Focus Economics Consensus Forecast Asia - September 2010

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© FocusEconomics 2010ISSN 2013-4940

Economic Forecasts from the World’s Leading Economists

CONSENSUS FORECASTFOCUSECONOMICSFOCUSECONOMICSFOCUSECONOMICSFOCUSECONOMICSFOCUSECONOMICS

AsiaAsiaAsiaAsiaAsia ContentsContentsContentsContentsContentsSummary .................................... 3

Calendar .................................. 1 3

China ........................................ 1 4

Hong Kong ............................... 2 5

India .......................................... 3 4

Indonesia ................................. 4 4

Korea ........................................ 5 3

Malaysia .................................. 6 3

Philippines ............................... 7 2

Singapore ................................ 8 1

Taiwan ..................................... 9 0

Thailand ................................... 9 9

Vietnam ................................. 109

Notes .......................................112

Order Form .............................113

Arne PohlmanChief Economist

Ángel TalaveraSenior Economist

Keith CatlinSenior Economist

Armando CiccarelliEconomist

Gerardo MoránEconomist

Ricardo AcevesEconomist

Marcos Felipe CasarinEconomist

Joan Enric DomeneEconomist

September 2010Publication date: 31 August 2010

Information available: up to and including 30 August 2010

Forecasts collected: 24 - 27 August 2010

Next edition: 28 September 2010

Summary September 2010FOCUSECONOMICS

FocusEconomics Consensus Forecast Asia | 2

Gross Domestic Product, annual variation in % Consumer Prices, annual average variation in %

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011World 4.0 1.8 -1.9 3.8 3.6 3.2 4.6 0.9 2.6 2.6

United States 1.9 0.0 -2.6 3.0 2.8 2.9 3.8 -0.4 1.6 1.5Euro area 2.8 0.6 -4.1 1.2 1.4 2.1 3.3 0.3 1.5 1.6Asia 7.0 4.0 2.1 6.6 5.9 2.6 4.6 0.0 2.4 2.5

Japan 2.4 -1.2 -5.2 3.1 1.6 0.1 1.4 -1.4 -0.9 -0.2Asia (ex Japan) 9.7 7.0 6.1 8.7 7.6 4.1 6.4 0.8 4.0 3.6

China 13.0 9.6 9.1 10.0 8.9 4.8 5.9 -0.7 3.2 3.1India 9.2 6.7 7.4 8.3 8.4 4.7 8.4 3.8 8.1 5.4Asean 6.6 4.3 1.4 7.2 5.5 3.9 8.6 2.7 4.2 4.5

Indonesia 6.3 6.0 4.5 6.0 6.2 6.0 9.8 5.0 4.8 5.9Malaysia 6.3 4.6 -1.7 7.1 5.3 2.0 5.4 0.6 2.0 2.6Philippines 7.1 3.7 1.1 5.6 4.8 2.8 9.3 3.2 4.4 4.2Thailand 4.9 2.5 -2.2 6.8 4.4 2.2 5.4 -0.9 3.4 3.1Vietnam 8.5 6.2 5.3 6.5 7.0 8.3 23.0 6.9 9.9 8.7

NIEs 5.8 1.9 -0.9 7.0 4.4 2.3 4.6 1.4 2.5 2.7Hong Kong 6.4 2.2 -2.8 5.6 4.5 2.0 4.3 0.5 2.7 3.0Korea 5.1 2.3 0.2 5.8 4.3 2.5 4.7 2.8 2.9 3.1Singapore 8.5 1.8 -1.3 12.8 5.2 2.1 6.5 0.6 2.7 2.6Taiwan 6.0 0.7 -1.9 7.3 4.3 1.8 3.5 -0.9 1.3 1.6

Real GDP, annual variation in % Consumer Prices, variation in %

2007 2008 2009 2010 2011 2007 2008 2009 2010 2011World -0.7 -2.3 -7.0 -6.4 -5.3 0.0 0.0 0.0 0.0 0.0

United States -1.1 -3.2 -10.0 -9.3 -7.8 -5.2 -4.9 -3.0 -3.3 -3.5Euro area -0.6 -2.0 -6.3 -6.5 -5.4 0.2 -1.6 -0.7 -0.3 0.0Asia -0.5 -2.7 -5.4 -4.9 -4.2 6.2 5.0 4.3 3.6 3.3Japan -2.5 -5.8 -9.9 -9.2 -8.8 4.8 3.2 2.8 3.7 3.9

Asia (ex Japan) 0.6 -1.0 -3.0 -2.9 -2.2 6.9 5.9 5.1 3.7 3.1China 0.7 -0.4 -2.2 -2.6 -1.9 11.0 9.4 6.0 4.7 4.1India -2.6 -6.0 -6.6 -5.6 -5.1 -1.4 -2.5 -2.4 -2.6 -2.4Asean 0.3 -0.4 -3.3 -3.0 -2.3 8.3 5.1 6.9 5.5 4.8

Indonesia -1.2 0.0 -1.6 -1.7 -1.3 2.6 0.0 2.0 1.1 0.8Malaysia -3.2 -4.8 -7.0 -5.6 -4.8 15.7 17.5 16.7 14.0 12.7Philippines -0.2 -0.9 -3.9 -3.7 -3.1 4.4 2.2 5.3 4.2 3.8Thailand -1.7 -1.1 -4.4 -3.6 -3.3 6.4 0.6 7.7 4.4 3.4Vietnam -1.8 -2.1 -4.5 -6.1 -4.8 -9.8 -9.3 -7.8 -7.8 -6.4

NIEs 3.9 1.1 -1.9 -1.0 -0.3 6.1 4.9 8.5 5.9 5.2Hong Kong 7.7 0.1 0.8 -0.5 -0.1 12.3 13.6 8.7 8.6 9.0Korea 3.5 1.2 -1.7 -0.4 0.3 0.6 -0.6 5.1 1.8 1.2Singapore 12.1 5.7 -2.0 -1.1 0.5 27.6 19.2 19.1 17.7 16.2Taiwan -0.4 -0.9 -4.0 -2.7 -2.2 8.3 6.6 11.0 8.0 7.2

Current Account, % of GDPFiscal Balance, % of GDP

-8

-4

0

4

8

12

World UnitedStates

Euro area Japan Asia (exJapan)

China India

2008 2009 2010 2011

-4

0

4

8

12

World UnitedStates

Euro area Japan Asia (exJapan)

China India

2008 2009 2010 2011

Forecast Summary | Major Economies and Asia



SummaryRegional outlook improves


LONG-TERM TRENDS | 5-year averages

• Asia continues to rebound strongly, as countries continue to reportbetter-than-expected growth figures in the second quarter. As a resultof continued strong growth, regional behemoth, China, surpassedJapan to become the world’s second largest economy in the secondquarter.

• Consensus Forecast panellists have lifted their estimate for ex-JapanAsian growth this year from the 8.6% expected last month to thecurrent 8.7% forecast. In 2011, panellists see the regional economygrowing 7.6%.

• Amid persistent upward price pressures, Consensus Forecastpanellists have left their inflation estimates for this year unchangedat 4.0%. In 2011, regional inflation will moderate and average 3.6%.

ASIA | Regional outlook improves a notchThe outlook for the Asian economies improved over last month, as ConsensusForecast panellists lifted their forecast for ex-Japan Asia output growth in 2010from the 8.6% expected last month to the current 8.7% projection. Theimprovement represents the fourteenth consecutive monthly upgrade and marksa notable improvement compared to the 6.1% expansion recorded in 2009.Quarterly forecasts show that growth is estimated to have peaked at 10.6%year-on-year expansion in the first quarter, as many economies experienced astrong rebound from last year’s first quarter slump. Throughout the remainderof the year, growth will moderate as the favourable base effect progressivelyfades away, with year-on-year growth decelerating to 9.5% in the second quarterand averaging 7.7% in the second half of the year.

This month, Consensus Forecast panellists lifted their GDP growth forecast fornine of the eleven economies surveyed (Hong Kong, India, Indonesia, Korea,Malaysia, Philippines, Singapore, Taiwan and Thailand), left the forecast forone country unchanged (Vietnam) and cut the forecast for another country(China).

CHINA | Growth continues to slowDespite having surpassed Japan as the world’s second largest economy in thesecond quarter, recent data confirm the notion of an overall slowdown in theChinese economy. The moderation is the result of concerted government policiesaimed at slowing the rapid expansion of the economy, as policy makersimplemented a series of measures such as shutting down old facilities in specificindustries as well as policies to cool the housing market. As a result of thecontinued slowdown as well as the newly implemented policies, China’s growth

Note: Data refer to GDP-weighted Asian (ex Japan) average based onmarket exchange rates. For details see note at end of publication.

2000-04 2005-015 2010-14GDP growth (%) 6.8 7.9 7.8Inflation (%) 2.3 3.5 3.5Fiscal Balance (% of GDP) -2.2 -1.0 -1.7Current Account (% of GDP) 3.3 5.8 3.0

Change in 2010 GDP Growth Forecast

Note: Change between September and August 2010 in percentage points.Source: FocusEconomics Consensus Forecast.

-0.3 0.0 0.3 0.6 0.9

ChinaVietnam

IndiaAsia (ex Japan)

IndonesiaKorea

PhilippinesHong Kong

MalaysiaNIEs

AseanTaiwan

SingaporeThailand



forecast was cut for the second consecutive month from the 10.1% expectedlast month to 10.0% this month.

Thailand | Growth forecasts improve after strong second quarter resultThailand experienced the strongest adjustment to this year’s growth forecast.Consensus Forecast panellists raised their projection for GDP growth by 0.8percentage points over last month, lifting the Consensus Forecast to 6.8%. Inthe second quarter, the Thai economy expanded a faster-than-expected 9.1%annually. The strong result was buttressed by robust external demand thathelped to compensate for a weaker domestic sector, which had been adverselyaffected by political unrest in April and May. As a result, the government raisedits official forecast for 2010 GDP growth from 3.5% – 4.5% to 6.5% - 7.5%.

KOREA | Outlook improves furtherIn Korea, Consensus Forecast panellist raised their projections for output growththis year by 0.1 percentage points over last month and now expect GDP toexpand 5.8% in 2010. The improvement continued to reflect the country’s stronggrowth momentum, as both the domestic and external sectors remain robust.Industrial production continues to expand at a double-digit pace and exportshave rebounded to above their pre-crisis peak.

INDIA | Growth prospects improves despite amid moderating industrialproductionConsensus Forecast panellists have raised their projection for the region’ssecond largest economy, by a notch this month, from the 8.2% expansionexpected in August to 8.3%. Although the June industrial sector readingundershot expectations, exports continue to surge ahead. However, owing torising inflationary pressures, the Reserve Bank of India (RBI) decided to lift therepurchase rate by 25 basis points to 5.75% on 27 July. The bank alsoannounced that it would change the periodicity of its monetary policy meetings.The Bank will now hold policy meetings every six weeks, instead of the previousthree-month interval. The current tighter monetary policy may dent growthsomewhat in the coming months.

INFLATION | Inflation expectations unchangedAfter raising their inflation estimate in August, Consensus Forecast panellistsleft their forecasts unchanged this month. Panellists currently estimate 2010inflation for ex-Japan Asia to average 4.0% this month, which is well above the0.8% inflation recorded in 2009.

Inflationary pressures expected to remain moderate in China but strongin IndiaCompared to last month, Consensus Forecast panellists cut their 2010 inflationforecast for three of the eleven economies surveyed (China, Hong Kong andPhilippines). The panel raised its estimate for three countries (India, Indonesiaand Thailand) and maintained their projections for the remaining five economies(Korea, Malaysia, Singapore, Taiwan and Vietnam). India experienced thestrongest upward revision, as panellists lifted their forecast by 0.3 percentagepoints from 7.8% last month to 8.1% this month. Wholesale price inflation inIndia moderated but still remained in double-digit territory in July. Owing to themounting price pressures driven by strong domestic demand growth, the RBIhas embarked on a policy-tightening course. Meanwhile, Consensus Forecastpanellists cut their inflation estimate for China from 3.3% to 3.2%. If attained,the level would be only slightly above the 3.0% inflation target set by PrimerWen Jiabao for this year.

Note: Change between September and August 2010 in percentage points.Source: FocusEconomics Consensus Forecast.

Change in 2010 Inflation Forecast

-0.2 -0.1 0.0 0.1 0.2 0.3

PhilippinesChinaKorea

Hong KongNIEs

MalaysiaSingapore

VietnamAsia (ex Japan)

TaiwanThailand

AseanIndonesia

India



Gross Domestic Product, annual variation in % GDP Growth, 2010

Note: Gross domestic product, real annual variation in %. Alldata for India refer to fiscal year ending in March.Sources: National statistical institutes and central banks.

Notes and sources

GDP per capita, USD GDP per capita, 2010

Note: GDP per capita in current USD.Sources: National statistical institutes and central banks.

Notes and sources

2008 2009 2010 2011 2012 2013 2014China 9.6 9.1 10.0 8.9 9.0 9.0 9.1Hong Kong 2.2 -2.8 5.6 4.5 4.4 4.2 4.2India 6.7 7.4 8.3 8.4 8.5 8.4 8.3Indonesia 6.0 4.5 6.0 6.2 6.3 6.4 6.5Korea 2.3 0.2 5.8 4.3 4.5 4.3 4.1Malaysia 4.6 -1.7 7.1 5.3 5.7 5.6 5.4Philippines 3.7 1.1 5.6 4.8 5.2 4.8 4.5Singapore 1.8 -1.3 12.8 5.2 5.3 4.8 4.9Taiwan 0.7 -1.9 7.3 4.3 4.8 4.6 4.8Thailand 2.5 -2.2 6.8 4.4 5.1 5.3 5.2Vietnam 6.2 5.3 6.5 7.0 6.8 6.9 6.9

Asia (ex Japan) 7.0 6.1 8.7 7.6 7.8 7.8 7.9Asean 4.3 1.4 7.2 5.5 5.8 5.8 5.7NIEs 1.9 -0.9 7.0 4.4 4.7 4.4 4.4

2008 2009 2010 2011 2012 2013 2014China 3,406 3,664 4,155 4,813 5,525 6,265 7,171Hong Kong 30,694 29,991 31,982 33,886 35,766 37,844 40,120India 1,049 1,087 1,339 1,570 1,788 2,004 2,242Indonesia 2,127 2,320 2,768 3,123 3,435 3,758 4,138Korea 19,162 17,078 21,086 24,124 25,953 27,243 28,637Malaysia 7,992 6,763 7,589 8,442 9,110 9,899 10,977Philippines 1,847 1,747 1,951 2,156 2,298 2,419 2,599Singapore 38,904 35,514 40,709 44,350 46,778 49,189 52,096Taiwan 16,630 16,775 18,366 20,088 21,366 22,371 23,860Thailand 4,135 3,971 4,326 4,756 5,102 5,437 5,824Vietnam 1,050 1,056 1,157 1,266 1,442 1,665 1,776

Asia (ex Japan) 2,835 2,912 3,359 3,844 4,320 4,798 5,368Asean 2,831 2,785 3,184 3,537 3,837 4,151 4,510NIEs 20,576 19,172 22,427 25,059 26,790 28,152 29,754

0 10,000 20,000 30,000 40,000 50,000

Vietnam

India

Philippines

Indonesia

Asean

Asia (ex Japan)

China

Thailand

Malaysia

Taiwan

Korea

NIEs

Hong Kong

Singapore

4 6 8 10 12 14

Philippines

Hong Kong

Korea

Indonesia

Vietnam

Thailand

NIEs

Malaysia

Asean

Taiwan

India

Asia (ex Japan)

China

Singapore

0

7,500

15,000

22,500

30,000

Asia (exJapan)

China India NIEs Korea Asean Indonesia

2008 2009 2010 2011

-4

0

4

8

12

Asia (exJapan)


2008 2009 2010 2011



Private Consumption, annual variation in % Private Consumption Growth, 2010

Note: Private consumption, real annual variation in %. Datafor China are based on FocusEconomics estimates.Sources: National statistical institutes and central banks.

Notes and sources

Investment, annual variation in % Investment Growth, 2010

Note: Gross fixed investment, real annual variation in %. Datafor China refer to nominal urban investment in fixed assets.Sources: National statistical institutes and central banks.

Notes and sources

2008 2009 2010 2011 2012 2013 2014China 9.1 9.4 9.4 9.3 9.1 9.4 9.4Hong Kong 2.4 -0.4 5.1 4.3 4.2 4.2 4.0India 6.8 4.3 7.0 7.2 7.1 7.3 7.2Indonesia 5.3 4.9 5.3 5.4 5.2 5.2 5.8Korea 1.3 0.2 4.4 3.5 3.7 4.0 3.8Malaysia 8.5 0.8 5.4 5.6 6.3 6.7 6.3Philippines 4.7 4.1 5.0 4.8 4.6 4.3 4.4Singapore 2.7 0.4 5.3 4.6 4.8 4.8 4.6Taiwan -0.6 1.5 2.5 2.6 3.3 3.1 3.0Thailand 2.7 -1.1 3.8 3.7 3.4 3.7 4.3Vietnam 9.2 4.8 7.3 7.3 6.7 6.6 6.7

Asia (ex Japan) 6.7 6.2 7.5 7.4 7.4 7.7 7.7Asean 5.1 2.6 5.1 5.1 5.0 5.1 5.4NIEs 1.2 0.5 4.1 3.5 3.8 3.9 3.7

2008 2009 2010 2011 2012 2013 2014China 26.1 30.5 25.0 21.7 23.4 20.7 21.8Hong Kong 0.8 -1.8 9.1 7.5 5.9 4.9 5.2India 4.0 7.2 11.8 12.2 13.2 12.9 12.5Indonesia 11.9 3.3 8.7 9.7 9.0 9.2 9.7Korea -1.9 -0.2 6.3 4.2 4.7 4.3 4.0Malaysia 0.8 -5.5 6.6 5.8 5.7 6.5 6.4Philippines 2.9 -3.5 6.7 4.6 5.9 6.2 5.9Singapore 13.6 -3.3 11.3 8.0 6.4 6.6 6.9Taiwan -11.2 -11.8 14.4 5.7 3.9 3.7 3.9Thailand 1.2 -9.0 8.5 6.5 8.8 8.8 7.8Vietnam 3.8 5.5 6.8 6.8 7.7 7.9 8.0

Asia (ex Japan) 14.6 16.8 17.8 15.5 16.8 15.4 16.1Asean 6.8 -1.6 8.4 7.6 7.7 8.0 8.1NIEs -2.0 -3.5 9.0 5.4 4.8 4.5 4.5

0 3 6 9 12

Taiwan

Thailand

NIEs

Korea

Philippines

Asean

Hong Kong

Indonesia

Singapore

Malaysia

India

Vietnam

Asia (ex Japan)

China

0 8 16 24 32

Korea

Malaysia

Philippines

Vietnam

Asean

Thailand

Indonesia

NIEs

Hong Kong

Singapore

India

Taiwan

Asia (ex Japan)

China

0

2

4

6

8

10

Asia (exJapan)


2008 2009 2010 2011

-10

0

10

20

30

40

Asia (exJapan)


2008 2009 2010 2011



Unemployment, 2010

Note: End-of-year unemployment rate. China end-of-year urbanunemployment. India has no official unemployment statistics.Sources: National statistical institutes.

Notes and sources

Fiscal Balance, % of GDP Fiscal Balance, 2010

Note: Fiscal balance in % of GDP.Sources: National statistical institutes, finance ministries andAsian Development Bank (ADB) for China.

