Ukrainian and Russian staff• Several western managing directors told me last week that, “We are seeing serious tensions

and break downs of relationships among our Russian and Ukrainian staff and this is a real tragedy”

• A few companies have started to take Ukrainians out of Moscow offices and Russians out of Kiev at the request of their staff; no one is being obliged to transfer

• The numbers from our survey are as follows:– 59% of companies spot heightened tension and 41% do not– 80% are NOT transferring staff while 20% are transferring some

• All this has consequences for promotion and succession planning and could turn into a serious medium-term HR problem

• Conversely several western executives told me recently that, “Tensions are actually quite minor (or below the surface)”

• So in summary, some disconcerting trends for sure but also not exclusively bad news. But also quite sad and depressing

Where do you put Ukraine in your structure?

• Firstly, whereas in the past many companies had structural links between their Kiev and Moscow offices or dotted lines even when formal links were detached, this will “presumably” disappear as Ukraine is detached organisationally from Moscow

• But many companies have a vested interest in keeping a CIS structure including Ukraine and do not want to disrupt a working structure which is also convenient

• In our latest survey (surprisingly to me), 40% of companies are retaining a CIS structure with Ukraine while another 15% do so with Ukraine “more autonomous”

• “Only” 45% are taking or have taken Ukraine out of the CIS structure• One MD for the CIS region explained the commercial reasons why Ukraine should remain in

the structure include trade ties, customs regulations, legislation, practicality, synergies etc.• But conversely an executive replied: “There were many synergies but frankly many of these

are disappearing” We are also witnessing increasing pressure from Ukrainian-based executives demanding to be detached from any structure which contains Russia

• Our assumption is that with a cease-fire in place that as “things calm down” , then companies will not tamper with their structures and leave things alone

• On the other hand, pressures from the Ukrainian business community should ensure that at least some companies start to detach Ukraine from their CIS structure

Economic outlook (1) - GDP

• GDP has declined in every quarter of the year since Q3 2012 with the one exception of the last quarter of 2013

• GDP will trend negative until the end of 2015 but should start to run positive in the first or second quarter of 2016

• But the depth of the existing recession means that our estimates for 2015 and 2016 are tweaked downwards a little since our last quarterly report. But the downgrade is not massive

• We now see 2015 GDP at -10.5% (instead of -9.4%) and for next year we expect GDP growth of 0.8% (instead of 1.4%)

• Risks are evenly divided to the up and down in 2016• We presume no further escalation in eastern Ukraine and perhaps some lessening of tension

in 2016 and we also presume continued IMF and international financial support• Further out we anticipate GDP growth of 2.8% in 2017 with an average of around 4% in

subsequent years• Investment and exports seems currently to be relatively stronger but some key consumer

indicators are also improving• For example fixed investment, judged quarter on quarter, actually rose in Q2 by 4.5%

compared with a drop in Q1 of -7.4%

Economic outlook (2) - GDP

• Similarly industrial output hit a bottom of -22.5% in February but has improved fairly well to “only” -5.1% in September. On this basis industrial output should be turning positive in the next 2-3 months

• We estimate that investment will finish this year at -18.0% and rally to +2.0% in 2016 and climb to 4.0% by 2018

• Industry ought to recover a little faster from a slump of -16.0% this year to + 3.0% next year and then average close to 5% expansion in subsequent years

• For comparative purposes the worst industrial number in the last 25 years was recorded in 2009 when output was down -37%

• Thanks to those shifts in investment and industrial output and with some relative currency stability, industrial confidence is also getting better:

• This averaged a level of 120 in 2010 to 2013 but declined to 100 by January 2014; in the Q1 of 2015 it reached a recent low point of 83 but by Q3 this year the indicator was back to a level of 100. So while the indictor is not absolutely good, it is on a recovery trajectory

• The construction sector in the first 9 months of this year is down -23% • Cargo transportation was down by -9% last year but has recently shrunk by -14.3% in the first

9 months of 2015 • The trends for construction and cargo transport are both better than in spring this year

Economic outlook (3) - GDP

• In theory the falling hryvnia ought to help Ukrainian exports but there will be little help from a recessionary Russia and a still weak (but improving) Eurozone

• Exports collapsed -23% in 2014 and still look set to decline a further -15 to -20% this year before recovering by 5.0% in 2016; imports fell -30% last year and will be still negative this year by at least -18% and then increase by 5.5% in 2016

• Gas prices are set to rise by 1,000%+ over the next two years and this will inevitably hit consumers and corporations, but we also know that there is scope for better efficiency in energy usage so there is some compensation here

• While the trends are in the right direction, the recovery will be hard: the global business environment is not helping; the Eurozone is under-going a recovery but a sub-par one; and trading relations with Russia are tense and other CIS markets are struggling or below par