Notes and sources

Unemployment, % of active population

2008 2009 2010 2011 2012 2013 2014China 4.2 4.3 4.3 4.2 4.2 4.1 4.2Hong Kong 4.1 4.9 4.4 4.0 3.9 3.7 3.8India - - - - - - -Indonesia 8.1 7.9 7.7 7.4 7.5 7.3 7.0Korea 3.3 3.5 3.3 3.0 3.1 3.1 2.8Malaysia 3.1 3.4 3.4 3.3 3.3 3.2 3.2Philippines 6.8 7.1 7.7 7.5 7.4 7.7 7.7Singapore 2.4 2.0 2.1 2.1 2.3 2.3 2.2Taiwan 5.0 5.7 5.1 4.6 4.3 4.1 3.5Thailand 1.4 1.5 1.2 1.2 1.2 1.3 1.4Vietnam 4.7 5.0 4.8 4.5 4.7 4.5 4.3


2008 2009 2010 2011 2012 2013 2014China -0.4 -2.2 -2.6 -1.9 -1.4 -1.5 -0.9Hong Kong 0.1 0.8 -0.5 -0.1 0.2 1.4 1.8India -6.0 -6.6 -5.6 -5.1 -4.7 -3.7 -3.3Indonesia 0.0 -1.6 -1.7 -1.3 -1.0 -1.0 -0.9Korea 1.2 -1.7 -0.4 0.3 0.6 1.3 1.5Malaysia -4.8 -7.0 -5.6 -4.8 -4.1 -3.6 -3.4Philippines -0.9 -3.9 -3.7 -3.1 -2.5 -2.4 -2.5Singapore 5.7 -2.0 -1.1 0.5 0.6 0.9 1.5Taiwan -0.9 -4.0 -2.7 -2.2 -2.2 -2.0 -1.9Thailand -1.1 -4.4 -3.6 -3.3 -3.6 -2.1 -2.8Vietnam -2.1 -4.5 -6.1 -4.8 -2.1 -1.8 -2.2

Asia (ex Japan) -1.0 -3.0 -2.9 -2.2 -1.8 -1.6 -1.2Asean -0.4 -3.3 -3.0 -2.3 -1.9 -1.5 -1.6NIEs 1.1 -1.9 -1.0 -0.3 -0.1 0.6 0.8

0 2 4 6 8

Thailand

Singapore

Korea

Malaysia

Asia (ex Japan)

NIEs

China

Hong Kong

Vietnam

Asean

Taiwan

Indonesia

Philippines

-8 -6 -4 -2 0

Vietnam

Malaysia

India

Philippines

Thailand

Asean

Asia (ex Japan)

Taiwan

China

Indonesia

Singapore

NIEs

Hong Kong

Korea

2

4

6

8

10

Asia (exJapan)

China NIEs Korea Asean Indonesia

2008 2009 2010 2011

-8

-6

-4

-2

0

2

Asia (exJapan)


2008 2009 2010 2011



Interest Rate, % Interest Rate, 2010

Note: Nominal end-of-year interest rates in %.China: 12-month lending rate.Hong Kong: 91-day Hong Kong interbank offered rate(HIBOR).India: RBI repurchase rate.Indonesia: Overnight BI rate.Korea: Overnight call rate.Malaysia: Overnight policy rate.Philippines: 91-day Treasury bill rate.Singapore: 3-month Singapore interbank rate (SIBOR).Taiwan: CB discount rate.Thailand: 1-day repurchase rate.Vietnam: Base rate.Sources: National central banks.

Notes and sources

Inflation, annual average variation of consumer prices in % Inflation, 2010

Note: Annual average variation of consumer price index in %.Data for India refer to wholesale price index (WPI).Sources: National statistical institutes and central banks.

Notes and sources

2008 2009 2010 2011 2012 2013 2014China 5.9 -0.7 3.2 3.1 3.0 3.2 3.2Hong Kong 4.3 0.5 2.7 3.0 2.6 3.0 3.1India 8.4 3.8 8.1 5.4 4.9 4.5 4.3Indonesia 9.8 5.0 4.8 5.9 6.0 5.6 5.2Korea 4.7 2.8 2.9 3.1 2.9 2.8 3.2Malaysia 5.4 0.6 2.0 2.6 2.9 3.0 3.0Philippines 9.3 3.2 4.4 4.2 4.4 4.8 4.5Singapore 6.5 0.6 2.7 2.6 2.1 1.9 1.6Taiwan 3.5 -0.9 1.3 1.6 1.6 1.6 1.7Thailand 5.4 -0.9 3.4 3.1 3.0 2.9 2.5Vietnam 23.0 6.9 9.9 8.7 7.3 6.7 6.0


0 3 6 9 12

Taiwan

Malaysia

NIEs

Hong Kong

Singapore

Korea

China

Thailand

Asia (ex Japan)

Asean

Philippines

Indonesia

India

Vietnam

-4

0

4

8

12

Asia (exJapan)


2008 2009 2010 2011

0 3 6 9 12

Hong Kong

Singapore

Taiwan

NIEs

Thailand

Korea

Malaysia

Philippines

Asean

Asia (ex Japan)

China

India

Indonesia

Vietnam

0

2

4

6

8

10

Asia (exJapan)


2008 2009 2010 2011

2008 2009 2010 2011 2012 2013 2014China 5.3 5.3 5.6 6.0 6.7 7.0 7.5Hong Kong 1.0 0.1 0.5 1.2 1.9 2.6 3.0India 5.0 5.0 6.3 7.2 6.6 6.8 7.1Indonesia 9.3 6.5 6.9 7.6 7.7 7.6 7.5Korea 3.3 2.0 2.7 3.4 3.6 3.6 3.4Malaysia 3.3 2.0 2.8 3.2 3.5 3.6 3.8Philippines 6.1 3.9 4.5 5.1 5.0 5.2 4.8Singapore 1.0 0.7 0.7 1.6 2.1 2.5 2.6Taiwan 2.0 1.3 1.6 2.0 1.9 2.1 2.3Thailand 2.8 1.3 2.0 2.6 3.4 3.8 4.0Vietnam 8.5 8.0 9.4 9.5 10.3 9.3 9.2




Current Account Balance, % of GDP Current Account Balance, 2010

Note: Current account balance as % of GDP.Sources: National statistical institutes and central banks.China: State Administration of Foreign Exchange (SAFE).

Notes and sources

Nominal Depreciation vs. USD, in % Depreciation versus USD, 2010

Note: Nominal depreciation of national currencies versusUSD in %. Positive number means currency is losing valueagainst USD. Regional aggregates provided only as indicativeinformation.Sources: National statistical institutes and central banks.China: State Administration of Foreign Exchange (SAFE).

Notes and sources

2008 2009 2010 2011 2012 2013 2014China -6.9 -0.1 -1.4 -3.6 -3.7 -2.7 -2.9Hong Kong -0.7 0.1 0.3 0.2 0.0 0.0 0.1India 21.6 -12.9 -6.2 -3.3 -3.9 -1.6 -0.9Indonesia 15.1 -17.0 -11.2 -2.8 0.4 1.2 -0.3Korea 25.7 -8.2 -5.4 -4.1 -3.5 -1.9 -0.8Malaysia 4.5 -1.2 -4.4 -5.2 -1.2 -1.3 -2.1Philippines 12.8 -2.4 -2.9 -3.3 -0.1 1.9 -0.7Singapore -0.1 -2.6 -2.8 -2.5 -0.1 0.3 -1.2Taiwan 1.3 -2.6 -2.2 -1.8 -1.3 -0.2 -1.6Thailand 3.4 -4.7 -5.0 -3.3 -0.1 0.1 -0.8Vietnam 6.1 8.7 6.6 3.5 -0.9 -2.1 4.5

Asia (ex Japan) 3.6 -3.9 -3.2 -3.3 -3.0 -1.9 -2.0Asean 8.4 -7.5 -6.1 -2.9 -0.1 0.4 -0.5NIEs 14.1 -5.1 -3.7 -2.9 -2.2 -1.1 -0.9

2008 2009 2010 2011 2012 2013 2014China 9.4 6.0 4.7 4.1 4.3 4.1 3.8Hong Kong 13.6 8.7 8.6 9.0 8.0 8.4 7.6India -2.5 -2.4 -2.6 -2.4 -1.6 -1.4 -1.4Indonesia 0.0 2.0 1.1 0.8 0.5 0.3 0.0Korea -0.6 5.1 1.8 1.2 1.0 0.8 0.7Malaysia 17.5 16.7 14.0 12.7 11.6 10.6 9.9Philippines 2.2 5.3 4.2 3.8 2.8 2.0 1.8Singapore 19.2 19.1 17.7 16.2 14.1 13.3 13.5Taiwan 6.6 11.0 8.0 7.2 6.9 7.4 7.4Thailand 0.6 7.7 4.4 3.4 2.0 2.2 2.0Vietnam -9.3 -7.8 -7.8 -6.4 -6.1 -5.2 -4.8


-15 -10 -5 0 5 10

Indonesia

India

Asean

Korea

Thailand

Malaysia

NIEs

Asia (ex Japan)

Philippines

Singapore

Taiwan

China

Hong Kong

Vietnam

-16 -8 0 8 16 24

Vietnam

India

Indonesia

Korea

Asia (ex Japan)

Philippines

Thailand

China

Asean

NIEs

Taiwan

Hong Kong

Malaysia

Singapore

-20

-10

0

10

20

30

Asia (exJapan)


2008 2009 2010 2011

-4

0

4

8

12

Asia (exJapan)


2008 2009 2010 2011



Exports, annual variation in % Exports Growth, 2010

Note: Nominal annual variation in % of merchandise exportsSources: National statistical institutes and central banks.China: Customs Department.

Notes and sources

Imports, annual variation in % Imports Growth, 2010

Note: Nominal annual variation in % of merchandise imports.Sources: National statistical institutes and central banks.China: Customs Department.

Notes and sources

2008 2009 2010 2011 2012 2013 2014China 17.4 -15.9 23.5 14.1 12.2 11.4 10.3Hong Kong 5.6 -11.9 12.9 10.9 5.3 5.9 6.0India 13.7 -7.8 19.9 18.6 9.9 8.3 9.6Indonesia 18.3 -14.4 18.5 12.2 13.4 12.3 9.2Korea 14.2 -13.7 22.3 10.9 9.0 9.4 11.4Malaysia 13.1 -21.1 18.7 11.2 10.7 8.4 8.2Philippines -2.2 -22.3 20.0 8.7 9.3 8.4 3.5Singapore 12.7 -20.2 23.5 11.1 9.8 9.7 11.2Taiwan 3.4 -20.2 18.6 9.9 8.2 5.6 5.6Thailand 16.8 -13.9 20.1 9.1 11.7 12.3 9.0Vietnam 29.1 -9.7 20.5 17.1 11.4 14.0 15.8

Asia (ex Japan) 13.7 -15.7 21.4 12.6 10.4 9.9 9.6Asean 14.4 -17.8 21.2 11.2 10.9 10.6 9.9NIEs 9.4 -16.0 19.7 10.8 8.1 7.9 9.0

2008 2009 2010 2011 2012 2013 2014China 18.5 -11.3 34.3 16.9 10.4 13.1 11.2Hong Kong 6.2 -10.2 16.3 11.3 4.1 4.5 4.8India 21.2 -10.2 24.1 18.4 7.1 7.3 9.2Indonesia 36.9 -27.7 27.0 16.0 15.7 16.6 11.1Korea 21.8 -25.7 33.7 13.1 10.0 10.0 11.2Malaysia 6.5 -21.0 24.7 12.5 15.3 10.7 9.6Philippines 6.2 -24.1 19.1 9.7 11.6 11.8 5.4Singapore 21.3 -23.1 22.8 11.8 10.0 10.0 10.6Taiwan 9.4 -27.0 26.5 11.8 8.4 5.6 6.2Thailand 26.4 -24.9 29.5 11.1 11.7 12.1 8.5Vietnam 28.6 -14.7 20.4 10.3 11.2 14.6 15.0

Asia (ex Japan) 17.5 -17.1 27.3 14.5 9.7 10.6 9.9Asean 20.7 -23.0 24.1 12.1 12.2 12.0 10.2NIEs 14.7 -20.9 24.3 12.0 8.0 7.7 8.5

10 13 16 19 22 25

Hong Kong

Indonesia

Taiwan

Malaysia

NIEs

India

Philippines

Thailand

Vietnam

Asean

Asia (ex Japan)

Korea

Singapore

China

15 20 25 30 35

Hong Kong

Philippines

Vietnam

Singapore

Asean

India

NIEs

Malaysia

Taiwan

Indonesia

Asia (ex Japan)

Thailand

Korea

China

-30

-15

0

15

30

Asia (exJapan)


2008 2009 2010 2011

-50

-25

0

25

50

Asia (exJapan)


2008 2009 2010 2011



International Reserves, months of imports International Reserves, 2010

Note: International reserves as months of imports.Sources: Central banks.

Notes and sources

External Debt, % of GDP External Debt, 2010

Note: External debt as % of GDP.Sources: National statistical institutes, central banks andfinance ministries.

Notes and sources

2008 2009 2010 2011 2012 2013 2014China 20.6 28.7 24.3 22.8 21.8 20.5 19.2Hong Kong 5.6 8.8 7.9 8.1 8.7 8.5 8.7India 9.9 11.9 10.4 9.6 9.7 9.6 8.8Indonesia 5.3 9.4 8.4 7.9 7.3 6.5 6.5Korea 5.7 10.2 8.3 7.8 7.4 7.0 6.6Malaysia 7.5 9.9 8.6 8.2 8.1 7.9 7.6Philippines 7.4 11.1 10.9 11.1 10.9 10.0 9.8Singapore 6.6 9.2 8.5 8.3 8.1 7.6 6.6Taiwan 14.8 24.2 20.7 19.9 19.9 20.3 20.1Thailand 7.6 12.6 10.8 10.6 9.6 8.9 8.3Vietnam 3.6 2.8 2.3 2.5 2.6 2.4 2.2


2008 2009 2010 2011 2012 2013 2014China 8.3 8.0 6.9 6.1 6.0 5.5 5.1Hong Kong 308 319 304 255 212 174 139India 18.5 18.7 16.4 15.3 14.0 13.4 12.4Indonesia 31.9 32.2 25.9 22.8 21.1 19.9 18.3Korea 40.6 48.3 39.9 36.5 34.2 32.5 30.6Malaysia 30.8 35.7 28.4 25.2 24.2 22.1 20.5Philippines 32.3 33.1 31.3 28.4 28.4 26.5 24.4Singapore 216 235 217 217 217 216 209Taiwan 23.6 21.1 22.5 21.8 20.9 20.4 19.9Thailand 24.0 26.6 23.5 21.5 21.2 20.4 19.7Vietnam 31.4 26.7 28.8 28.3 27.0 24.9 24.5


0 8 16 24 32

Vietnam

Hong Kong

Korea

Indonesia

Singapore

Asean

Malaysia

NIEs

India

Thailand

Philippines

Asia (ex Japan)

Taiwan

China

0 10 20 30 40 50

China

India

Taiwan

Thailand

Asia (ex Japan)

Indonesia

Malaysia

Vietnam

Philippines

Korea

0

8

16

24

32

Asia (exJapan)


2008 2009 2010 2011

0

25

50

75

100

125

Asia (exJapan)


2008 2009 2010 2011



Quarterly Data | Economic Growth and Inflation | Q1 2008 - Q4 2010

Gross domestic productannual var. in % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4China 11.3 10.7 9.9 7.5 6.5 8.2 9.5 11.1 11.9 10.3 9.4 8.8Hong Kong 8.6 5.6 2.6 -1.2 -7.7 -3.8 -2.4 2.5 8.0 6.5 4.7 3.3India 8.6 7.8 7.7 5.8 5.8 6.0 8.6 6.5 8.6 8.6 7.9 8.7Indonesia 6.2 6.4 6.4 5.3 4.5 4.1 4.2 5.4 5.7 6.2 6.0 6.0Korea 5.5 4.4 3.3 -3.3 -4.3 -2.2 1.0 6.0 8.1 7.2 4.2 4.3Malaysia 7.6 6.5 4.9 0.1 -6.2 -3.9 -1.2 4.4 10.1 8.9 5.7 4.8Philippines 3.9 3.7 4.6 2.8 0.5 1.2 0.2 2.1 7.8 7.9 5.4 5.0Singapore 7.4 2.7 0.0 -2.5 -8.9 -1.7 1.8 3.8 16.9 18.8 9.4 10.7Taiwan 6.9 5.4 -0.8 -7.1 -9.1 -6.9 -1.0 9.1 13.7 12.5 5.6 2.4Thailand 6.4 5.2 2.9 -4.2 -7.1 -4.9 -2.7 5.9 12.0 9.1 5.3 3.0Vietnam 7.5 6.7 6.5 5.6 3.1 4.5 6.0 6.9 5.8 6.2 7.0 7.0

Asia (ex Japan) 9.2 8.3 7.3 4.2 3.2 4.8 6.6 8.7 10.6 9.5 7.9 7.5Asean 6.4 5.4 4.5 1.4 -1.3 0.3 1.5 4.9 9.1 8.9 6.3 5.9NIEs 6.4 4.6 1.9 -3.8 -6.4 -3.5 0.2 6.1 10.4 9.7 5.2 4.5

2008 2009 2010

Yoy change of quarterlyavg. CPI % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4China 8.0 7.8 5.3 2.5 -0.6 -1.5 -1.3 0.7 2.2 2.9 3.6 3.4Hong Kong 4.6 5.7 4.6 2.3 1.7 -0.1 -0.9 1.3 1.9 2.6 3.4 2.4India 5.8 9.6 12.5 8.6 3.2 0.6 -0.1 5.0 10.2 11.0 9.1 8.0Indonesia 7.6 10.7 13.5 12.6 9.2 5.7 2.8 2.6 3.7 4.4 5.4 5.6Korea 3.0 3.6 4.4 4.7 4.7 4.2 3.3 2.8 2.5 2.4 2.9 3.2Malaysia 2.6 4.9 8.4 5.9 3.7 1.3 -2.3 -0.2 1.3 1.6 2.1 2.3Philippines 5.5 9.7 12.2 9.7 6.9 3.2 0.3 2.9 4.3 4.2 4.5 4.3Singapore 6.6 7.5 6.6 5.4 2.1 -0.5 -0.4 -0.8 0.2 0.9 3.6 3.1Taiwan 3.6 4.2 4.5 1.9 0.0 -0.8 -1.3 -1.2 1.3 1.1 1.3 1.3Thailand 5.1 7.5 7.3 2.2 -0.3 -2.8 -2.2 1.9 3.8 3.3 3.6 3.4Vietnam 11.1 15.5 20.2 23.0 22.4 17.4 11.0 6.9 5.2 5.9 9.1 9.1

Asia (ex Japan) 6.5 7.4 6.8 4.4 1.6 0.1 -0.3 1.6 3.5 4.1 4.4 4.1Asean 6.2 9.0 10.9 9.0 6.4 3.2 1.0 2.0 3.1 3.4 4.5 4.5NIEs 3.7 4.4 4.7 3.8 2.9 1.9 1.2 1.2 1.9 2.0 2.7 2.7

2008 2009 2010

GDP, year-on-year variation in %

-5

0

5

10

15

Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10

Asia (ex Japan) China

India Korea

Consumer Prices, year-on-year variation in %

-5

0

5

10

15

Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10

Asia (ex Japan) China

India Korea

| 13

September 2010FOCUSECONOMICS

FocusEconomics Consensus Forecast Asia

Economic Release Calendar

Date Country Event1 September Indonesia August Consumer Prices

Korea August Consumer Prices

2 September India July Merchandise Trade

Malaysia July Merchandise Trade

Thailand August Consumer Prices

6 September Taiwan August Consumer Prices

Taiwan August Producer Prices

7 September Philippines August Consumer Prices

Taiwan August Merchandise Trade

9 September Malaysia July Industrial Production

10 September India July Industrial Production

Philippines July Merchandise Trade

11 September Indonesia July Industrial Production

13 September China August Consumer Prices

China August Fixed Asset Investment

China August Retail Sales

China August Industrial Production

14 September India August Wholesale Prices

15 September Korea August Merchandise Trade

Korea August Unemployment

Philippines Q2 2010 Unemployment

16 September Hong Kong August Unemployment

17 September Philippines Q2 2010 Balance of Payments

Singapore August Merchandise Trade

21 September Hong Kong August Consumer Prices

22 September Malaysia August Consumer Prices

23 September Singapore August Consumer Prices

Taiwan August Industrial Production

Taiwan August Unemployment

24 September Singapore August Industrial Production

27 September Hong Kong August Merchandise Trade

28 September Philippines July Industrial Production

| 14

China September 2010FOCUSECONOMICS


REAL SECTOR | China surpasses Japan to become world’s second largesteconomyAccording to second quarter data published by the National Bureau of Statisticsof China (NBS) and the numbers published by the Cabinet Office (CO) in Japan,China surpassed Japan as the world’s second largest economy in U.S. dollarsterms. In the second quarter, China’s GDP reached USD 1.34 trillion, whereasJapan’s GDP was USD 1.29 trillion. Quarterly comparisons are fully dependable,as the numbers do not take into account the seasonal variations in eacheconomy.

For the full year, Consensus Forecast panellists expect China to surpass Japanin total output, which will mean that China will officially become the world’ssecond largest economy, right behind the United States. Currently, estimatesfor when China will surpass the U.S. as the world’s largest economy vary greatly,with some analysts seeing China taking the number one spot as early as 2027and others not expecting it to do so until more than a decade later.

For this year, the government maintains an 8.0% economic growth target, butthe private sector expects growth to come in well above this level. Panellistshave cut their projections 0.1 percentage points over the previous month andexpect the economy to expand 10.0%. For next year, panellists expect theeconomy to expand 8.9% which is unchanged over last month’s Consensus.

ChinaOutlook deteriorates


• According to data recently published in China and Japan, the Chineseeconomy overtook Japan’s to become the world’s second largesteconomy in the second quarter. Going forward, China is expected tocontinue to gain ground on the world’s largest economy, the UnitedStates, but it will be decades before it can seize the No 1 spot.

• Consensus Forecast panellists have cut their forecasts for GDPgrowth by 0.1 percentage points over last month and expect theeconomy to grow 10.0% this year. For 2011, the panel sees economicgrowth slowing to 8.9%.

• Inflation rose from 2.9% in June to 3.3% in July. Panellists expectinflation to average 3.2% this year, which is down 0.1 percentagepoints over last month’s projection. In 2011, the panel expects inflationto moderate a notch to 3.1%.

China


2000-04 2005-09 2010-14Population (million): 1,294 1,326 1,382GDP (USD bn): 1,510 3,562 7,817GDP per capita (USD): 1,165 2,681 5,645GDP growth (%): 9.2 10.7 9.2Fiscal Balance (% of GDP): -2.3 -0.8 -1.7Inflation (%): 1.1 2.6 3.1Current Account (% of GDP): 2.4 8.6 4.2External Debt (% of GDP): 12.0 10.4 5.9

0

2,000

4,000

6,000

8,000

1990 1994 1998 2002 2006 2010

China Japan

US

D B

n

Gross Domestic Product | nominal value

Note: Nominal value of GDP in current USD bn.Source: National Bureau of Statistics of China (NBS), the Cabinet Office ofJapan (CO) and FocusEconomics calculations.

| 15



REAL SECTOR | Government announces plant closuresIn July, industrial production expanded 13.4% over the same month last year.The reading came in below the previous month’s 13.7% expansion but was inline with market expectations.

One of the primary drivers behind the monthly slowdown was automobilemanufacturing, which increased 9.7% year-on-year, slightly down from 9.9% inJune. Automobile manufacturing has been spurred by a tax incentive on smallcar purchases, which are being partially rolled back throughout 2010.

Despite the July slowdown, annual average growth in industrial productionincreased for the eleventh consecutive month, rising from 16.5% in June to16.7%.

On 8 August, the Ministry of Industry and Information Technology ordered 2,087plants to close outdated facilities by the end of September. The move wasaimed at “eliminating backward production capacity” as well as improving theenvironmental efficiency of the economy, according to the government. Thefirms targeted by the policy are mostly in high-polluting, resource-intensiveindustries, such as steel, coal, glass and paper production. The governmentdid not order the complete closure of all these plants, but only specificcomponents with “backward production capacity”, such as outdated blastfurnaces and coke ovens.

Consensus Forecast participants expect industrial output growth to slow to15.3% for the full year 2010, which is unchanged over last month’s estimate.For 2010, the panel expects industrial production to moderate further to 13.6%.

REAL SECTOR | Retail sales come up short

In July, nominal retail sales increased 17.9% over the same month last year.The figure came in below the 18.3% increase registered in June and undershotmarket expectations, which had seen retail sales accelerating to a 18.5%increase.

The slowdown in retail was, in part, the result of weaker automobile sales growth,which fell from 28.3% year-on-year growth in June to 27.6% in July. Car saleshave been a key component of the strength of the retail sector during the lastyear, as government incentives helped spur car purchases.

Despite the slowdown observed in the June reading, annual average retailsales continued to rise, improving from 17.2% in June to 17.4%, which is thehighest level since July 2009.

Consensus Forecast panellists expect retail sales to grow 19.2% this year,which is unchanged over last month’s forecast. For 2010, the panel anticipatesretail sales to slow to 17.1%.

REAL SECTOR | Investment continues to slowIn the first seven months of the year, nominal urban fixed-asset investmentincreased 24.9% over the same period last year. The reading was down fromthe 25.5% figure tallied in the first half of the year and undershot marketexpectations, which had seen investment adding 25.3%.

29.9

33.635.1

31.6

24.3

20.5

26.6 26.6 26.325.4 25.4 24.9

22.3

20.0

25.0

30.0

35.0

40.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

%

Year-on-year

Annual Average

Nominal Urban Fixed Investment | variation in %

Note: Year-on-year and annual average variation of nominal urban fixed in-vestment in %. Owing to seasonal factors related to the Lunar New Year,January and February data are reported together.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.

15.2 15.4 15.516.2

15.8

17.5

15.2

22.1

18.018.5 18.7

18.317.9

14.0

16.0

18.0

20.0

22.0

24.0


%

Year-on-year Annual Average

Nominal Retail Sales | variation in %

Note: Year-on-year and annual average variation of retail sales in %. Janu-ary and February data are affected by to seasonal factors related to theLunar New Year.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.

Industrial Production | variation in %

Note: Year-on-year and annual average var. of industrial production in %.Owing to seasonal factors related to the Lunar New Year, January and Feb-ruary data are reported together.Source: National Bureau of Statistics of China (NBS) and FocusEconomicscalculations.

10.812.3

13.9

16.1

19.218.5

20.7 20.7

18.1 17.816.5

13.7 13.4

5.0

10.0

15.0

20.0

25.0


%


| 16



Based on the seven-month growth rate published by the National StatisticalOffice (NBS), urban fixed-asset investment grew 22.3% year-on-year in July,which was down from the previous month’s 24.9% reading, and representedthe slowest rate of expansion so far this year.

Consensus Forecast participants expect urban fixed-asset investment growthto expand 25.0% for the full year 2008, which is unchanged from last month’sestimate. For 2011, the panel expects investment to moderate to 21.7%.

OUTLOOK | PMI continues to fall in JulyThe July Purchasing Managers’ Index (PMI) from the National Bureau ofStatistics (NBS) and the China Federation of Logistics and Purchasing (CFPL)fell by 0.9 percentage points to 51.2%, which was in line with market forecasts.Despite the moderation in July, the index has now tallied 17 consecutive monthsabove 50% threshold after plummeting far below that level in November 2008.A reading above 50% indicates that the manufacturing sector is expanding,while a reading below 50% implies a contraction.

The weakening was broad-based, as all but one of the 11 componentscomposing the index fell over the previous month. That said, the category thatexperienced the most marked decrease was production, which may augur fora continued deceleration in industrial output, as the government tries to coolthe economy.

MONETARY SECTOR | Inflation rises to highest level in nearly two yearsIn July, consumer prices rose by 3.3% annually. The figure came in above the2.9% year-on-year increase registered in the previous month, but was in linewith market expectations. Furthermore, the reading represented the highestlevel observed since November 2008. The main drivers behind the increasewere higher prices for food as well as for housing. Higher food prices werepartially caused by flooding that disrupted food supplies. As a result of the Julyfigure, annual average inflation jumped from the 1.1% posted in June to 1.6%.

Producer prices, in contrast, continue to moderate. In June, the producer priceindex (PPI) added a less-than-expected 4.8% annually, which came in wellbelow the previous month’s 6.4% reading. A moderation in producer pricesmay feed into lower consumer prices going forward.

Although the People’s Bank of China (PBOC) has kept interest rates on hold at5.31% since December 2008, monetary authorities continue to tighten the reinsby raising the reserve requirement ratio (RRR). The PBOC raised the RRRthree times this year, but has left ratio unchanged since May.

Going forward, higher wages could feed through to higher prices, according toSheng Laiyun, spokesman for the National Bureau of Statistics (NBS). Despitethe warning, Sheng stated that the country would be able to meet this year’s3.0% inflation target. Consensus Forecast participants expect inflation toaverage 3.2% in 2010, which is 0.1 percentage points down from last month’sestimate. For 2011, the panel expects inflation to moderate a notch to 3.1%.

EXTERNAL SECTOR | Export growth moderates slightly in JulyIn July, exports added 38.1% over the same month last year to reach USD145.5 billion. The figure came in below the 43.9% expansion in June, butovershot market expectations, which had seen exports growing 35.0%.

-1.8-1.2

-0.8-0.5

0.6

1.91.5

2.72.4

2.83.1 2.9

3.3

-4.0

-2.0

0.0

2.0

4.0


%

Year-on-year

Annual Average

Inflation | Consumer Price Index

Note: Annual and annual average variation of consumer price index in %.Source: Source: National Bureau of Statistics of China (NBS) .

Purchasing Managers’ Index

Note: Purchasing Managers’ Index from the National Bureau of Statistics ofChina (NBS) and the China Federation of Logistics and Purchasing (CFLP).A reading above 50 shows an increase while a value below 50 shows adecrease.Source: National Bureau of Statistics of China (NBS) and the China Federa-tion of Logistics and Purchasing (CFLP).

35

40

45

50

55

60

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10

%

| 17



Meanwhile, imports grew 22.7% year-on-year (June: +34.1% yoy) to reach USD116.8 billion. As a result, the trade surplus rose from USD 20.0 billion in July toUSD 28.0 billion in June, the largest surplus tallied since January 2009. As aresult, the three month average in exports reached USD 138.2 billion, which isabove the USD 136.0 billion pre-crisis peak reached in September 2008.Consensus Forecast panellists estimate year exports to grow 23.5% this yearand 14.1% in 2011.

Merchandise Trade | USD bn

Note: Monthly exports, imports and trade balance in USD billion.Source: General Administration of Customs of the People’s Republic of Chinaand FocusEconomics calculations.

-50

0

50

100

150

Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10

Trade Balance Exports Imports

| 18



Economic Indicators | 2005 - 2014

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 1,322 1,314 1,323 1,331 1,340 1,365 1,374 1,382 1,391 1,400GDP per capita (USD) 1,685 2,032 2,564 3,406 3,720 4,180 4,818 5,559 6,364 7,302GDP (USD bn) 2,228 2,671 3,391 4,535 4,984 5,705 6,619 7,685 8,855 10,224Economic Growth (GDP, annual var. in %) 10.4 11.6 13.0 9.6 9.1 10.0 8.9 9.0 9.0 9.1 Private Consumption (ann. var. in %) 12.0 9.8 10.7 9.1 9.4 9.4 9.3 9.1 9.4 9.4 Nom. Fixed Urban Invest. (ann. var. in %) 26.0 23.9 25.8 26.1 30.5 25.0 21.7 23.4 20.7 21.8Industrial Production (ann. var. in %) 16.3 16.4 18.0 12.9 11.1 15.3 13.6 13.1 12.6 12.3Retail Sales (annual var. in %) 12.9 13.7 16.8 21.7 15.5 19.2 17.1 18.2 18.2 19.0Unemployment (% of active population) 4.2 4.1 4.0 4.2 4.3 4.3 4.2 4.2 4.1 4.2Fiscal Balance (% of GDP) -1.2 -0.7 0.7 -0.4 -2.2 -2.6 -1.9 -1.4 -1.5 -0.9Monetary and Financial Sector Money (annual variation of M1 in %) 11.8 17.5 21.4 8.6 32.4 - - - - -Inflation (CPI, annual variation in %) 1.6 2.8 6.5 1.2 1.9 - - - - -Inflation (CPI, annual average in %) 1.8 1.5 4.8 5.9 -0.7 3.2 3.1 3.0 3.2 3.2Inflation (PPI, annual variation in %) 3.2 3.0 5.4 -1.1 1.7 - - - - -12-Month Lending Rate (%, eop) 5.58 6.12 7.47 5.31 5.31 5.61 5.95 6.67 7.05 7.53Stock Market (SSE comp. var. in %) -8.3 130 96.7 -65.4 80.0 - - - - -Exchange Rate (CNY per USD, eop) 8.07 7.82 7.30 6.83 6.83 6.64 6.36 6.18 6.03 5.84Exchange Rate (CNY per USD, average) 8.18 7.94 7.59 6.93 6.83 6.73 6.50 6.27 6.11 5.94External Sector Current Account Balance (% of GDP) 7.2 9.4 11.0 9.4 6.0 4.7 4.1 4.3 4.1 3.8Current Account Balance (USD bn) 161 250 372 426 297 267 268 329 363 393Trade Balance (USD bn) 102 177 262 297 197 161 147 192 183 201Exports (USD bn) 763 969 1,218 1,430 1,202 1,492 1,702 1,909 2,126 2,345Imports (USD bn) 660 792 956 1,133 1,005 1,330 1,555 1,717 1,942 2,160Exports (annual variation in %) 28.4 27.1 25.7 17.4 -15.9 23.5 14.1 12.2 11.4 10.3Imports (annual variation in %) 17.7 19.9 20.7 18.5 -11.3 34.3 16.9 10.4 13.1 11.2International Reserves (USD bn) 819 1,066 1,528 1,946 2,399 2,690 2,956 3,116 3,311 3,450International Reserves (months of imports) 14.9 16.2 19.2 20.6 28.7 24.3 22.8 21.8 20.5 19.2External Debt (USD bn) 281 323 374 375 398 396 407 458 491 518External Debt (% of GDP) 12.6 12.1 11.0 8.3 8.0 6.9 6.1 6.0 5.5 5.1 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 9.9 7.5 6.5 8.2 9.5 11.1 11.9 10.3 9.4 8.8Industrial Production (ann. var. in %) 13.0 6.4 5.3 9.0 12.3 17.9 19.6 16.0 14.6 12.7Inflation (CPI, annual average in %) 5.3 2.5 -0.6 -1.5 -1.3 0.7 2.2 2.9 3.6 3.412-Month Lending Rate (%, eop) 7.21 5.31 5.31 5.31 5.31 5.31 5.31 5.31 5.52 5.61Exchange Rate (CNY per USD, eop) 6.82 6.83 6.84 6.83 6.83 6.83 6.83 6.79 6.69 6.64 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Nom. Fixed Urban Invest. (ann. var. in %) 24.3 20.5 26.6 26.6 26.3 25.4 25.4 24.9 22.3 -Industrial Production (ann. var. in %) 19.2 18.5 20.7 20.7 18.1 17.8 16.5 13.7 13.4 -Retail Sales (annual var. in %) 15.8 17.5 15.2 22.1 18.0 18.5 18.7 18.3 17.9 -PMI (50.0%-point threshold) 55.2 56.6 55.8 52.0 55.1 55.7 53.9 52.1 51.2 -Inflation (CPI, annual variation in %) 0.6 1.9 1.5 2.7 2.4 2.8 3.1 2.9 3.3 -Exchange Rate (CNY per USD, eop) 6.83 6.83 6.83 6.83 6.83 6.83 6.83 6.79 6.78 6.80

| 19



-6

0

6

12

18

1995 2000 2005 2010

ChinaAsia (ex Japan)World

-5

0

5

10

15

20

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

5

10

15

1995 2000 2005 2010

ChinaAsia (ex Japan)

-10

0

10

20

30

40

1995 2000 2005 2010


6

8

10

12

14

Apr Jul Oct Jan Apr Jul

MaximumConsensusMinimum

6

8

10

12



8

9

10

11


2010

2011

15

20

25

30


2010

2011

Real Sector | Gross Domestic Product

3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts

5 | Consumption | % variation 6 | Investment | % variation

Real GDP growth in % 2 | Real GDP | Q1 07-Q4 11 | % variation

7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts

General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the National Bureau of Statistics of China (NBS),Asian Development Bank (ADB) and FocusEconomics estimates. See be-low for details. Forecasts based on FocusEconomics Consensus Fore-cast.

1 GDP, annual variation in %. Source: NBS.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: NBS.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: FocusEconomicsestimate.6 Nominal urban fixed investment, annual variation in %. Source: NBS.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Nominal urban fixed investment, change in 2010 and 2011 forecastsduring the last 18 months.9 Industrial production, annual variation in %. Source: NBS.10 Urban unemployment, % of active population. Source: NBS.11 Balance of central government, % of GDP. Source: ADB.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central government, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources

1 | Real GDP | 1995 - 2014 | % variation

Individual Forecasts 2010 2011Allianz 10.0 9.0ANZ 10.2 9.6Bank of China (Hong Kong) 9.5 9.0Capital Economics 10.0 8.0Citigroup Global Markets Inc. 9.5 8.8Core Pacific-Yamaichi 9.5 -Credit Suisse 9.7 8.8Daiwa Capital Markets 9.8 8.6DBS Bank 11.0 10.0Deutsche Bank 9.6 8.6Goldman Sachs 10.1 10.0Hang Seng Bank 9.5 9.0HSBC 10.0 8.9ING 10.0 9.0JPMorgan 10.8 9.4Lloyds TSB Corp. Mrkts. 9.5 8.7Morgan Stanley 10.0 9.5RBC Capital Markets 9.7 8.8Standard Chartered Bank 10.0 8.0UBS 10.0 8.7United Overseas Bank 10.0 8.3Wing Hang Bank 12.0 -SummaryMinimum 9.5 8.0Maximum 12.0 10.0Median 10.0 8.9Consensus 10.0 8.9History30 days ago 10.1 8.960 days ago 10.2 9.090 days ago 10.0 9.1Additional Forecasts IMF (July 2010) 9.8 9.6ADB (July 2010) 9.6 9.1

| 20



0

6

12

18

24

1995 2000 2005 2010


2

3

4

5

1995 2000 2005 2010


-8

-4

0

4

1995 2000 2005 2010


10

12

14

16


20102011

4.1

4.3

4.5

4.7


20102011

-4

-3

-2

-1


20102011

Real Sector | Additional forecasts

14 | Fiscal Balance | evolution of fcst

11 | Fiscal Balance | % of GDP

12 | Industry | evolution of forecasts

9 | Industry | % variation

13 | Unemployment | evolution of fcst

10 | Unemployment | % of active pop.

Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011Allianz - - - - - - - - -2.9 -2.5ANZ - - - - - - - - - -Bank of China (Hong Kong) 9.8 9.4 25.0 21.5 15.6 16.0 4.3 4.0 -3.0 -1.5Capital Economics - - - - - - - - -3.0 -2.0Citigroup Global Markets Inc. 9.0 9.5 - - 14.5 12.7 4.1 4.0 -2.7 -2.4Core Pacific-Yamaichi - - - - - - 4.0 - - -Credit Suisse 9.5 9.0 - - - - 4.2 4.2 -2.7 -2.0Daiwa Capital Markets - - - - 12.3 12.5 - - -1.0 1.5DBS Bank - - 25.0 22.0 - - - - -2.8 -2.5Deutsche Bank 9.0 9.0 21.0 20.0 13.5 12.0 - - -2.5 -2.0Goldman Sachs - - - - - - - - -1.9 -Hang Seng Bank - - - - 14.0 12.0 - - - -HSBC 9.5 9.2 26.0 20.0 15.5 13.3 4.6 4.5 -2.7 -2.6ING - - 28.0 25.0 17.8 17.0 4.2 4.2 -2.8 -2.4JPMorgan - - - - 15.9 13.6 4.4 4.2 -2.1 -1.8Lloyds TSB Corp. Mrkts. 9.2 9.7 - - - - 4.3 4.2 - -Morgan Stanley - - - - - - - - -3.0 -3.0RBC Capital Markets - - - - - - - - -2.3 -1.1Standard Chartered Bank - - - - - - - - - -UBS 9.7 9.0 - - - - - - -3.5 -2.0United Overseas Bank - - - - - - - - -2.7 -1.9Wing Hang Bank - - 25.0 - 19.0 - - - - -SummaryMinimum 9.0 9.0 21.0 20.0 12.3 12.0 4.0 4.0 -3.5 -3.0Maximum 9.8 9.7 28.0 25.0 19.0 17.0 4.6 4.5 -1.0 1.5Median 9.5 9.2 25.0 21.5 15.5 13.0 4.3 4.2 -2.7 -2.0Consensus 9.4 9.3 25.0 21.7 15.3 13.6 4.3 4.2 -2.6 -1.9History30 days ago 9.4 9.3 25.0 21.7 15.3 13.6 4.3 4.2 -2.6 -1.860 days ago 9.5 9.2 24.7 21.9 15.3 13.9 4.3 4.2 -2.6 -1.890 days ago 9.5 9.2 24.5 21.8 15.3 13.9 4.2 4.2 -2.6 -1.7

Consumption% variation

Investment% variation

Fiscal Balance% of GDP

Industry% variation

Unemployment% of active pop.

| 21



0

2

4

6



0

2

4

6



-5

0

5

10

15

20

1995 2000 2005 2010


-4

0

4

8

12

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

10

20

30

40

1995 1998 2001 2004 2007-5

0

5

10

2000 2003 2006 2009

1,000

1,500

2,000

2,500

3,000

3,500

Jan Jul Jan Jul Jan Jul1,000

2,000

3,000

4,000

5,000

6,000

Jan Jul Jan Jul Jan Jul

Monetary Sector | Inflation, Money, Producer Prices and Stock Market

19 | Producer Prices | % var.