• But with spiking inflation and tumbling real wages and hryvnia, there are estimates that GDP per capita will fall to just $1,500 from $4,000 in 2012 (denominated in dollars of course)

• We think that a resilient business sector will continue to improve though the next 12 months thanks to some elements of import substitution as well as benefiting eventually from the competitive exchange rate which will apply to Ukrainian exporters especially those based in the eastern part of the country

Economic outlook (4) – consumers

• Household spending this year will still be -11.8% before climbing back to 1.3% in 2016 and then trending at 3-4% in subsequent years

• Getting a precise handle on consumer sector related numbers is tricky given that about 35% of economic activity takes place in the grey/black economy and many/most people receive extra remuneration in addition to any official resources. This helps explain why consumer spending is not more deeply ravaged given trends in real wages

• Real wages in 2015 will be negative by -33% which is a colossal, negative number and reflects a war-time economy

• Essentially this means that inflation is averaging about 50% with nominal wages up by about 17% and thus we arrive at the approximate -33% negative number

• We anticipate a fall in prices in 2016 while nominal wages will remain around 15-17% and thus real wages will improve to about -5% in 2016 and finally turn positive by about +5% in 2017 and later years

• These are bleak numbers and take a toll on consumer confidence indicators: • This indicator (consumer confidence) reached an all time low of 40 in 2009 after averaging

about 100 in 2001-08

Economic outlook (5) – consumers

• The figure then averaged around 80 in the period 2010 to March 2014 (with a downward blip at the end of 2010)

• But after Crimea the indictor quickly fell to 60 in July 2014 and 40 in January 2015 (equal to its worst number); by end of October the number was slightly up to 45

• So this important indicator is better than the start of the year but only marginally and still close to a record low level

• It seems it will take a lot more military stability and economic recovery before confidence levels rise• And this insecurity is reflected in retail sales which recently actually touched an all-time low level,

worse than in 2009• Retail sales were unsustainably high during the period mid-2010/end 2013 bubble economy

increasing by more than 15% per annum• They then decelerated to 4-5% growth just prior to Crimea and by July 2014 were negative -10%

and then slumped to an all-time low of -30% in March 2015 (in 2009 the level reached “just” -20%)• Since then we have witnessed a mild recovery to -24% in June and -16% in September and we

expect this figure to run slightly positive year-on-year at the end of this year comparing like months with like months

• Unemployment averaged 10.5% last year and we think this could tick up to 12% this year as companies make tougher decisions

Economic outlook (6) – consumers/wages

• Nominal wage growth and real wage growth (after inflation) in 2010-2012 were among the highest in the world and certainly the highest in Europe

• But these were already trending downwards from +20% in 2010 to +17% in 2011, +15% in 2012 and +7.9% in 2013

• But real wages have faced a catastrophic collapse in 2014 and through into 2015 • As inflation jumped to “only” an average of 12% last year, real wages fell by -4% as nominal

wages started to soften • But with nominal wages fluctuating in a range of 8-13% last year and 13-17% this year as

inflation leaps to 50-60%, then real wages are been destroyed by -33% this year, one of the worst figures in recent global history

• It seems the peak of inflation may have been hit in April at 60.9% and as prices decelerate, then real wages in 2016 will improve but still be in negative territory at minus -4.8% before turning positive by +3.0% in 2017

• Real wage trends will hurt consumer confidence and ensure that retail and household expenditure will sink this year

Inflation and interest rate outlook

• We expect the National Bank to continue interest rate cuts on the back of a stabilise currency and declining inflation

• The Bank did announce a rate cut shortly after the debt-restructuring deal on 27 August when the central rate was cut from 30% to 27%

• Inflation ticked down to 51.9% in September down from a recent high of 60.9% in April and 28.5% at the start of this year

• Core inflation (excluding all food and energy cost) feel to 14.3% in August compared with a peak of almost 40% in March

• The back-drop to this is that inflation was at close to zero for most of 2012-2013 and inflation started January 2014 at zero but climbed to 20% by October 2015

• The recent improvement in prices this autumn is related to lower food prices, a more stable currency picture and a favourable base inflation rate compared with last year when tariffs were jacked up

• Presuming a mild economic scenario and maintained currency stability, we expect inflation to average 50% this year and then dip to an average of 18% in 2016 and then to continue this fall to 8.6% in 2017

Currency outlook (1)

• In the second half of 2013 the hryvnia was stable against the dollar at 7.87 and averaged 11.0 to the Euro in the first half of 2014. It then moved as follows:

Dollar Euro1 Jan 2014 8.03 11.016 March 9.03 12.7712 October 12.7 16.11 January 2015 15.6 18.91 March 2015 28.6 32.38 July 20.7 23.230 October 22.8 25.0

• The February free float caused the currency collapse but then we witnessed some moderate recovery thanks to 1) some FX controls 2) some stabilisation in eastern Ukraine and 3) and the announcement of the IMF program and proposed and then successful negotiations with private creditors

Currency outlook (2)

• The background is that the currency was pegged to the dollar through 2010 to 2014 at 7.87 • By April 2014 this crept up though the 10 level and in February 2015 prior to the Crimean

incursion stood just over 20• The currency hit a recent low of 33 to the US dollar in March this year and since then

stabilised to 23 in April and it has fluctuated around that number until end October 2015• FX reserves continued to rise in Q3 to $12.6bn and this was largely thanks to the

disbursement of $1.7bn under the FF program and support from other international financial institutions

• Moreover the National Bank was able to establish some swap lines with China and Sweden which helped raise reserves by some $1bn

• These stable reserves and presuming no escalation in eastern Ukraine combined with the continued IMF support after the Russian Eurobond resolution, ought to ensure some stabilisation of the currency especially as inflation ticks downwards

• We share the consensus view that the hryvnia should average 23-24 in 2015 and then stay close to that figure as an average about 25-26 in 2016

• This is the central scenario with mild risk on the down/worse side

Currency outlook (3)

• (But the official numbers for the exchange rate do not reflect the entire reality and for companies and citizens, even when they can exchange hryvnia, the effective rate is often 15-20% worse than the official figure)

• In subsequent years with still moderately high inflation and with the need for several years to build up FX reserves, we except some mild downward pressure on the currency each year of about 3-5% especially given the probability of emerging market volatility in the next 18 months

• Equally any stronger/better political resolution in eastern Ukraine could entail a 5-15%+ appreciation in the currency• We think that capital contrails (imposed in Q1 this year) will be kept in place until next year

but then removed as the current account balance improves and FX reserves build up again• Presuming further currency and inflation stability by then, we do not anticipate a currency

collapse whenever such controls ae removed

Ukraine - economic outlook: statistics

2013 2014 2015 2016 2017 2018 2019GDP 0.0 -6.8 -10.5 0.8 2.8 4.0 3.9Fixed investment -6.6 -23.0 -18.0 2.0 5.2 5.8 5.6Industrial output -4.3 -11.0 -16.0 3.0 4.5 5.8 5.9Household spending 7.8 -9.6 -11.8 1.3 3.0 3.7 3.8Government spending 2.7 -5.0 -4.0 0.8 1.4 1.4 1.3Real wages 7.9 -4.0 -33.0 -4.8 4.5 3.2 3.0Retail sales 8.0 -9.5 -17.0 3.0 3.7 4.7 4.3Consumer prices (average) -0.3 12.5 50.0 18.0 8.6 7.5 6.9Budget deficit (% GDP) -4.4 -4.6 -4.4 -3.7 -2.8 -2.8 -2.6Current account (% GDP) -9.3 -3.8 -1.3 -1.4 -1.6 -2.2 -2.0Exports -8.0 -23.0 -15.0 5.5 8.0 8.2 7.5Imports -6.0 -34.0 -20.0 7.0 7.2 7.8 7.2Hryvnia/Euro (average) 10.7 15.7 25.5 27.5 31.0 32.5 32.5Hryvnia/dollar (average) 8.1 11.9 23.0 25.0 27.0 28.5 29.8Unemployment (%) 8.7 10.5 12.0 11.0 9.8 8.5 8.3

Note: Real annual % change unless stated

Disclaimer

© 2015 CEEMEA Business Group*

*a joint venture betweenDT-Global Business Consulting GmbH, Address: Keinergasse 8/33, 1030 Vienna, Austria,Company registration: FN 331137t and GSA Global Success Advisors GmbH, Hoffeldstraße 1 , 2522 Oberwaltersdorf, AustriaCompany registration: FN 331082k Source: DT-Global Business Consulting GmbH and CEEMEA Business Group research

Basic data sources come from central banks, own intelligence network, CEEMEA Business Group corporate survey, governments and other public sources. Interpretation, views, forecasts, business quotes and business outlooks by DT-Global Business Consulting GmbH and CEEMEA Business Group.

This material is provided for information purposes only. It is not a recommendation or advice of any investment or commercial activity whatsoever. The CEEMEA Business Group accepts no liability for any commercial losses incurred by any party acting on information in these materials.

Contact: Dr Daniel Thorniley, President, DT-Global Business Consulting GmbHM: +43 676 534 6852 / E: [email protected] / W: www.ceemeabusinessgroup.com