15 | Inflation | 1995 - 2014 | in % Inflation | annual avg. var. of consumer price index in %

17 | Inflation 2010 | evolution of fcst

21 | MSCI Broad China Index 22 | Stock Market | SSE

20 | Money | % variation


16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the National Bureau of Statistics of China(NBS) and People’s Bank of China (PBOC). See below for details. Fore-casts based on FocusEconomics Consensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: NBS.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: NBS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 2000-2009.Source: NBS.20 Money, annual variation of M1 in %. 1995-2009. Source: PBOC.21 Daily MSCI Broad China index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, Shanghai Stock Exchange Composite Index(SSE). Jan. 2008 until end of previous month. Source: Shanghai StockExchange.

Notes and sources

Individual Forecasts 2010 2011Allianz 3.2 3.0ANZ - -Bank of China (Hong Kong) 4.0 2.8Capital Economics 2.8 2.0Citigroup Global Markets Inc. 3.0 3.6Core Pacific-Yamaichi 2.6 -Credit Suisse 3.7 5.2Daiwa Capital Markets 3.5 2.5DBS Bank 4.0 3.0Deutsche Bank 3.0 2.5Goldman Sachs 2.4 1.3Hang Seng Bank 3.0 2.5HSBC 2.9 2.5ING 2.5 2.5JPMorgan 3.2 2.5Lloyds TSB Corp. Mrkts. 3.8 4.4Morgan Stanley 2.8 2.5RBC Capital Markets - -Standard Chartered Bank 2.5 4.0UBS 3.0 4.0United Overseas Bank 3.9 4.7Wing Hang Bank 4.0 -SummaryMinimum 2.4 1.3Maximum 4.0 5.2Median 3.0 2.7Consensus 3.2 3.1History30 days ago 3.3 3.160 days ago 3.3 3.390 days ago 3.4 3.4Additional Forecasts IMF (Apr. 2010) 3.1 2.4ADB (Mar. 2010) 3.6 3.2

| 22



4

6

8

10

12

14

1995 2000 2005 20105

6

7

8

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

3

4

5

6

7



4

5

6

7

8



5

6

7

8

9

1995 2000 2005 20106.0

6.5

7.0

7.5

8.0

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

5.5

6.0

6.5

7.0



5.5

6.0

6.5

7.0



Monetary Sector | Interest Rate and Exchange Rate

29 | CNY/USD 2010 | evolution of fcst

27 | Exchange Rate | CNY per USD 28 | Exchange Rate | CNY per USD

23 | Interest Rate | 1995 - 2014 | in % 24 | Interest Rate | Q1 07-Q4 11 | in %

25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst

30 | CNY/USD 2011 | evolution of forecasts

Policy Interest Rate and Exchange Rate

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the National Bureau of Statis-tics of China (NBS), the People’s Bank of China (PBOC), State Adminis-tration of Foreign Exchange (SAFE) and General Administration of Cus-toms of the People’s Republic of China (Customs). See below for details.Forecasts based on FocusEconomics Consensus Forecast.

23 Interest rate, 12-month Lending Rate in % (eop). Source: PBOC.24 Quarterly interest rate, 12-month Lending Rate in % (eop). Source:PBOC.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate,CNY per USD (eop). Source: SAFE.28 Quarterly exchange rate, CNY per USD (eop). Source: PBOC.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: SAFE.32 Trade balance, imports and exports, in USD bn. Source: Customs.33 International reserves, months of imports. Source: PBOC.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Customs.36 External debt as % of GDP. Source: SAFE.

Notes and sources

Individual Forecasts 2010 2011 2010 2011Allianz - - 6.60 6.30ANZ 6.12 - 6.62 6.21Bank of China (Hong Kong) - - 6.40 6.20Capital Economics 5.31 6.12 6.70 6.50Citigroup Global Markets Inc. - - 6.70 6.50Core Pacific-Yamaichi 5.85 - 6.62 -Credit Suisse - - 6.70 6.47Daiwa Capital Markets 5.58 5.58 6.45 6.20DBS Bank 5.85 - 6.69 -Deutsche Bank - - 6.70 6.47Goldman Sachs - - 6.70 6.49Hang Seng Bank 5.30 5.60 6.65 6.50HSBC 5.31 5.31 6.67 -ING - - 6.75 6.60JPMorgan 5.85 6.12 6.60 6.20Lloyds TSB Corp. Mrkts. 5.60 6.90 6.61 6.38Morgan Stanley - - - -RBC Capital Markets 5.58 6.12 6.60 6.20Standard Chartered Bank 5.31 5.85 6.63 6.35UBS - - 6.55 6.20United Overseas Bank 5.85 - 6.77 -Wing Hang Bank 5.40 - 6.80 -SummaryMinimum 5.30 5.31 6.40 6.20Maximum 6.12 6.90 6.80 6.60Median 5.58 5.99 6.65 6.37Consensus 5.61 5.95 6.64 6.36History30 days ago 5.66 6.01 6.64 6.3660 days ago 5.74 6.28 6.62 6.2990 days ago 5.86 6.35 6.59 6.27

Interest Rate Exchange Rate% CNY per USD

| 23



-5

0

5

10

15

1995 2000 2005 2010


0

600

1,200

1,800

2,400

1995 2000 2005 2010

Trade Balance ExportsImports

-30

-15

0

15

30

45

1995 2000 2005 2010


5

10

15

20

25

30

1995 2000 2005 2010


0

15

30

45

60

1995 2000 2005 2010


250

300

350

400

450


20102011

External Sector | Current Account, Trade and International Reserves

34 | Current Account | evol. of fcst

33 | Int. Reserves | months of imports

36 | External Debt | % of GDP 35 | Exports | annual variation in %

32 | Trade Balance | USD billion 31 | Current Account | % of GDP

Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011Allianz 225 243 150 170 1,500 1,650 1,350 1,480 2,750 3,100ANZ - - - - - - - - - -Bank of China (Hong Kong) 267 301 200 208 1,346 1,556 1,146 1,348 2,685 2,861Capital Economics 320 380 220 - 1,680 - 1,460 - - -Citigroup Global Markets Inc. 290 304 171 170 1,529 1,732 1,358 1,562 2,600 2,850Core Pacific-Yamaichi - - - - - - - - - -Credit Suisse 288 327 195 221 1,446 1,696 1,251 1,475 2,803 3,247Daiwa Capital Markets 140 176 93 77 1,370 1,507 1,277 1,430 2,636 2,860DBS Bank 250 210 104 35 1,563 1,844 1,459 1,809 2,749 2,899Deutsche Bank 227 181 167 101 1,562 1,734 1,395 1,633 2,550 2,850Goldman Sachs 309 - - - - - - - - -Hang Seng Bank - - 158 121 1,526 1,831 1,368 1,710 - -HSBC 254 251 175 183 1,502 1,802 1,327 1,619 2,550 2,700ING 228 231 101 93 1,467 1,746 1,366 1,653 2,700 2,900JPMorgan 270 263 217 211 1,500 1,734 1,283 1,523 2,766 3,146Lloyds TSB Corp. Mrkts. - - - - - - - - - -Morgan Stanley 343 302 - - - - - - - -RBC Capital Markets 338 325 - - - - - - - -Standard Chartered Bank 331 301 - - - - - - - -UBS 269 280 140 170 1,418 1,588 1,278 1,418 2,800 3,100United Overseas Bank 200 220 - - - - - - - -Wing Hang Bank - - 169 - 1,476 - 1,307 - - -SummaryMinimum 176 176 93 35 1,346 1,507 1,146 1,348 2,550 2,700Maximum 380 380 220 221 1,680 1,844 1,460 1,809 2,803 3,247Median 272 272 168 170 1,500 1,733 1,339 1,542 2,700 2,899Consensus 268 268 161 147 1,492 1,702 1,330 1,555 2,690 2,956History30 days ago 264 268 159 144 1,490 1,699 1,331 1,555 2,690 2,95660 days ago 265 270 163 152 1,479 1,688 1,316 1,536 2,691 2,96190 days ago 276 280 183 176 1,418 1,634 1,236 1,458 2,690 2,971

Current Account Trade BalanceUSD bn USD bn USD bn USD bn

Exports Imports Int. ReservesUSD bn

| 24



India37%

Other10%

Indonesia7%

Malaysia1%

Korea 2%

China43%

India15%

Other14%

Malaysia2%Korea

10%

China53%

Indonesia6%

Other Asia15%

Other25% Hong

Kong & Macao14%

USA18%

Japan8%

EU-2720%

Other45%

Other Asia22%

Hong Kong & Macao

3%

USA7%

Japan12%

EU-2711%

Manufactures

93%

Agricultural products

3%

Fuels and mining

products4%

Manufactures 65%

Fuel and mining

products 28%

Agricultural products

8%

Long-term Foreign Currency Ratings

Weaknesses Strengths

Political Data

Population | %-share in Asia GDP | %-share in Asia

ImportsExports

Exports Imports

Trade Structure

Primary markets | share in %

Primary products | share in %

Economic Structure Economic Infrastructure

General Data China in the Region

Fact Sheet

• Lack of comprehensive infra-structure

• Nascent legal system

• Financial system vulnerability

• Huge domestic market

• Large workforce

• Competitive labour costs

Official name: People's Republic of ChinaCapital: Beijing (13.3 m)Other cities: Shanghai (19.2 m)

Chengdu (11.0 m)Chongqing (5.2 m)

Area (km2): 9,596,960Population (million, 2009 est.): 1,338Pop. density (per km2, 2009 est.): 139Pop. growth rate (%, 2009 est.): 0.7Life expectancy (years, 2009 est.): 73.5Illiteracy rate (%, 2000): 9.1Language: Mandarin Chinese and otherMeasures: Metric & local systemsTime: 8 hours ahead of GMT

Prime Minister: Hu JintaoLast elections: 15 March 2008Next elections: March 2013Chairman of the PBOC: Zhou Xiaochuan

Telecommunication (2009) Telephones - main lines (per 100 inhabitants): 23.3Telephones - mobile cellular (per 100 inhabit.): 55.5Internet Users (per 100 inhabitants): 28.5Broadband Subscribers (per 100 inhabitants): 7.7

Energy (2007) Primary Energy Production (trillion Btu): 70,796Primary Energy Consumption (trillion Btu): 77,808Electricity Generation (billion kW-h): 3,041Electricity Consumption (billion kW-h): 2,835Oil Supply (thousand bpd): 3,912Oil Consumption (thousand bpd): 7,582CO2 Emmissions (million metric tons): 6,247

Transportation (2009) Airports: 482Railways (km): 77,834Roadways (km): 3,583,715Waterways (km): 110,000Chief Ports: Shanghai, Canton, Ningbo

Agency Rating OutlookMoody’s: A1 PositiveS&P: A+ StableFitch Ratings: A+ Stable

Services38%

Agriculture

16%

Industry46%

1999

Industry48%

Agriculture

11%

Services41%

2009

| 25

Hong Kong September 2010FOCUSECONOMICS


REAL SECTOR | Hong Kong grows more than expected in Q2In the second quarter, gross domestic product (GDP) expanded 6.5% overthe same quarter last year. The reading fell short of the 8.0% growth recordedin the first quarter (previously reported: +8.2% year-on-year) but was slightlyahead of market expectations of 6.3%.

The slowdown over the previous quarter was driven by weaker growth indomestic demand, as the contribution from the external sector improved.Private consumption decelerated from a 7.1% expansion in the first quarterto 4.6% increase in the second, while government consumption slowed downfrom 3.4% to 2.7%. Gross fixed investment, in contrast, accelerated from a8.2% annual expansion in the first quarter to 15.2% growth in the secondquarter. Nevertheless, domestic demand receded from a 16.2% expansionin the first quarter to 11.7%.

Exports of goods and services continued to fare strongly in the second quarter,amid the sustained global economic recovery. Exports grew 19.5%, followingon a 20.7% expansion in the first quarter, while imports rose 22.4% (Q1:+25.8% yoy). As a result, the net contribution from the external sector to overallgrowth improved from a 6.8 percentage-point detraction in the first quarter toa 4.5 percentage-point detraction in the second.

A quarter-on-quarter comparison corroborates the robust expansionsuggested by the annual figures, as the economy increased 1.4% over thefirst quarter in seasonally adjusted terms. The government recently revisedup its forecast for full-year growth to between 5.0% and 6.0% (previouslyexpected: 4.0% to 5.0%). That said, for the time being, the government remainscautious as the outlook for exports remains somewhat uncertain, and expectsgrowth to moderate slightly in the second half of the year.

Hong KongOutlook improves


• In the second quarter, gross domestic product expanded 6.5% annuallyon the back of spurring demand and service exports. Although thereare concerns that the debt crisis in Europe will slow demand, inboundtourism is expected to buttress consumption.

• Consensus Forecast panellists anticipate the economy will expand5.6% this year, which is up 0.2 percentage points from last month’sforecast. For 2011, the panel expects the economy to expand 4.5%.

• Inflation dropped sharply to 1.3% in July from June’s 2.8%. However,government expects inflation to increase again in the coming monthsdue to strong domestic demand. Panellists expect inflation to average2.7% this year, which is down 0.1 percentage points from last month’sprojection. In 2011, the panel expects inflation to rise to 3.0%.

Hong Kong


2000-04 2005-09 2010-14Population (million): 6.7 6.9 7.2GDP (USD bn): 165 200 264GDP per capita (USD): 24,430 28,791 36,829GDP growth (%): 4.4 4.0 4.6Fiscal Balance (% of GDP): -2.4 2.7 0.6Inflation (%): -2.3 2.0 2.9Current Account (% of GDP): 7.5 11.6 8.3External Debt (% of GDP): 188 300 217

2.7

4.6

6.5

15.2

19.5

22.4

0.0 6.0 12.0 18.0 24.0 30.0

GovernmentConsumption

PrivateConsumption

GDP

Investment

Exports

Imports

%

GDP by Type Q2 2010 | variation in %

Note: Year-on-year changes in %.Source: Census and Statistics Department Hong Kong and FocusEconomics cal-culations.

| 26



0.1

-1.6

0.7

2.1

0.10.4

0.1

1.0

-0.4

0.4

-0.2

0.1

-1.4-2.0

-1.0

0.0

1.0

2.0

3.0


%

-2.0

0.0

2.0

4.0

%

Monthly (left scale)

Annual (right scale)

-4.1 -5.2

-0.9

1.2

8.310.0 11.4

3.2

31.5

17.3

12.4

16.3

12.1

-10.0

0.0

10.0

20.0

30.0

40.0

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

%

YoY Annual average

Consensus Forecast panellists are also upbeat about this year’s prospectsand anticipate the economy will expand 5.6%, which is up 0.2 percentagepoints from last month’s forecast. For 2011, the panel expects the economyto grow 4.5%.

REAL SECTOR | Retail sales moderate in JuneIn June, retail sales rose 12.1% over the same moth last year in volumeterms. The figure was well below the 16.3% increase recorded in May andalso undershot market expectations that had seen retail sales expanding14.7%. Despite the slowdown, June’s reading represented the fifthconsecutive month of retail sales expanding at a double-digit pace, reflectinga strong rebound in local consumption and inbound tourism.

The monthly expansion was broad-based. That said, the main drivers behindthe strong increase were sales of motor vehicles and parts which increasedby 35.1% year-on-year, as well as jewellery, watches and valuable gifts, whichrose 18.3%. However, seasonally adjusted figures do not corroborate thestrong growth suggested by the annual figures, as retail sales fell 2.6% inthe three-month period ending in June, compared to the preceding periodending in March. The trend, however, continues to point up, as annual averagegrowth in retail sales increased from 8.0% in May to 9.4% in June.

A government spokesman stated that looking ahead, recovery in localconsumer demand will be subject to uncertainties due to the evolvingEuropean debt crisis. Nevertheless, the expected strength in inbound tourismshall aid retail businesses.

MONETARY SECTOR | Inflation moderates unexpectedly in JulyIn July, consumer prices declined 1.4% over the previous month, whichcontrasted the 0.1% rise recorded in June. The drop in prices was the resultof lower housing prices due to the government’s provision of two-monthpayment for public housing tenants which started in July. Moreover, lowerprices for electricity, gas and water as well as for clothing more than offsethigher prices for food and transport.

In line with the monthly price fall, annual inflation dropped from 2.8% in Juneto 1.3%, the lowest level in six months. The figure undershot marketexpectations, which had seen prices rising 2.9%. Finally, annual averageinflation rose from 1.2% in June to 1.5%.

A government spokesman stated that consumer prices should still be subjectto moderate upward pressures. That said, despite the expected economicexpansion, the sustained growth in productivity in the economy should helpto alleviate part of the domestic cost pressures. The government sees inflationaveraging 2.3% this year.

Consensus Forecast panellists anticipate inflation to average 2.7% this year,which is down 0.1 percentage points from last month’s forecast. For 2011,the panel expects annual average inflation to rise further to 3.0%.


Note: Annual and monthly variation of consumer price index in %.Source: Census and Statistics Department Hong Kong.

Retail Sales | variation in %

Note: Year-on-year changes and annual average variationin %.Source: Census and Statistics Department Hong Kong and FocusEconomics cal-culations.

| 27




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 6.8 6.9 7.0 7.0 7.0 7.1 7.1 7.2 7.2 7.2GDP per capita (USD) 25,999 27,488 29,783 30,694 29,991 32,266 34,440 36,669 39,089 41,680GDP (USD bn) 178 190 207 215 211 228 245 262 281 302Economic Growth (GDP, ann. var. in %) 7.1 7.0 6.4 2.2 -2.8 5.6 4.5 4.4 4.2 4.2 Private Consumption (annual var. in %) 3.0 5.9 8.5 2.4 -0.4 5.1 4.3 4.2 4.2 4.0 Fixed Investment (annual variation in %) 4.1 7.1 3.4 0.8 -1.8 9.1 7.5 5.9 4.9 5.2Industrial Production (annual variation in %) 2.5 2.2 -1.4 -6.7 -8.3 1.4 1.9 1.0 1.1 1.1Unemployment (eop, % of active population) 5.2 4.4 3.4 4.1 4.9 4.4 4.0 3.9 3.7 3.8Fiscal Balance (% of GDP) 1.0 4.0 7.7 0.1 0.8 -0.5 -0.1 0.2 1.4 1.8Monetary and Financial Sector Money (annual variation of M1 money in %) -10.3 13.1 25.4 4.7 39.6 - - - - -Inflation (CPI, annual variation in %) 1.4 2.3 3.8 2.1 1.3 - - - - -Inflation (CPI, annual average in %) 1.0 2.0 2.0 4.3 0.5 2.7 3.0 2.6 3.0 3.1Inflation (PPI, annual variation in %) 0.7 2.2 3.0 5.6 -1.7 - - - - -91-day HIBOR (%, eop) 4.23 3.90 3.45 0.95 0.14 0.48 1.21 1.94 2.64 2.97Stock Market (variation of HSI in %) 4.5 34.2 39.3 -48.3 52.0 - - - - -Exchange Rate (HKD per USD, eop) 7.75 7.77 7.80 7.75 7.76 7.79 7.79 7.79 7.79 7.79Exchange Rate (HKD per USD, average) 7.78 7.77 7.80 7.79 7.75 7.78 7.79 7.79 7.79 7.79External Sector Current Account Balance (% of GDP) 11.4 12.1 12.3 13.6 8.7 8.6 9.0 8.0 8.4 7.6Current Account Balance (USD bn) 20.2 22.9 25.5 29.3 18.3 19.7 22.0 21.1 23.5 22.8Trade Balance (USD bn) -7.6 -14.0 -19.7 -23.1 -26.9 -42.2 -48.1 -44.3 -43.2 -53.7Exports (USD bn) 290 318 346 365 322 363 403 424 450 477Imports (USD bn) 297 332 366 388 349 406 451 470 491 515Exports (annual variation in %) 11.2 9.7 8.9 5.6 -11.9 12.9 10.9 5.3 5.9 6.0Imports (annual variation in %) 10.2 11.6 10.2 6.2 -10.2 16.3 11.3 4.1 4.5 4.8International Reserves (USD bn) 124 133 153 183 256 268 304 340 349 373International Reserves (months of imports) 5.0 4.8 5.0 5.6 8.8 7.9 8.1 8.7 8.5 8.7 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, ann. var. in %) 2.6 -1.2 -7.7 -3.8 -2.4 2.5 8.0 6.5 4.7 3.3Inflation (CPI, annual average in %) 4.6 2.3 1.7 -0.1 -0.9 1.3 1.9 2.6 3.4 2.491-day HIBOR (%, eop) 3.66 0.95 0.90 0.36 0.22 0.14 0.15 0.57 0.47 0.48 Monthly Data Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10Retail Sales (annual variation in %) 8.3 10.0 11.4 3.2 31.5 17.3 12.4 16.3 12.1 -Unemployment (eop, % of active population) 5.2 5.1 4.9 4.9 4.6 4.4 4.4 4.6 4.6 4.3Inflation (CPI, mom variation in %) 2.1 0.1 0.4 0.1 1.0 -0.4 0.4 -0.2 0.1 -1.4Inflation (CPI, annual variation in %) 2.2 0.5 1.3 1.0 2.8 2.0 2.4 2.5 2.8 1.3

| 28



-8

-4

0

4

8

12

1995 2000 2005 2010

Hong KongAsia (ex Japan)World

-10

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-8

-4

0

4

8

12

1995 2000 2005 2010

Hong KongAsia (ex Japan)

-20

-10

0

10

20

1995 2000 2005 2010


0

2

4

6

8

Apr Jul Oct Jan Apr


0

2

4

6

8



0

2

4

6


2010

2011

2

4

6

8

10


2010

2011






General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Census and Statistics Department Hong Kong(C&SD) and the Treasury of Hong Kong (Treasury). See below for details.Forecasts based on FocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: C&SD.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: C&SD.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: C&SD.6 Gross fixed investment, annual variation in %. Source: C&SD.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: C&SD.10 Unemployment, % of active population. Source: C&SD.11 Consolidated fiscal balance, % of GDP. Source: Treasury.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Consolidated fiscal balance, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources

1 | Real GDP | 1995-2014 | % variation

Individual Forecasts 2010 2011ANZ 5.3 4.3Bank of China (Hong Kong) 5.0 4.5Capital Economics 6.5 4.0Citigroup Global Markets Inc. 5.5 4.7Core Pacific-Yamaichi 4.0 -Credit Suisse 5.3 4.3Daiwa Capital Markets 3.5 2.5DBS Bank 7.0 4.5Deutsche Bank 6.5 5.5Goldman Sachs 6.0 5.3Hang Seng Bank 5.0 4.5HSBC 5.4 4.7ING 6.2 5.8JPMorgan 6.8 4.2Morgan Stanley 6.0 4.0Standard Chartered Bank 5.4 5.0UBS 6.0 4.3United Overseas Bank 5.5 4.5Wing Hang Bank 6.0 -SummaryMinimum 3.5 2.5Maximum 7.0 5.8Median 5.5 4.5Consensus 5.6 4.5History30 days ago 5.4 4.660 days ago 5.4 4.690 days ago 5.2 4.6Additional ForecastsGovernment (Aug. 2010) 5.0-6.0 -IMF(July 2010) 6.0 4.4ADB (July 2010) 5.4 4.3

| 29



-6

-3

0

3


20102011

3

4

5

6

7


20102011

-4

-2

0

2


20102011

-20

-10

0

10

20

1995 2000 2005 2010


2

4

6

8

1995 2000 2005 2010


-10

-5

0

5

10

1995 2000 2005 2010









Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - -Bank of China (Hong Kong) 5.5 5.3 10.5 9.8 4.0 3.5 - -Capital Economics 4.0 4.5 8.0 4.0 - - -1.5 0.0Citigroup Global Markets Inc. 4.5 3.7 9.3 4.5 4.5 4.1 0.5 1.0Core Pacific-Yamaichi - - - - 4.3 - - -Credit Suisse 4.8 4.2 8.1 6.9 4.0 3.8 -1.4 -0.7Daiwa Capital Markets 4.6 3.7 12.7 12.0 - - -2.1 -1.6DBS Bank 4.1 3.5 7.0 6.0 4.2 3.7 - -Deutsche Bank 7.8 5.0 10.2 13.5 4.6 4.0 0.1 -0.2Goldman Sachs - - - - - - - -Hang Seng Bank 5.0 4.0 10.8 7.8 4.4 4.0 - -HSBC 4.9 3.5 6.6 7.4 4.9 4.5 -0.8 -0.5ING 4.7 5.5 7.6 7.1 4.9 4.5 2.1 3.0JPMorgan - - - - - - -1.5 -0.7Morgan Stanley 4.8 4.0 9.7 5.7 - - - -Standard Chartered Bank - - - - - - - -UBS 5.6 4.6 7.5 5.0 - - -1.4 -1.5United Overseas Bank - - - - 4.2 3.8 0.8 0.5Wing Hang Bank 6.5 - 9.9 - - - - -SummaryMinimum 4.0 3.5 6.6 4.0 4.0 3.5 -2.1 -1.6Maximum 7.8 5.5 12.7 13.5 4.9 4.5 2.1 3.0Median 4.8 4.1 9.3 7.0 4.4 4.0 -1.1 -0.4Consensus 5.1 4.3 9.1 7.5 4.4 4.0 -0.5 -0.1History30 days ago 5.2 4.4 8.4 6.8 4.4 4.0 -0.5 -0.160 days ago 5.2 4.2 8.7 7.2 4.3 3.9 -0.6 -0.190 days ago 5.1 4.0 8.9 7.5 4.4 3.9 -0.5 -0.1



Fiscal Balance% of GDP% of active pop.

Unemployment

| 30



-5

0

5

10

15

1995 2000 2005 2010


-3

0

3

6

9

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-2

0

2

4

6



0

2

4

6

8



-25

0

25

50

1995 1998 2001 2004 2007-4

-2

0

2

4

6

1995 1998 2001 2004 2007

3,000

5,000

7,000

9,000

11,000


15,000

20,000

25,000

30,000




15 | Inflation | 1995 - 2014 | in %


21 | MSCI Price Index 22 | Stock Market | HSI



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Census and Statistics DepartmentHong Kong (C&SD) and the Hong Kong Monetary Authority (HKMA). Seebelow for details. Forecasts based on FocusEconomics Consensus Fore-cast.

15 Inflation, annual variation in consumer price index (CPI) in % (eop).Source: C&SD.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in % (eop). Source: C&SD.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 1995-2009. Source:C&SD.20 Money, annual variation of M1 in %.1995-2009 Source: HKMA.21 Daily MSCI Price index in USD. Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, Hang Seng Index (HSI). Jan. 2008 until end ofprevious month. Source: Hang Seng Bank.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Bank of China (Hong Kong) 3.0 2.8Capital Economics 2.5 3.0Citigroup Global Markets Inc. 2.7 2.4Core Pacific-Yamaichi 3.0 -Credit Suisse 3.1 5.1Daiwa Capital Markets 3.0 2.6DBS Bank 3.0 3.0Deutsche Bank 2.2 3.0Goldman Sachs 3.3 3.5Hang Seng Bank 2.2 3.7HSBC 2.4 3.4ING 2.5 2.1JPMorgan 2.7 2.1Morgan Stanley 2.8 2.5Standard Chartered Bank 2.0 3.5UBS 2.0 3.0United Overseas Bank 2.7 3.0Wing Hang Bank 4.0 -SummaryMinimum 2.0 2.1Maximum 4.0 5.1Median 2.7 3.0Consensus 2.7 3.0History30 days ago 2.8 2.960 days ago 2.7 3.090 days ago 2.6 3.0Additional ForecastsGovernment (Aug. 2010) 2.3 -IMF (Apr. 2010) 2.0 1.7ADB (Mar. 2010) 2.2 2.8

Inflation | annual avg. var. of consumer price index in %

| 31



0

2

4

6

8

10

1995 2000 2005 20100

2

4

6

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

0

1

2

3

4



0

1

2

3

4

5



7.70

7.75

7.80

7.85



7.65

7.70

7.75

7.80

7.85



7.70

7.75

7.80

7.85

1995 2000 2005 20107.70

7.75

7.80

7.85

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


29 | HKD/USD 2010 | evolution of fcst

27 | Exchange Rate | HKD per USD 28 | Exchange Rate | HKD per USD



30 | HKD/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Census and StatisticsDepartment Hong Kong (C&SD) and the Hong Kong Monetary Authority(HKMA). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.

23 Interest rate, 91-day HIBOR in % (eop). Source: HKMA.24 Quarterly interest rate, 91-day HIBOR in % (eop). Source: HKMA25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, HKD per USD (eop). Source: HKMA.28 Quarterly exchange rate, HKD per USD (eop). Source: HKMA.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: HKMA.32 Trade balance, imports and exports, in USD bn. 1995-2010. Source:C&SD.33 International reserves, months of imports. Source: C&SD.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: C&SD.36 International reserves in USD bn., evolution of 2010 and 2011forecast during the last 18 months.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ - - 7.75 7.80Bank of China (Hong Kong) - - 7.80 7.80Capital Economics - - 7.80 7.80Citigroup Global Markets Inc. 0.60 - 7.75 7.75Core Pacific-Yamaichi - - 7.80 -Credit Suisse 0.50 1.80 7.80 7.80Daiwa Capital Markets - - 7.78 7.80DBS Bank 0.65 - 7.75 -Deutsche Bank 0.50 - 7.80 7.80Goldman Sachs 0.50 0.50 7.80 7.80Hang Seng Bank - - 7.80 7.80HSBC 0.30 1.40 7.80 7.80ING 0.70 1.70 7.79 7.76JPMorgan - - 7.80 7.80Morgan Stanley 0.45 1.30 7.80 7.80Standard Chartered Bank 0.30 0.30 7.78 7.76UBS 0.30 1.50 7.80 7.80United Overseas Bank 0.50 - 7.80 -Wing Hang Bank - - 7.80 -SummaryMinimum 0.30 0.30 7.75 7.75Maximum 0.70 1.80 7.80 7.80Median 0.50 1.40 7.80 7.80Consensus 0.48 1.21 7.79 7.79History30 days ago 0.48 1.50 7.79 7.7960 days ago 0.66 1.74 7.79 7.7990 days ago 0.83 2.08 7.79 7.79

Interest Rate Exchange Rate% HKD per USD

| 32



-10

-5

0

5

10

15

1995 2000 2005 2010


-200

0

200

400

600

1995 2000 2005 2010


0

5

10

15

20

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


10

20

30

40


20102011




36 | Int. Reserves | evol. of fcst 35 | Exports | annual variation in %


Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Bank of China (Hong Kong) - - -32.3 -30.3 341 385 374 415 - -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 18.8 21.9 -34.1 -23.3 367 391 401 415 280 310Core Pacific-Yamaichi - - - - - - - - - -Credit Suisse 30.1 30.6 -27.8 -32.2 375 423 402 456 304 353Daiwa Capital Markets 14.3 10.1 -39.5 -46.2 360 381 399 427 291 326DBS Bank 22.0 26.0 -67.0 -104.0 376 436 443 540 285 330Deutsche Bank 7.8 13.8 -43.8 -43.9 384 423 428 466 237 221Goldman Sachs - - - - - - - - - -Hang Seng Bank - - -42.7 -47.7 358 386 400 434 - -HSBC 16.7 18.0 -30.1 -33.6 355 389 385 423 247 230ING 26.0 28.0 -32.0 -37.0 368 413 400 450 310 335JPMorgan 28.7 29.7 -37.0 -51.1 372 425 409 476 296 331Morgan Stanley 9.2 7.6 - - - - - - - -Standard Chartered Bank 21.5 24.6 - - - - - - - -UBS 25.7 32.1 -64.1 -80.2 364 383 428 463 162 -United Overseas Bank 15.5 21.3 - - - - - - - -Wing Hang Bank - - -56.1 - 340 - 397 - - -SummaryMinimum 7.8 7.6 -67.0 -104.0 340 381 374 415 162 221Maximum 30.1 32.1 -27.8 -23.3 384 436 443 540 310 353Median 20.2 23.2 -38.2 -43.9 366 391 401 450 285 328Consensus 19.7 22.0 -42.2 -48.1 363 403 406 451 268 304History30 days ago 20.4 22.8 -41.7 -47.5 362 402 404 449 278 30260 days ago 22.3 24.0 -39.0 -44.3 360 400 399 444 266 30390 days ago 22.1 24.0 -33.7 -34.7 356 396 390 430 268 304



150

200

250

300

350


20102011

| 33



Other11%

Hong Kong0.2%

China43%

Indonesia7%

Korea 2%

India37%

Other13%

Korea10%

Indonesia6%

China54%

India15%

Hong Kong2%

5.6 5.0

34.5 37.5

9.2 7.6

18.9 17.5

31.8 32.4

0%

25%

50%

75%

100%Commerce

Services

Industry

Finance and RealEstate

Other

2004 2009

0%

25%

50%

75%

100%

2003 2005 2007 2009Private Consumption Government ConsumptionInvestment Net exports

Other Asia10%

Other11%

China52%

USA11%

Japan4%

EU-2712%

Other Asia19%

Other12%

China47%

USA5%

Japan10%

EU-277%

Raw materials

36%

Capital Goods33%

Consumer

Goods30%

Other1%

Other manufactures

57%

Raw materials

36%

Capital Goods31%

Consumer Goods26%

Foodstuffs4%Fuels

3%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure

GDP by Expenditure | share in %GDP by Sector | share in %

Economic Infrastructure

General Data Hong Kong in the Region

Fact Sheet

• Economic policy constrainedby exchange rate system

• Interference from Beijingincreases political uncertainty

• Model free trade policy setting

• Low tax environment

• Highly skilled labour force

Official name: Hong Kong SpecialAdministrative Region

Capital: Hong KongOther cities: Hong Kong Island (1.3 m)

Kowloon (2.0 m)New Territories (3.7 m)

Area (km2): 1104.0Population (million, 2009): 7.0Population density (per km2, 2009): 6361.4Population growth rate (%, 2009 est 0.5Life expectancy (years, 2009 est.): 81.9Illiteracy rate (%, 2002): 6.5Language: Cantonese, EnglishMeasures: Metric system and

Chinese standard weightsTime: 8 hours ahead of GMT

Chief Executive: Donald T. Yam-kuenLast elections: March 2007Next elections: March 2012Monetary Authority Chief Executive: Joseph Yam

Telecommunication (2009) Telephones - main lines (per 100 inhabitants): 59.7Telephones - mobile cellular (per 100 inhabit.): 174Internet Users (per 100 inhabitants): 61.2Broadband Subscribers (per 100 inhabitants): 29.3

Energy (2007) Primary Energy Consumption (trillion Btu): 1,129Electricity Generation (billion kW-h): 36.6Electricity Consumption (billion kW-h): 38.5Oil Consumption (thousand bpd): 325CO2 Emmissions (million metric tons): 82.9

Transportation (2009) Airports: 2Roadways (km): 2,049Chief Ports: Hong Kong

Agency Rating OutlookMoody’s: Aa2 PositiveS&P: AA+ StableFitch Ratings: AA Stable

| 34

India September 2010FOCUSECONOMICS


REAL SECTOR | Industrial production returns to single-digit growthIn June, industrial production expanded 7.1% over the same month last year,according to the so-called quick estimate for the index of industrial production.The reading was well below the 11.3% expansion recorded in May (previouslyreported: +11.5% year-on-year) and market expectations, which had industrialoutput rising 8.4%.

The figure marked, in fact, the slowest pace in 13 months, as the favourablebase effect that has partly fuelled annual growth rates in previous months isfading away (industrial output increased a solid 8.3% in June 2009).

The slowdown over the previous month was broad-based. The manufacturingsector, which accounts for over three quarters of total industrial production,expanded 7.3% in June, well below the 12.0% increase registered in May.Mining added 9.5% year-on-year (May: +10.1% yoy) and, finally, electricityproduction increased 3.5% (May: +6.4% yoy). On a use-based classification,the monthly slowdown was driven by slower growth in capital goods (May:+34.2% yoy; June: +9.7% yoy) as well as in basic goods.

Based on the preliminary monthly figures, industrial production rose 11.5% inthe April-June period, the first quarter of the fiscal year 2010/11, which wasbelow the 15.0% expansion observed in the January-March period. Moreover,as a result of the slower growth in June, annual average growth in industrialproduction ended the upward trend initiated a year ago, inching down from12.4% in May to 12.3%.

Consensus Forecast panellists expect industrial production to expand 9.3% inthe current fiscal year, which is unchanged from last month’s forecast. For theFY 2011/12, the panel expects industrial production to expand 8.8%.

IndiaOutlook improves


• Growth in the industrial sector moderated to 7.1% in June, the slow-est pace in 13 months, as the favourable base effect that had boostedgrowth in the previous months is fading away.

• Consensus Forecast panellists anticipate the economy to grow 8.3%this fiscal year, which is up 0.1 percentage points over last month’sforecast. For 2011/12, the panel sees economic growth at 8.4%.

• Wholesale price inflation is hovering around 10.0%, which pressuredthe Central Bank to continue tightening monetary policy. ConsensusForecast panellists expect wholesale price inflation to average 8.1%this fiscal year, which is up 0.3 percentage points from last month’sforecast. For 2011/12, the panel sees inflation moderating to 5.4%.

India


2000-04 2005-09 2010-14Population (million): 1,040 1,137 1,236GDP (USD bn): 543 1,079 2,259GDP per capita (USD): 520 945 1,820GDP growth (%): 6.0 8.5 8.4Fiscal Balance (% of GDP): -5.3 -4.6 -4.5Inflation (WPI, %): 5.2 5.4 5.5Current Account (% of GDP): 0.7 -1.7 -1.9External Debt (% of GDP): 20.4 18.6 14.3


Note: Year-on-year and annual average variation of industrial productionindex in %.Source: Ministry of Statistics and Programme Implementation (MOSPI) andFocusEconomics calculations.

8.37.2

10.69.3

10.2

12.0

17.716.3

14.7 14.5

16.5

11.3

7.1

0.0

5.0

10.0

15.0

20.0


%

Year-on-Year

Annual Average

| 35



Finance Minister Pranab Mukherjee recently stated that an economic expan-sion of 8.5% in the current fiscal year, which will end in March 2011, would besatisfactory. The government aims at reaching a sustained growth rate of 10%by 2014. In the same vein, the Reserve Bank of India anticipates GDP willexpand 8.5% this current fiscal year.

Consensus Forecast panellists anticipate GDP to grow 8.3% this fiscal year,which is up 0.1 percentage points from last month’s forecast. For the financialyear 2011/12, the panel sees economic growth reaching 8.4%.

MONETARY SECTOR | Inflation moderates in JulyIn June, the consumer price index for industrial workers (CPI IW) added 1.16%over the previous month, which was broadly unchanged from 1.18% increaserecorded in May. Despite the monthly rise, annual consumer price inflationinched down from 13.9% in May to 13.7%.

The more recent and comprehensive wholesale price index seems to corrobo-rate the notion of moderating inflation. In July, wholesale prices increased 1.04%over the previous month, which contrasted the 0.23% price drop recorded inJune. Despite the monthly rise, annual wholesale inflation fell from 10.6% inJune to 10.0%, undershooting market expectations, which had anticipatedwholesale inflation would drop to only 10.4%. The figure marks, in fact, thelowest inflation rate in six months. Nonetheless, the inflation trend continues topick up. Annual average wholesale price inflation increased for the eighth con-secutive month, rising nearly a full percentage point from 6.3% in June to 7.2%% in July.

Inflation continues to hover close to double digits mainly fuelled by high pricesfor food (July: +11.4% year-on-year) as well as for fuels (+14.3% yoy). How-ever, food inflation appears to be starting to moderate, which helps to accountfor the stabilisation of the wholesale price index.

The Central Bank expects wholesale price inflation to moderate to 6.0% by theend of the current fiscal year, which will end in March 2011 (recently revisedfrom the previous 5.5% estimate).

Consensus Forecast panellists expect wholesale inflation to average 8.1% thiscurrent fiscal year, which is up 0.3 percentage points over last month. For thefinancial year 2011/12, the panel expects average wholesale inflation to mod-erate to 5.4%.

MONETARY SECTOR | Central Bank raises interest rates againAt its most recent meeting on 27 July, the Reserve Bank of India (RBI) decidedto lift the repurchase rate by 25 basis points to 5.75%, in a decision that was inline with market expectations. The RBI also raised the reverse repurchase rateby 50 basis points, from 4.00% to 4.50%. The move represented the fourthinterest rate hike in as many months.

Monetary authorities argued that controlling inflation has now become moreimportant than stimulating economic growth, with wholesale prices hoveringnear double-digit territory for six months, as a result of surging food and fuelprices. The Bank added that the recovery in the domestic economy remainsfirmly in place and, in fact, is intensifying, even with a marginal contributionfrom the important agricultural sector, which highlights the resilience of theIndian economy.

Inflation | Wholesale Price Index

Note: Monthly and annual variation of wholesale price index in %.Source: Reserve Bank of India and FocusEconomics calculations.

1.57

0.880.75

-0.04

1.94

0.44

0.89

0.00

1.16

1.62

1.13

-0.23

1.04

-0.5

0.0

0.5

1.0

1.5

2.0


%

-4.0

0.0

4.0

8.0

12.0

%

Month-on-Month (left scale) Year-on-Year (right scale)

| 36



The RBI also announced that it would change the periodicity of its monetarypolicy meetings, in an attempt to adapt to a rapidly evolving macroeconomicscenario as well as to avoid a large gap between policy reviews. The Bank willnow hold policy meetings every six weeks, instead of the previous three-monthperiod. The next policy meeting is scheduled for 16 September, and analystsare currently divided regarding a further monetary tightening move, as recentdata from the industrial sector suggest that economic growth is cooling, whileinflation has fallen to a six-month low in July.

EXTERNAL SECTOR | Exports remain strongIn June, exports rose 30.4% over the same month last year to reach USD 17.7billion. The figure was down from the 35.1% expansion recorded in May. Thatsaid, despite the slowdown, the monthly figure marked the sixth consecutivemonth of double-digit growth rates in exports.

On a quarterly basis, exports expanded a strong 33.8% year-on-year in theApril-June period – the first quarter of the fiscal year 2010/11 – virtually un-changed from the 33.4% increase recorded in the previous quarter. Further-more, exports continue to creep towards pre-crisis levels, with the 3-monthsum of exports at USD 50.8 billion in June, still below the USD 56.9 billionpeak reached in July 2008 but well above the USD 37.3 billion trough in April2009.

Meanwhile, imports increased 23.0% year-on-year (May: +38.5% yoy) to USD28.3 billion. The monthly figure was led by oil imports, which increased 26.5%over the same month last year. As a result of the monthly figures, the tradedeficit narrowed from USD 11.3 billion in May to USD 10.6 billion in June.

During the last twelve months exports have amounted to USD 183.6 billion.The government is targeting exports to reach USD 200 billion this current fis-cal year, which will end on March 2011. Consensus Forecast panellists antici-pate exports will expand 19.9% this fiscal year and 18.6% in 2011/12.


Note: Monthly exports, imports and trade balance in USD billion.Source: Ministry of Commerce and Industry.

-20

-10

0

10

20

30

40

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10


| 37



Economic Indicators | 2005/06 - 2014/15

Annual Data 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15Real Sector Population (million) 1,099 1,118 1,137 1,156 1,175 1,195 1,215 1,235 1,256 1,277Economic Growth (GDP, annual var. in %) 9.5 9.7 9.2 6.7 7.4 8.3 8.4 8.5 8.4 8.3 Private Consumption (annual variation in % 8.5 8.3 9.7 6.8 4.3 7.0 7.2 7.1 7.3 7.2 Fixed Investment (annual variation in %) 15.3 14.3 15.2 4.0 7.2 11.8 12.2 13.2 12.9 12.5 Agriculture (annual variation in %) 5.2 3.7 4.7 1.6 0.2 - - - - - Industry (annual variation in %) 9.3 12.7 9.5 3.9 9.3 - - - - - Services (annual variation in %) 11.1 10.2 10.5 9.8 8.5 - - - - -Industrial Production (annual variation in %) 8.2 11.5 8.5 2.7 10.5 9.3 8.8 8.4 8.4 8.6Fiscal Balance (% of GDP) -4.3 -3.6 -2.6 -6.0 -6.6 -5.6 -5.1 -4.7 -3.7 -3.3Monetary and Financial Sector Money (annual variation of M1 in %) 23.0 19.2 18.2 0.8 28.1 - - - - -Inflation (CPI, annual variation in %) 4.9 6.7 7.9 8.0 14.9 - - - - -Inflation (CPI, annual average in %) 4.4 6.7 6.2 9.1 12.3 - - - - -Inflation (WPI, annual average in %) 4.4 5.4 4.7 8.4 3.8 8.1 5.4 4.9 4.5 4.3RBI Repurchase Rate (%, eop) 6.50 7.75 7.75 5.00 5.00 6.33 7.16 6.65 6.77 7.10Stock Market (var. of BSE SENSEX in %) 42.3 46.7 47.1 -52.4 81.0 - - - - -Exchange Rate (INR per USD, eop) 44.6 43.6 40.0 51.0 45.1 44.2 42.3 41.0 41.0 40.2Exchange Rate (INR per USD, average) 44.3 45.3 40.3 46.0 47.4 44.7 43.3 41.6 41.0 40.6External Sector Current Account (% of GDP) -1.3 -1.1 -1.4 -2.5 -2.4 -2.6 -2.4 -1.6 -1.4 -1.4Current Account (USD bn) -9.9 -9.6 -17.0 -29.8 -32.2 -42.1 -45.5 -35.8 -36.7 -41.5Trade Balance (USD bn) -41 -54 -87 -118 -102 -133 -157 -162 -169 -192Exports (USD bn) 103 125 163 185 171 205 243 267 289 317Imports (USD bn) 143 179 251 304 273 338 401 429 460 503Exports (annual variation in %) 30.6 22.2 29.9 13.7 -7.8 19.9 18.6 9.9 8.3 9.6Imports (annual variation in %) 37.1 24.9 39.9 21.2 -10.2 24.1 18.4 7.1 7.3 9.2International Reserves (USD bn) 152 199 310 252 279 294 321 345 368 371International Reserves (months of imports) 12.7 13.3 14.8 9.9 11.9 10.4 9.6 9.7 9.6 8.8External Debt (USD bn) 138 172 224 225 245 266 291 314 347 363External Debt (% of GDP) 18.0 19.8 18.3 18.5 18.7 16.4 15.3 14.0 13.4 12.4 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 7.7 5.8 5.8 6.0 8.6 6.5 8.6 8.6 7.9 8.7Inflation (WPI, annual average in %) 12.5 8.6 3.2 0.6 -0.1 5.0 10.2 11.0 9.1 8.0RBI Repurchase Rate (%, eop) 9.00 6.50 5.00 4.75 4.75 4.75 5.00 5.25 5.70 6.05Exchange Rate (INR per USD, eop) 46.9 48.5 51.0 47.9 48.0 46.7 45.1 46.6 45.4 44.9 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Industrial Production (annual variation in %) 12.0 17.7 16.3 14.7 14.5 16.5 11.3 7.1 - -Inflation (WPI, mom variation in %) 1.94 0.44 0.89 0.00 1.16 1.62 1.13 -0.23 1.04 -Inflation (WPI, annual variation in %) 5.6 8.1 9.4 10.1 11.0 11.2 11.1 10.6 10.0 -Exchange Rate (INR per USD, eop) 46.6 46.7 46.4 46.2 45.1 44.4 46.5 46.6 46.5 47.1

| 38



-6

0

6

12

1995 2000 2005 2010

IndiaAsia (ex Japan)World

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

4

8

12

1995 2000 2005 2010


-10

0

10

20

30

1995 2000 2005 2010


4

6

8

10



6

7

8

9

10



6.0

6.5

7.0

7.5

8.0


2010

2011

6

8

10

12

14


2010

2011






General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Ministry of Statistics and ProgrammeImplementation (MOSPI) and the Ministry of Finance. See below for details.Forecasts based on FocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: MOSPI.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: MOSPI.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: MOSPI.6 Gross fixed investment, annual variation in %. Source: MOSPI.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: MOSPI.10 Industrial production, evolution of 2010 forecasts during the last 18months.11 Industrial production, evolution of 2011 forecasts during the last 18months.12 Central government balance, % of GDP. Source: Ministry of Finance.13 Central government balance, evolution of 2010 forecasts during thelast 18 months.14 Central government balance, evolution of 2011 forecasts during thelast 18 months.

Notes and sources


Individual Forecasts 2010/11 2011/12Allianz 7.5 7.5AnandRathi 6.5 9.0BofA Merrill Lynch 8.1 8.0Capital Economics 9.2 9.5Citigroup Global Markets Inc. 8.4 8.6Credit Suisse 8.3 8.3Cris il 8.0 -Daiwa Capital Markets 8.7 8.8DBS Bank 8.8 8.5Deutsche Bank 8.1 8.4Goldman Sachs 8.2 8.7HSBC 8.8 8.3ING Financial Markets 8.2 9.0JPMorgan 8.3 8.5Kotak Securities 8.1 7.8Morgan Stanley 8.5 8.4RBC Capital Markets 8.1 8.0Standard Chartered Bank 8.1 8.5State Bank of India 8.5 -UBS 9.0 8.0SummaryMinimum 6.5 7.5Maximum 9.2 9.5Median 8.3 8.5Consensus 8.3 8.4History30 days ago 8.2 8.560 days ago 8.2 8.590 days ago 8.2 8.4Additional ForecastsReserve Bank of India (July 2010) 8.5 -IMF (July 2010) 9.4 8.4ADB (Mar. 2010) 8.2 8.7

| 39



-8

-6

-4

-2



-8

-6

-4

-2



-8

-4

0

4

1995 2000 2005 2010


2

4

6

8

10

12



4

6

8

10

12



0

4

8

12

16

1995 2000 2005 2010



14 | Fiscal Balance 2011 | evol. of fcst

11 | Industry 2011 | evol. of forecasts



13 | Fiscal Balance 2010 | evol. of fcst

10 | Industry 2010 | evol. of forecasts

Individual Forecasts 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12Allianz - - - - - - -5.5 -4.3AnandRathi 6.3 6.5 12.0 16.0 6.1 7.2 -5.6 -4.3BofA Merrill Lynch - - - - 8.5 8.8 - -Capital Economics 8.0 7.0 12.0 10.0 - - - -Citigroup Global Markets Inc. 6.5 7.5 14.0 15.5 9.4 9.4 -5.4 -4.8Credit Suisse 5.4 6.2 8.5 8.8 9.9 8.5 -5.1 -5.5Crisil - - 12.5 - 8.6 - -5.0 -Daiwa Capital Markets 8.9 8.6 9.7 10.1 9.7 10.4 -5.0 -4.8DBS Bank - - - - 9.3 9.0 - -Deutsche Bank - - 14.9 11.5 - - -5.8 -5.6Goldman Sachs - - - - - - - -HSBC 7.0 6.3 16.0 13.0 11.1 6.6 -5.5 -4.8ING Financial Markets 7.5 9.0 11.0 16.0 9.5 10.0 - -JPMorgan - - - - 10.8 9.3 -5.1 -4.9Kotak Securities 6.7 6.5 7.5 8.5 8.5 8.9 -5.3 -5.0Morgan Stanley - - - - - - -7.6 -7.3RBC Capital Markets - - - - - - -6.0 -5.0Standard Chartered Bank - - - - - - - -State Bank of India - - - - 9.7 - - -UBS - - - - 9.9 8.8 -5.5 -4.8SummaryMinimum 5.4 6.2 7.5 8.5 6.1 6.6 -7.6 -7.3Maximum 8.9 9.0 16.0 16.0 11.1 10.4 -5.0 -4.3Median 6.9 6.8 12.0 11.5 9.5 8.9 -5.5 -4.9Consensus 7.0 7.2 11.8 12.2 9.3 8.8 -5.6 -5.1History30 days ago 7.3 7.6 11.8 12.2 9.3 8.9 -5.4 -4.860 days ago 7.3 7.7 12.1 12.7 9.3 8.9 -5.6 -4.990 days ago 7.2 7.7 11.5 12.7 9.3 8.8 -5.7 -4.9


Industry% variation



| 40



0

3

6

9

12

1995 2000 2005 2010


-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


2

4

6

8

10



2

3

4

5

6

7



0

10

20

30

1995 2000 20050

3

6

9

12

1995 2000 2005

4

6

8

10

2005 2006 2007 2008 2009 20105,000

10,000

15,000

20,000

25,000



19 | CPI-IW | % variation

15 | Inflation | 1995 - 2014 | in % Inflation | ann. avg. variation of wholesale price index in %


21 | 10-Year Bond | in % 22 | Stock Market | BSE SENSEX



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Reserve Bank of India (RBI) , the Ministryof Commerce and Industry and the Labour Bureau. RBI inflation forecastrefers to year-on-year wholesale inflation. See below for details. Forecastsbased on FocusEconomics Consensus Forecast.

15 Inflation, annual average variation in wholesale price index (WPI) in%. Source: Ministry of Commerce and Industry.16 Quarterly inflation, average variation in wholesale price index (WPI) in%. Source: Ministry of Commerce and Industry.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Consumer price index for industrial workers (CPI-IW), in %. Source:Labour Bureau.20 Money, annual variation of M1 in %. Source: RBI.21 10-Year bond yield in %. Jan. 2005 until end of previous month.Source: RBI.22 Daily index levels, BSE SENSEX. Jan. 2008 until end of previousmonth. Source: Bombay Stock Exchange.

Notes and sources

Individual Forecasts 2010/11 2011/12Allianz - -AnandRathi 6.9 4.5BofA Merrill Lynch - -Capital Economics - -Citigroup Global Markets Inc. 8.8 6.5Credit Suisse 8.2 5.5Crisil 8.8 -Daiwa Capital Markets 7.3 4.2DBS Bank 8.0 5.3Deutsche Bank - -Goldman Sachs 7.5 6.0HSBC - -ING Financial Markets - -JPMorgan - -Kotak Securities 9.5 6.6Morgan Stanley - -RBC Capital Markets - -Standard Chartered Bank 8.2 5.0State Bank of India - -UBS - -SummaryMinimum 6.9 4.2Maximum 9.5 6.6Median 8.2 5.4Consensus 8.1 5.4History30 days ago 7.8 5.460 days ago 7.0 5.390 days ago 6.9 5.4Additional ForecastsReserve Bank of India (July 2010) 6.0 -ADB (Mar. 2010) 5.0 5.5

| 41



2

4

6

8



4

6

8

10



30

40

50

60



35

40

45

50



4

6

8

10

12

14

1995 2000 2005 20104

6

8

10

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

30

40

50

60

1995 2000 2005 201035

40

45

50

55

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


29 | INR/USD 2010 | evolution of fcst

27 | Exchange Rate | INR per USD 28 | Exchange Rate | INR per USD



30 | INR/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Reserve Bank of India(RBI) and the Ministry of Commerce and Industry. See below for details.Forecasts based on FocusEconomics Consensus Forecast.

23 Interest rate, RBI Repurchasing Rate in % (eop). Source: RBI.24 Quarterly interest rate, RBI Repurchasing Rate in % (eop). Source:RBI.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, INR per USD (eop). Source: RBI.28 Quarterly exchange rate, INR per USD (eop). Source: RBI.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: RBI.32 Trade balance, imports and exports, in USD bn. Source: Departmentof Commerce.33 International reserves, months of imports. Source: RBI.34 Current account in USD billion, evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Deparment of Commerce.36 External debt as % of GDP. Source: RBI.

Notes and sources

Individual Forecasts 2010/11 2011/12 2010/11 2011/12Allianz - - 44.5 44.0AnandRathi 5.50 7.00 42.0 40.0BofA Merrill Lynch 6.50 7.50 43.5 -Capital Economics 6.25 7.00 42.0 42.0Citigroup Global Markets Inc. - - 43.5 40.0Credit Suisse 6.25 7.50 43.5 42.0Crisil - - 43.8 -Daiwa Capital Markets - - 45.0 43.3DBS Bank 6.50 - 45.4 -Deutsche Bank 6.75 - 44.0 42.0Goldman Sachs - - 44.0 43.0HSBC 6.25 6.75 45.5 43.5ING Financial Markets 6.25 7.50 43.5 41.5JPMorgan 6.50 - 43.0 -Kotak Securities 6.50 7.00 47.0 46.0Morgan Stanley - - 45.4 42.2RBC Capital Markets 6.25 7.00 44.0 42.0Standard Chartered Bank 6.50 - 44.0 -State Bank of India - - 44.0 -UBS - - 46.5 41.0SummaryMinimum 5.50 6.75 42.0 40.0Maximum 6.75 7.50 47.0 46.0Median 6.38 7.00 44.0 42.0Consensus 6.33 7.16 44.2 42.3History30 days ago 6.30 7.16 43.9 42.160 days ago 6.18 7.21 43.6 41.690 days ago 6.15 7.04 43.4 41.5

Interest Rate Exchange Rate% INR per USD

| 42



-5

0

5

10

1995 2000 2005 2010


-200

0

200

400

600

1995 2000 2005 2010


-20

0

20

40

1995 2000 2005 2010


0

5

10

15

20

1995 2000 2005 2010


0

20

40

60

1995 2000 2005 2010


-50

-40

-30

-20

-10


20102011






Individual Forecasts 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12Allianz -25.0 -35.0 - - - - - - 275 285AnandRathi -33.6 -17.8 -113 -113 186 233 298 346 311 373BofA Merrill Lynch -40.6 -36.3 -134 -162 228 248 362 410 299 -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. -35.1 -41.2 -128 -140 209 251 338 392 275 296Credit Suisse -53.4 -34.5 -132 -138 202 247 334 385 315 364Crisil - - -130 - 207 - 337 - - -Daiwa Capital Markets -34.5 -36.5 -126 -141 218 248 344 389 273 288DBS Bank -45.0 -57.0 -154 -192 202 234 356 426 310 350Deutsche Bank -40.4 -48.9 -126 -142 179 197 305 339 293 299Goldman Sachs -48.7 - - - - - - - - -HSBC -64.0 -73.0 -144 -165 197 220 341 385 264 259ING Financial Markets -38.0 -43.5 -133 -163 194 229 327 392 310 350JPMorgan -52.5 -60.7 -146 -181 226 267 372 449 274 321Kotak Securities -50.5 -83.5 -139 -170 208 261 347 430 284 299Morgan Stanley -45.5 -43.9 -131 -154 - - - - - -RBC Capital Markets -43.8 -28.6 - - - - - - - -Standard Chartered Bank -35.5 -24.4 - - - - - - - -State Bank of India -30.0 - -130 - 190 - 320 - 330 -UBS -42.0 -63.0 -136 -185 221 280 357 465 308 365SummaryMinimum -64.0 -83.5 -154 -192 179 197 298 339 264 259Maximum -25.0 -17.8 -113 -113 228 280 372 465 330 373Median -41.3 -42.4 -132 -162 205 247 339 392 296 310Consensus -42.1 -45.5 -133 -157 205 243 338 401 294 321History30 days ago -41.3 -46.4 -133 -157 205 243 338 400 294 32060 days ago -36.2 -36.7 -133 -153 200 234 333 387 306 34290 days ago -33.1 -34.3 -130 -151 198 230 328 381 315 352

Int. ReservesUSD bnUSD bn USD bn

Exports ImportsCurrent Account Trade BalanceUSD bn USD bn

| 43



India38%

China43%

Korea 2% Other

10%

Indonesia7%

India15%

Indonesia6%

China53%

Korea10%

Other16%

-25%

0%

25%

50%

75%

100%

2002/03 2004/05 2006/07 2008/09Private Consumption Government ConsumptionInvestment Net exports

12.6 12.3

13.7 13.1

15.1 17.2

25.1 26.5

15.316.1

18.1 14.6

0%

25%

50%

75%

100%Agriculture, forestry andfishing

Manufacturing

Trade, hotels, transportand communication

Financing, insurance,real estate andbusiness services

Community, social andpersonal services

Other

2005/06 2009/10

Other Asia12%

Other36%

EU-2721%

Japan3%

USA13%

China15% Other

Asia14%

Other44%

China15%

USA7%

Japan3%

EU-2717%

Others61%

Nuclear reactors

and machinery

4%

Electrical machinery

and equipment

5%

Mineral fuels and

oils15%

Precious or semiprecious stones

15%Others30%

Mineral fuels and

oils35%

Precious or semiprecious stones

14%

Nuclear reactors

and machinery

9%

Electrical machinery

and equipment

8%

Fertilisers4%

Official name: Republic of IndiaCapital: New Delhi (13.8 m)Other cities: Greater Mumbai (16.4 m)

Kolkata (13.2 m)Bangalura (5.7m)

Area (km2): 3,166,414Population (million, 2009): 1,156Population density (per km2, 2009): 365.1Population growth rate (%, 2009): 1.4Life expectancy (years, 2009): 66.1Illiteracy rate (%, 2001): 39.0Language: Hindi, English and

21 other official languagesMeasures: Metric systemCalendar: Year begins on 21 or

22 March of Gregorian calendarTime: 5:30 hours ahead of GMT



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data India in the Region

Fact Sheet

• Excessive bureaucracy slowsdynamism

• Protectionist trade policyapproach

• Weak infrastructure

• Electricity/energy shortages

• Huge domestic market

• Skilled labour force in keyindustries, particularly softwaredevelopment

• High catch-up growth potential

• Low inflationary environment

Prime Minister: Manmohan SinghLast elections: 19 July 2007Next elections: July 2012Central Bank Governor: Duvvuri Subbarao


Energy (2007) Primary Energy Production (trillion Btu): 13,048Primary Energy Consumption (trillion Btu): 19,094Electricity Generation (billion kW-h): 762Electricity Consumption (billion kW-h): 568Oil Supply (thousand bpd): 881Oil Consumption (thousand bpd): 2,845CO2 Emmissions (million metric tons): 1,386

Transportation (2009) Airports: 349Railways (km): 64,015Roadways (km): 3,320,410Waterways (km): 14,500Chief Ports: Mumbai, Chennai, Kolkata

Agency Rating OutlookMoody’s: Baa3 StableS&P: BBB- StableFitch Ratings: BBB- Stable

| 44

Indonesia September 2010FOCUSECONOMICS


REAL SECTOR | Economic growth accelerates amid stronger domesticdemandIn the second quarter, gross domestic product (GDP) expanded 6.2% over thesame quarter last year. The reading beat last month’s Consensus Forecastpanellists’ expectations of a 5.9% increase and came in ahead of the previousquarter’s 5.7% growth pace. Furthermore, the reading represented the fastestexpansion tallied since the third quarter of 2008.

The acceleration compared to the previous quarter was due to positivedevelopments in the domestic sector. Private consumption increased 5.0%year-on-year (Q1: +3.9% yoy), which more than compensated for the 9.0%contraction observed in government consumption. Moreover, investmentcontinued to grow robustly and added 8.0% (Q1: +7.8% yoy). In contrast, thenet contribution from the external sector to overall growth deteriorated and fellfrom 1.0 percentage points in the first quarter to 0.4 percentage points.

At the sector level, the acceleration over the previous quarter was broad-based,with all sectors improving with the exception of electricity, gas and water supply.The acceleration was led by the manufacturing sector, which accounts for nearlya quarter of GDP, and which increased 4.3% (Q1: +3.7% yoy). Nonetheless,the largest contribution to growth came form the trade, hotel and restaurantssector, which expanded a robust 9.6% (Q1: +9.4% yoy).

The Central Bank expects the economy to grow 5.6% this year and to acceleratefurther to between 6.0% and 6.5% in 2011. Consensus Forecast panellistsbroadly share the Bank’s assessment and anticipate the economy to grow 6.0%this year, which is up 0.1 percentage points from last month’s projection. Nextyear, the panel expects economic growth to reach 6.2%.

IndonesiaOutlook improves


• The Indonesian economy, which was less affected by the globaldownturn, as it is less dependant on the external sector than most ofits regional peers, which continues to pick up steam. In the secondquarter, the economy increased 6.2%, represented the fastest rate innearly two years.

• Consensus Forecast panellists anticipate the economy will grow 6.0%this year, which is up 0.1 percentage points from last month’sprojection. Next year, the panel expects the economy to expand 6.2%.

• Annual inflation reached 6.2% in July, marking the highest readingin over 15 months. The panel anticipates inflation will continue risingin the months ahead and will average 4.8%, this year, which is 0.1percentage points below last month’s forecast. Next year, the panelsees inflation rising to 5.9%.

Indonesia


2000-04 2005-09 2010-14Population (million): 211 226 240GDP (USD bn): 199 410 840GDP per capita (USD): 940 1,810 3,490GDP growth (%): 4.6 5.6 6.3Fiscal Balance (% of GDP): -2.4 -0.9 -1.2Inflation (%): 7.9 8.9 5.5Current Account (% of GDP): 3.5 1.6 0.5External Debt (% of GDP): 71.1 37.3 21.6

GDP by Type, Q2 2010 | variation in %

Note: Year-on-year changes in %.Source: Statistics Indonesia (BPS) and FocusEconomics calculations.

-9.0

0.0

5.0

6.2

8.0

17.7

14.6

-20.0 -10.0 0.0 10.0 20.0 30.0

Governmentconsumption

Domestic Demand

Privateconsumption

GDP

Investment

Exports

Imports

%

| 45



MONETARY SECTOR | Inflation soars amid higher food pricesIn July, consumer prices jumped 1.57% over the previous month. The readingcame in well above June’s 0.97% price rise as well as market expectations,which had prices increasing 1.10%. The sharp monthly price hike was almostentirely driven by higher food prices (+4.69% month-on-month), in particularfor rice, which has risen steadily in recent months. Owing to July’s high reading,annual inflation soared from 5.0% in June to 6.2%, which represented thehighest level in over a year, lifting annual average inflation to 3.6%.

Going forward, the government announced it will sell 500,000 metric tons ofrice at below market prices in an effort to contain inflation during the fastingmonth of Ramadan, when Muslims usually spend more on food products, beganon 11 August. Nonetheless, inflation is likely to soar again in August as thegovernment increased electricity tariffs for the first time in seven years.

Despite the sharp raise in inflation, at its most recent meeting on 4 August theCentral Bank left its current monetary policy stance unaltered for the twelfthconsecutive month at 6.50%, in a decision broadly expected by the market.The Bank has set an inflation target of 5% ±1% for this year and next, andremains confident inflation will fall within range this year.

Consensus Forecast panellists broadly share the Bank’s assessment and expectinflation to average 4.8% this year, which is up 0.1 percentage points from lastmonth’s forecast. For next year, panellists see inflation rising to 5.9% by year-end.

0.450.56

1.05

0.19

-0.03

0.33

0.84

0.31

-0.16

0.150.29

0.97

1.57

-0.5

0.0

0.5

1.0

1.5

2.0


%

2.0

4.0

6.0

8.0

%

Monthly (left scale) Annual (right scale)


Note: Annual and monthly variation of consumer price index in %.Source: Statistics Indonesia (BPS).

| 46




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 220 223 226 229 231 234 237 240 243 246GDP per capita (USD) 1,236 1,551 1,816 2,127 2,320 2,775 3,157 3,487 3,813 4,218GDP (USD bn) 272 345 410 486 537 650 749 837 927 1,038Economic Growth (GDP, annual var. in %) 5.7 5.5 6.3 6.0 4.5 6.0 6.2 6.3 6.4 6.5 Private Consumption (ann. var. in %) 4.0 3.2 5.0 5.3 4.9 5.3 5.4 5.2 5.2 5.8 Government Consumption (ann. var. in %) 6.6 9.6 3.9 10.4 15.7 - - - - - Fixed Investment (ann. var. in %) 10.9 2.6 9.3 11.9 3.3 8.7 9.7 9.0 9.2 9.7Manufacturing (annual variation in %) 4.6 4.6 4.7 3.7 2.1 4.9 5.3 4.6 4.7 4.9Unemployment (eop, % of active population) 11.2 10.3 9.1 8.1 7.9 7.7 7.4 7.5 7.3 7.0Fiscal Balance (% of GDP) -0.5 -1.0 -1.2 0.0 -1.6 -1.7 -1.3 -1.0 -1.0 -0.9Monetary and Financial Sector Money (annual variation of M1 in %) 11.1 28.1 27.6 -0.9 8.3 - - - - -Inflation (CPI, annual variation in %) 17.1 6.6 6.6 11.1 2.8 - - - - -Inflation (CPI, annual average variation in %) 10.5 13.1 6.0 9.8 5.0 4.8 5.9 6.0 5.6 5.2Inflation (WPI, annual variation in %) 16.3 13.5 13.4 25.9 4.6 - - - - -BI Rate (%, eop) 12.75 9.75 8.00 9.25 6.50 6.94 7.55 7.73 7.63 7.47Stock Market (variation of IDX in %) 16.2 55.3 52.1 -50.6 87.0 - - - - -Exchange Rate (IDR per USD, eop) 9,917 9,156 9,382 11,055 9,447 8,989 8,951 9,066 9,161 9,019Exchange Rate (IDR per USD, average) 10,207 9,668 9,642 10,188 10,460 9,223 8,970 9,008 9,113 9,090External Sector Current Account Balance (% of GDP) 0.1 3.1 2.6 0.0 2.0 1.1 0.8 0.5 0.3 0.0Current Account Balance (USD bn) 0.3 10.8 10.5 0.1 10.7 7.4 5.6 3.9 2.4 0.3Trade Balance (USD bn) 17.5 29.7 32.8 22.9 35.1 30.2 29.5 30.6 28.1 32.2Exports (USD bn) 87 104 118 140 119 140 157 178 200 219Imports (USD bn) 69 74 85 117 84 110 128 148 172 191Exports (annual variation in %) 22.9 19.0 14.0 18.3 -14.4 18.5 12.2 13.4 12.3 9.2Imports (annual variation in %) 37.2 6.3 15.4 36.9 -27.7 27.0 16.0 15.7 16.6 11.1International Reserves (USD bn) 34.7 42.6 56.9 51.6 66.1 77.2 83.9 89.8 93.5 103International Reserves (months of imports) 6.0 6.9 8.0 5.3 9.4 8.4 7.9 7.3 6.5 6.5External Debt (USD bn) 134 133 141 155 173 168 171 177 184 190External Debt (% of GDP) 49.5 38.4 34.5 31.9 32.2 25.9 22.8 21.1 19.9 18.3 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 6.4 5.3 4.5 4.1 4.2 5.4 5.7 6.2 6.0 6.0Inflation (CPI, annual average variation in %) 13.5 12.6 9.2 5.7 2.8 2.6 3.7 4.4 5.4 5.6BI Rate (%, eop) 9.25 9.25 7.75 7.00 6.50 6.50 6.50 6.50 6.50 6.94Exchange Rate (IDR per USD, eop) 9,427 11,055 11,633 10,276 9,729 9,447 9,110 9,070 9,062 8,989 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Industrial Production (s.a. mom var. in %) 3.8 3.4 5.3 4.0 3.5 3.8 4.1 4.9 - -Retail Sales (annual variation in %) 1.0 7.1 -3.6 -3.0 3.0 2.1 4.5 1.5 - -Inflation (CPI, mom variation in %) -0.03 0.33 0.84 0.31 -0.16 0.15 0.29 0.97 1.57 -Inflation (CPI, annual variation in %) 2.4 2.8 3.7 3.8 3.4 3.9 4.2 5.0 6.2 -Exchange Rate (IDR per USD, eop) 9,527 9,447 9,412 9,382 9,110 9,015 9,180 9,070 8,952 9,086

| 47




-14

-7

0

7

14

1995 2000 2005 2010

IndonesiaAsia (ex Japan)World

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-10

-5

0

5

10

15

1995 2000 2005 2010

IndonesiaAsia (ex Japan)

-45

-30

-15

0

15

30

1995 2000 2005 2010


3

4

5

6

7



4

5

6

7



4.0

4.5

5.0

5.5

6.0


2010 2011

4

6

8

10

12


2010 2011



2 | Real GDP | Q1 07-Q4 11 | % variation


1 | Real GDP | 1995 - 2014 | % variation Real GDP growth in %

Individual Forecasts 2010 2011ANZ 5.9 6.2Bank Danamon Indonesia 5.6 6.2BII 6.1 6.3Capital Economics 6.0 6.2Citigroup Global Markets Inc. 6.1 6.2Credit Suisse 5.9 5.6Daiwa Capital Markets 6.5 6.1Danareksa Securities 6.2 6.4DBS Bank 6.0 5.8Deutsche Bank 5.7 6.5Goldman Sachs 5.8 6.0HSBC 6.0 6.0ING 6.2 6.0JPMorgan 6.2 5.7Mandiri Sekuritas 5.8 6.3Morgan Stanley 6.0 6.5OCBC Bank 6.1 6.1RBC Capital Markets 6.0 6.5Standard Chartered Bank 6.2 6.5UBS 6.0 6.0United Overseas Bank 6.0 6.2SummaryMinimum 5.6 5.6Maximum 6.5 6.5Median 6.0 6.2Consensus 6.0 6.2History30 days ago 5.9 6.160 days ago 5.8 6.090 days ago 5.8 6.1Additional ForecastsCentral Bank (Aug. 2010) 5.6 6.0-6.5IMF (July 2010) 6.0 6.2ADB (July 2010) 6.0 6.0

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and the CentralBank (BI, Bank Indonesia). See below for details. Forecasts based onFocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: BPS.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: BPS.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: BPS.6 Gross fixed investment, annual variation in %. Source: BPS.7 Private consumption, change in 2010 and 2011 forecasts during thelast 18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: BPS.10 Unemployment, % of active population. Source: BPS.11 Balance of central government, % of GDP. Source: BI.12 Industrial production, evolution of 2010 and 2011 forecasts duringthe last 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last18 months.14 Balance of central government, evolution of 2010 and 2011forecasts during the last 18 months.

Notes and sources

| 48



-20

-10

0

10

20

1995 2000 2005 2010


0

3

6

9

12

1995 2000 2005 2010


-9

-6

-3

0

3

1995 2000 2005 2010


3

4

5

6


2010 2011

7

8

9

10


2010 2011

-2.0

-1.6

-1.2

-0.8


2010 2011








Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Bank Danamon Indonesia 5.0 4.9 9.0 11.9 - - 7.6 7.1 -1.7 -1.5BII 5.3 5.3 9.4 9.7 4.3 4.5 7.7 7.5 -1.7 -1.2Capital Economics 6.5 6.0 8.0 8.0 - - - - -1.5 -0.8Citigroup Global Markets Inc. 4.8 5.1 8.3 11.0 - - 7.0 6.8 -1.1 -1.5Credit Suisse 5.0 5.0 7.3 8.0 - - - - -2.0 -1.8Daiwa Capital Markets 5.8 5.9 10.4 11.2 5.1 5.3 - - -0.9 -0.8Danareksa Securities 4.8 5.0 9.8 12.9 4.3 4.4 7.4 7.2 - -DBS Bank - - - - - - - - -0.9 -0.9Deutsche Bank 4.6 6.0 8.7 8.8 4.0 8.0 - - -1.7 -1.8Goldman Sachs - - - - - - - - -2.2 -HSBC 4.9 5.1 9.0 9.1 5.9 4.7 8.0 8.0 -1.6 -1.0ING 6.2 5.8 9.7 10.5 5.7 5.0 - - -1.6 -1.5JPMorgan - - - - - - - - -2.0 -1.0Mandiri Sekuritas 5.2 5.3 8.6 10.7 - - - - -2.1 -1.5Morgan Stanley - - 8.0 10.0 - - - - -2.0 -1.5OCBC Bank 5.2 5.6 8.0 6.0 - - 8.5 8.0 -1.5 -1.2RBC Capital Markets - - - - - - - - -2.0 -1.0Standard Chartered Bank - - - - - - - - - -UBS 5.1 5.8 7.8 7.8 - - - - -1.6 -2.0United Overseas Bank - - - - - - 7.5 7.2 -2.0 -1.5SummaryMinimum 4.6 4.9 7.3 6.0 4.0 4.4 7.0 6.8 -2.2 -2.0Maximum 6.5 6.0 10.4 12.9 5.9 8.0 8.5 8.0 -0.9 -0.8Median 5.1 5.3 8.7 9.8 4.7 4.9 7.6 7.2 -1.7 -1.5Consensus 5.3 5.4 8.7 9.7 4.9 5.3 7.7 7.4 -1.7 -1.3History30 days ago 5.2 5.3 8.7 9.6 4.8 5.4 7.8 7.5 -1.7 -1.460 days ago 5.3 5.4 8.6 9.4 4.7 5.4 7.8 7.6 -1.7 -1.390 days ago 5.2 5.4 8.7 9.5 4.7 5.4 7.8 7.6 -1.8 -1.3




Industry% variation


| 49





Individual Forecasts 2010 2011ANZ - -Bank Danamon Indonesia 4.6 6.2BII 5.0 5.7Capital Economics 5.3 4.5Citigroup Global Markets Inc. 5.1 6.0Credit Suisse 4.3 6.2Daiwa Capital Markets 4.5 4.8Danareksa Securities - -DBS Bank 5.1 6.5Deutsche Bank 5.0 6.5Goldman Sachs 5.1 5.0HSBC 4.6 6.0ING 4.0 4.5JPMorgan 4.4 5.4Mandiri Sekuritas - -Morgan Stanley 5.0 5.7OCBC Bank 5.0 6.7RBC Capital Markets - -Standard Chartered Bank 5.4 6.1UBS 5.0 7.0United Overseas Bank 4.7 6.7SummaryMinimum 4.0 4.5Maximum 5.4 7.0Median 5.0 6.0Consensus 4.8 5.9History30 days ago 4.7 5.860 days ago 4.8 5.990 days ago 4.9 5.8Additional ForecastsCentral Bank (Aug. 2010) 5.8-6.0 -IMF (Apr. 2010) 4.7 5.8ADB (Mar. 2010) 5.6 6.2

200

400

600

800


0

15

30

45

60

1995 2000 2005 2010


-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


2

4

6

8

10



3

6

9

12



0

10

20

30

2000 2003 2006 2009-10

0

10

20

30

40

1995 1998 2001 2004 2007

1,000

1,500

2,000

2,500

3,000

3,500



15 | Inflation | 1995 - 2014 | in %


22 | Stock Market | IDX



16 | Inflation | Q1 07-Q4 11 | in %

21 | MSCI Price Index General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and the CentralBank (BI, Bank Indonesia). See below for details. Forecasts based onFocusEconomics Consensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: BPS.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: BPS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price index, annual variation in % (eop). 2000-2009.Source: BPS.20 Money, annual variation of M1 in %. 1995-2009. Source: BI.21 Daily MSCI Price index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, IDX. From Jan. 2008 until end of previousmonth. Source: Indonesia Stock Exchange.

Notes and sources

| 50



0

10

20

30

40

50

1995 2000 2005 20106

7

8

9

10

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

0

3,000

6,000

9,000

12,000

1995 2000 2005 20108,000

9,000

10,000

11,000

12,000

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

4

6

8

10



4

6

8

10



6,000

9,000

12,000

15,000



8,000

9,000

10,000

11,000

12,000




29 | IDR/USD 2010 | evolution of fcst

27 | Exchange Rate | IDR per USD 28 | Exchange Rate | IDR per USD



30 | IDR/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Statistics Indonesia (BPS) and theCentral Bank (BI, Bank Indonesia). See below for details. Forecastsbased on FocusEconomics Consensus Forecast.

23 Interest rate, BI Rate in % (eop). Source: BI.24 Quarterly interest rate, BI Rate in % (eop). Source: BI.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, IDR per USD (eop). Source: BI.28 Quarterly exchange rate, IDR per USD (eop). Source: BI.29 Exchange rate, evolution of 2010 forecast during the last 18months.30 Exchange rate, evolution of 2011 forecast during the last 18months.31 Current account balance as % of GDP. Source: BPS.32 Trade balance, imports and exports, in USD bn. Source: BPS.33 International reserves, months of imports. Source: BI.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: BPS.36 External debt as % of GDP. Source: BI.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ 6.75 7.75 9,500 9,250Bank Danamon Indonesia 6.50 7.50 9,150 9,325BII 6.50 7.50 9,150 9,355Capital Economics 8.00 8.50 8,750 8,600Citigroup Global Markets Inc. 7.00 7.50 9,050 9,125Credit Suisse 6.75 7.25 9,000 9,000Daiwa Capital Markets - - 8,700 8,500Danareksa Securities 6.50 6.75 9,286 9,430DBS Bank 7.00 - 9,100 -Deutsche Bank 7.25 - 8,925 8,700Goldman Sachs - - 8,700 8,400HSBC 6.50 7.50 8,800 -ING 6.50 7.00 9,050 9,000JPMorgan 6.50 7.00 8,900 9,300Mandiri Sekuritas 7.00 7.50 8,927 9,083Morgan Stanley - - - -OCBC Bank 7.00 7.50 8,843 8,598RBC Capital Markets 7.00 8.00 8,800 8,500Standard Chartered Bank 7.00 8.00 8,800 8,500UBS 7.50 8.00 9,400 9,500United Overseas Bank 7.75 - 8,950 -SummaryMinimum 6.50 6.75 8,700 8,400Maximum 8.00 8.50 9,500 9,500Median 7.00 7.50 8,939 9,000Consensus 6.94 7.55 8,989 8,951History30 days ago 6.93 7.52 9,032 9,01660 days ago 7.03 7.57 9,036 9,08690 days ago 7.08 7.63 9,071 9,079

Interest Rate Exchange Rate% IDR per USD

| 51




Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Bank Danamon Indonesia 7.0 4.0 35.3 36.4 140 158 105 122 82.3 92.1BII 4.6 4.1 16.5 12.4 149 164 133 151 80.0 88.6Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 7.1 4.6 34.7 27.7 145 163 111 136 85.1 91.3Credit Suisse 4.5 2.0 34.3 35.7 143 160 109 125 75.6 80.6Daiwa Capital Markets 6.5 6.1 29.8 30.7 120 136 91 105 68.7 74.0Danareksa Securities 8.7 7.6 32.4 34.3 136 159 103 125 65.6 73.3DBS Bank 5.0 4.0 - - - - - - 79.0 86.0Deutsche Bank 10.5 14.3 29.1 33.2 118 128 89 94 77.0 81.0Goldman Sachs 13.7 - - - - - - - - -HSBC 6.5 8.1 33.8 33.7 140 149 106 116 75.2 82.5ING 7.0 4.0 33.0 29.0 149 172 116 143 78.0 88.0JPMorgan 3.1 -0.2 25.6 27.2 141 163 115 135 73.6 78.6Mandiri Sekuritas 7.0 2.6 30.1 29.0 148 177 118 148 80.0 83.0Morgan Stanley 8.9 6.7 29.9 28.2 - - - - - -OCBC Bank 10.5 11.0 17.9 15.0 146 160 128 145 80.0 90.0RBC Capital Markets 6.5 - - - - - - - - -Standard Chartered Bank 6.0 3.4 - - - - - - - -UBS 9.0 7.0 40.0 40.7 146 156 106 115 81.1 86.1United Overseas Bank 7.7 6.7 - - - - - - - -SummaryMinimum 3.1 -0.2 16.5 12.4 118 128 89 94 65.6 73.3Maximum 13.7 14.3 40.0 40.7 149 177 133 151 85.1 92.1Median 7.0 4.6 31.2 29.9 143 160 109 125 78.5 84.5Consensus 7.4 5.6 30.2 29.5 140 157 110 128 77.2 83.9History30 days ago 7.2 5.6 30.6 30.2 140 157 109 127 76.7 83.260 days ago 7.6 6.7 29.3 29.4 139 156 110 126 75.4 82.590 days ago 8.2 7.1 28.7 30.0 133 151 104 120 74.2 81.0



0

4

8

12


2010 2011

-6

-3

0

3

6

9

1995 2000 2005 2010


0

50

100

150

200

250

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


0

5

10

15

20

25

1995 2000 2005 2010


0

50

100

150

200

1995 2000 2005 2010






| 52



0%

25%

50%

75%

100%


15.5 16.7

28.0 26.2

16.3 16.9

8.9 9.6

5.48.8

10.68.3

15.2 13.6

0%

25%

50%

75%

100%Agriculture

Mining and Quarring

Transport &Communication

Finance, Real Rstate &Business Services

Trade Hotel &Restaurants

Manufacturing Industry

Other

2004 2009

Other Asia31%

Other18%

EU-2712%

Japan19%

USA10%

China10%

Other Asia43%

Other20% China

15%

USA5%

Japan10%

EU-277%

Mining & Other17%

Oil and Gas16%

Manufacturing 63%

Agriculture 4%

Raw Materials and Others

72%

Capital Goods 21%

Consumer Goods

7%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Indonesia in the Region

Fact Sheet

• Widespread corruption detersforeign investment

• Weak legal framework

• Guerilla activity posessecurity threat

• Extensive natural resources

• Large domestic market

• Diverse manufacturing sector

Official name: Republic of IndonesiaCapital: Jakarta (12.3 m)Other cities: Bandung (5.7 m)

Surabaya (3.9 m)Medan (3.9 m)

Area (km2): 1,919,440Population (million, 2009 est.): 231Population density (per km2, 2009 est.) 121Population growth rate (%, 2009 est.): 1.2Life expectancy (years, 2009 est.): 70.8Illiteracy rate (%, 2000): 9.6Language: Bahasa IndonesiaMeasures: Metric systemTime: 7 hours ahead of GMT


President: Susilo Bambang YudhoyonoLast elections: 8 July 2009Next elections: 2014Central Bank Governor: Darmin Nasution

Energy (2007) Primary Energy Production (trillion Btu): 10,930Primary Energy Consumption (trillion Btu): 4,887Electricity Generation (billion kW-h): 134Electricity Consumption (billion kW-h): 119Oil Supply (thousand bpd): 1,043Oil Consumption (thousand bpd): 1,243CO2 Emmissions (million metric tons): 402

Transportation (2009) Airports: 683Railways (km): 8,529Roadways (km): 437,759Waterways (km): 21,579Chief Ports: Banjarmasin, Jakarta

Agency Rating OutlookMoody’s: Ba2 PositiveS&P: BB PositiveFitch Ratings: BB+ Stable

Other9%

Indonesia7%

China43%

Malaysia1%

Korea 2%

India38%

Other14%

Indonesia6%

India15%

China53%

Malaysia2%

Korea10%

| 53

Korea September 2010FOCUSECONOMICS


REAL SECTOR | Industrial production beats market expectationsIn June, industrial production rose 16.9% over the same month last year. Thefigure was down from the revised 21.7% increase (previously reported: 21.5%)recorded in May but came in slightly above market expectations of a 16.6%rise.

The slowdown over the previous month was mainly driven by a moderation inmanufacturing. Production in this category, which accounts for the bulk of in-dustrial output, increased 17.4% annually, which was down from the 22.4%increase observed in May. Meanwhile, mining rose 4.3%, contrasting the 10.7%fall recorded in May and, finally, electricity and gas improved slightly comparedto the previous month, growing 7.7% (May: +7.5% yoy).

A month-on-month comparison corroborates the moderation suggested by theannual figures, as industrial production grew 1.43% over the previous monthon a seasonally adjusted basis, which was down from the 2.71% increaserecorded in May.

Based on monthly data, industrial production expanded 19.5% in the secondquarter over the same period last year, coming short of the 25.8% expansionrecorded in the previous quarter. That said, annual average variation in indus-trial production rose from 14.4% in May to 16.1%, marking the strongest read-ing since December 2000.

Consensus Forecast participants lifted their estimates for full-year 2010 indus-trial output growth by 0.1 percentage points over last month to the current13.6%. Panellists expect industrial production to expand 7.7% next year, whichis unchanged from last month’s forecast.

KoreaOutlook improves

Armando CiccarelliEconomist

• Tensions with North Korea are growing, as the United States andSouth Korea conducted an 11-day military drill in the Sea of Japan inmid-August. Moreover, the U.S. announced further exercises for thebeginning of September.

• Industrial production growth moderated in July but exceeded mar-ket expectations. Consensus Forecast panellists remain upbeat andhave revised their forecast to the upside, seeing the economy grow-ing 5.8% this year, up 0.1 percentage points from last month’s fore-cast. For next year, panellists expect growth to moderate to 4.3%.

• In July, inflation remained unchanged at June’s 2.6%. For the timebeing, monetary authorities decided to refrain from raising interestrates. Panellists expect inflation to average 2.9% this year and 3.1%next year.

Korea


2000-04 2005-09 2010-14Population (million): 47.6 48.4 49.1GDP (USD bn): 596 922 1,234GDP per capita (USD): 12,515 19,187 25,103GDP growth (%): 5.4 3.3 4.6Fiscal Balance (% of GDP): 1.4 0.8 0.7Inflation (%): 3.2 3.0 3.0Current Account (% of GDP): 2.1 1.5 1.1External Debt (% of GDP): 25.2 35.0 34.7


Note: Seasonally adjusted month-on-month and annual average changes ofindustrial production index in %.Source: KOSTAT-KOSIS and FocusEconomics calculations.

5.55

2.22

-1.29

4.15

-2.97

1.772.38

0.00

3.40

1.87

0.22

2.71

1.57

-4.0

0.0

4.0

8.0


%

-8.0

0.0

8.0

16.0

24.0

%

MoM s.a. (left scale) Annual Average (right scale)

| 54



OUTLOOK | Consumer confidence drops in AugustIn August, the Consumer Survey Index (CSI) published by the Bank of Koreadropped to 110 points, down from July’s 112. However, at the current levelconsumer confidence remained above the 100-point threshold that separatesoptimism from pessimism for the thirteenth consecutive month, suggesting thatconsumption should continue to support the recovery in the coming months.

While households’ assessment on their living standards remained unchangedover the previous month, the evaluation of the domestic economic situationdeteriorated. Moreover, consumers lowered their expectations both about theirliving standards in the next six months as well as with regards to the situationof the general economy.

MONETARY SECTOR | Inflation remains unchanged in JulyIn July, consumer prices rose 0.35% over the previous month. The readingcontrasted both the 0.17% decline recorded in June as well as market expec-tations which saw prices falling 0.07%. The main drivers behind the monthlyprice rise were higher prices for culture and recreation as well as for food andalcoholic beverages.

Despite the monthly price increase, annual inflation remained unchanged atJune’s 2.6%. Core inflation, which excludes more volatile items such as freshfood and energy, added 0.17% over the previous month. Mirroring the devel-opments in the general index, annual core inflation remained unchanged atJune’s 1.7%. The three-year average inflation rate, which is the basis of theCentral Bank’s monetary policy, remained stable at 3.4% for a seventh con-secutive month, thus exceeding the Central Bank’s inflation target of 3.0% butremaining within the tolerance range of ±1.0 percentage points.

Consensus Forecast panellists expect inflation to average 2.9% in 2010, whichis unchanged from last month’s forecast. According to the panel, average infla-tion will inch up to 3.1% in 2011, which is also unchanged from last month’sprojection.

MONETARY SECTOR | Central Bank keeps policy rate unchangedAt the most recent monetary policy meeting on 12 August, the Central Bankdecided to keep the policy rate unchanged at 2.25%, in a decision widely ex-pected by market analysts, which considered last month’s decision to raiseinterest rates only as a fine tuning towards “normal” interest rate levels.

In its monetary policy statement, the Central Bank suggests upward inflationrisks in the months to come as a consequence of demand-pull pressures as-sociated with the upturn in economic activity. In fact, recovery in the domesticeconomy is expected to continue, as external risks due to instability in thefinancial markets in the wake of the Greek debt crisis have now waned.

According to market analysts, the phrasing of the monetary statement sug-gests future interest rate hikes. In particular, there is no reference to maintain-ing an accommodative policy going forward and the reference to “price stabil-ity” precedes that to “economic growth”, thus suggesting a shift in priorities.Therefore, the market expects the Central Bank to raise interest rates by afurther 25 basis points in next meeting on 9 September.

Consensus Forecast panellists expect on average the policy rate to end theyear at 2.65%. For next year, panellists forecast on average the policy rate toend the year at 3.43%

Consumer Confidence

Note: Consumer Survey Index (CSI). An index value above 100 indicates anoptimistic outlook while a value below 100 indicates a pessimistic outlook.Source: Bank of Korea (BoK).

80

90

100

110

120


Poin

ts


Note: Month-on-month and year-on-year changes of cons. price index in %.Source: KOSTAT-KOSIS and FocusEconomics calculations.

0.36 0.35

0.09

-0.26

0.18

0.35 0.35 0.35 0.35

0.52

0.09

-0.17

0.35

-0.6

-0.3

0.0

0.3

0.6


%

1.0

2.0

3.0

4.0

%


| 55



EXTERNAL SECTOR | Current account surplus expands in the secondquarterIn the second quarter, the current account incurred a surplus of USD 10.3billion. The reading was down from the of the USD 13.1 million surplus regis-tered in the same quarter the year before but marked a strong improvementcompared to the USD 1.3 billion surplus observed in the previous quarter.

The increase over the preceding quarter reflected a higher surplus in the tradebalance, which rose from USD 7.4 billion in the first quarter to USD 15.7 billionin the second. Both exports and imports accelerated compared to the previousquarter. Exports increased 34.6% annually in the second quarter (Q1: +34.1%year-on-year) while imports rose 45.7% (Q1: +37.7% yoy).

Despite the improvement in quarterly figures, the moving annual current ac-count balance narrowed to a USD 53.3 billion surplus, down from the USD55.3 billion surplus recorded in the first quarter. Consensus Forecast panellistsexpect the annual current account surplus to narrow further to US$ 17.7 billionthis year.

EXTERNAL SECTOR | Exports continue to expand, albeit at slower rateIn July, exports rose 28.3% over the same month last year to reach USD 40.9billion, according to the latest data released by Korea Customs Services (KCS).The figure was down from the 30.2% expansion recorded in June. However,despite the slowdown, the monthly figure marked the ninth consecutive double-digit increase in exports after having contracted for a full year.

The July increase confirms the strong recovery of the external sector, withexport figures outperforming pre-crisis levels in nominal terms, as the three-month average topped a record USD 40.6 billion in July, above the USD 39.2billion peak previously reached in July 2008 and, in fact, the highest level sincerecords began in 1990.

According to the Ministry of Knowledge Economy (MKE), the July reading wasdriven by strong increases in exports of semiconductors, which increased 70.6%over the previous year, and by a 55.9% annual rise in exports of automobileparts.

Meanwhile, according to KCS figures, imports increased 28.0% year-on-yearin July (June: +38.0% yoy), reaching USD 35.4 billion. As a result of the monthlyfigures, the trade surplus fell from USD 6.5 billion in June to USD 5.5 billion inJuly.

Consensus Forecast panellists anticipate exports will expand 22.3% this yearand 10.9% in 2011

Current Account Balance | USD billion

Note: Quarterly current account balance in USD billion.Source: Bank of Korea (BoK).

13.1

10.4 10.6

1.3

10.3

0.0

5.0

10.0

15.0

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010


Note: Monthly exports, imports and trade balance in USD billion.Source: Korea Customs Services (KCS).

-10

0

10

20

30

40

50



| 56




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 48.1 48.3 48.5 48.6 48.7 48.9 49.0 49.1 49.3 49.4GDP per capita (USD) 17,551 19,707 21,652 19,162 17,863 20,412 22,756 25,234 27,473 29,641GDP (USD bn) 845 952 1,049 931 833 998 1,115 1,240 1,353 1,464Economic Growth (GDP, annual var. in %) 4.0 5.2 5.1 2.3 0.2 5.8 4.3 4.5 4.3 4.1 Private Consumption (annual var. in %) 4.6 4.7 5.1 1.3 0.2 4.4 3.5 3.7 4.0 3.8 Government Consumption (ann. var. in %) 4.3 6.6 5.4 4.3 5.0 - - - - - Fixed Investment (annual variation in %) 1.9 3.4 4.2 -1.9 -0.2 6.3 4.2 4.7 4.3 4.0Industrial Production (annual variation in %) 6.3 8.4 6.9 3.4 -0.8 14.1 7.8 7.1 6.2 6.1Unemployment (eop, % of active population) 3.5 3.3 3.1 3.3 3.5 3.3 3.0 3.1 3.1 2.8Fiscal Balance (% of GDP) 0.4 0.4 3.5 1.2 -1.7 -0.4 0.3 0.6 1.3 1.5Monetary and Financial Sector Money (annual variation of M1 in %) 3.3 11.7 -14.7 4.5 17.8 - - - - -Inflation (CPI, annual variation in %) 2.6 2.1 3.6 4.1 2.8 - - - - -Inflation (CPI, annual average var. in %) 2.8 2.2 2.5 4.7 2.8 2.9 3.1 2.9 2.8 3.2Inflation (Core, annual variation in %) 1.8 2.1 2.4 5.6 2.2 - - - - -Inflation (PPI, annual variation in %) 1.5 0.3 3.6 5.6 1.8 - - - - -Overnight Call Rate %, eop 3.70 4.49 4.99 3.27 2.00 2.65 3.43 3.64 3.63 3.40Stock Market (variation of KOSPI in %) 54.0 4.0 32.3 -40.7 49.7 - - - - -Exchange Rate (KRW per USD, eop) 1,012 930 936 1,260 1,165 1,136 1,078 1,061 1,038 1,045Exchange Rate (KRW per USD, average) 1,024 955 929 1,102 1,277 1,152 1,107 1,070 1,050 1,042External Sector Current Account Balance (% of GDP) 1.8 0.6 0.6 -0.6 5.1 1.8 1.2 1.0 0.8 0.7Current Account Balance (USD bn) 15.0 5.4 5.9 -5.8 42.7 17.7 13.1 12.8 11.1 10.4Trade Balance (USD bn) 32.7 27.9 28.2 5.7 56.1 32.8 27.1 24.7 23.8 33.3Exports (USD bn) 289 332 379 433 374 457 507 553 605 674Imports (USD bn) 256 304 351 427 317 424 480 528 581 646Exports (annual variation in %) 12.1 14.8 14.2 14.2 -13.7 22.3 10.9 9.0 9.4 11.4Imports (annual variation in %) 16.7 18.6 15.4 21.8 -25.7 33.7 13.1 10.0 10.0 11.2International Reserves (USD bn) 210 239 262 201 270 294 313 325 338 356International Reserves (months of imports) 9.9 9.4 9.0 5.7 10.2 8.3 7.8 7.4 7.0 6.6External Debt (USD bn) 188 260 383 378 402 398 407 425 439 448External Debt (% of GDP) 22.2 27.3 36.5 40.6 48.3 39.9 36.5 34.2 32.5 30.6 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 3.3 -3.3 -4.3 -2.2 1.0 6.0 8.1 7.2 4.2 4.3Inflation (CPI, annual average var. in %) 4.4 4.7 4.7 4.2 3.3 2.8 2.5 2.4 2.9 3.2Overnight Call Rate %, eop 5.21 3.27 1.77 1.93 1.99 2.00 2.01 2.00 2.39 2.65Exchange Rate (KRW per USD, eop) 1,207 1,260 1,384 1,274 1,178 1,165 1,131 1,222 1,147 1,136 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Industrial Production (annual variation in %) 18.1 34.2 37.0 18.9 22.7 20.1 21.7 17.1 15.5 -Unemployment (eop, % of active population) 3.3 3.5 5.0 4.9 4.1 3.8 3.2 3.5 3.7 -Consum. Confid. Index (100-point threshold) 113 113 113 111 110 110 111 112 112 110Business Confid. Index (100-point threshold) 109.0 105.9 103.1 102.3 116.2 111.2 113.4 108.9 107.3 100.7Inflation (CPI, mom variation in %) 0.18 0.35 0.35 0.35 0.35 0.52 0.09 -0.17 0.35 -Inflation (CPI, annual variation in %) 2.4 2.8 3.1 2.7 2.3 2.6 2.7 2.6 2.6 -Exchange Rate (KRW per USD, eop) 1,163 1,165 1,162 1,160 1,131 1,108 1,200 1,222 1,183 1,189

| 57



-12

-6

0

6

12

1995 2000 2005 2010

KoreaAsia (ex Japan)World

-7

0

7

14

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-16

-8

0

8

16

1995 2000 2005 2010

KoreaAsia (ex Japan)

-30

-20

-10

0

10

20

1995 2000 2005 2010


0

2

4

6

8



2

3

4

5

6



2

3

4

5


2010

2011

3

4

5

6

7


2010

2011






General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Korea National Statistics Office (KOSTAT), KoreanStatistical Information Service (KOSIS), Ministry of Finance and Economyand the Bank of Korea (BoK). See below for details. Forecasts based onFocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: BoK2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: BoK.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: BoK.6 Gross fixed investment, annual variation in %. Source: BoK.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: KOSTAT-KOSIS.10 Unemployment, % of active population. Source: KOSTAT-KOSIS.11 Balance of central government, % of GDP. Source: Ministry of Financeand Economy.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central government, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources


Individual Forecasts 2010 2011ANZ 5.9 3.9Capital Economics 6.0 4.0Citigroup Global Markets Inc. 5.5 4.3Credit Suisse 6.7 4.9Daiwa Capital Markets 7.0 5.2DBS Bank 6.2 3.9Deutsche Bank 5.5 3.9Goldman Sachs 5.3 4.6HSBC 5.8 4.3ING 7.1 4.8JPMorgan 5.9 4.0KERI 6.1 -Korea Invest. & Securities 5.0 4.0LG 5.0 -Morgan Stanley 6.0 4.5RBC Capital Markets 5.0 4.5SERI 5.1 -Standard Chartered Bank 6.0 4.1UBS 6.0 3.3United Overseas Bank 5.7 4.1Woori I&S 5.6 4.6SummaryMinimum 5.0 3.3Maximum 7.1 5.2Median 5.9 4.2Consensus 5.8 4.3History30 days ago 5.7 4.360 days ago 5.5 4.390 days ago 5.3 4.3Additional ForecastsCentral Bank (July 2010) 5.9 4.5IMF (July 2010) 5.7 5.0ADB (July 2010) 5.5 4.6

| 58



4

8

12

16


20102011

3.0

3.5

4.0

4.5


20102011

-4

-2

0

2


20102011

-8

0

8

16

24

1995 2000 2005 2010


0

3

6

9

1995 2000 2005 2010


-8

-4

0

4

1995 2000 2005 2010









Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics 4.5 2.5 6.0 4.0 - - 2.8 2.5 0.5 1.0Citigroup Global Markets Inc. 4.1 4.0 5.4 4.0 17.6 8.7 3.6 3.3 -0.3 0.3Credit Suisse 4.5 4.0 8.4 4.5 - - 3.0 2.5 - -Daiwa Capital Markets 6.1 4.8 8.4 6.0 14.4 6.1 - - -0.2 0.9DBS Bank - - - - - - 3.1 3.0 - -Deutsche Bank 3.4 2.5 5.5 2.3 - - 3.2 3.4 -0.1 -0.2Goldman Sachs - - - - - - - - -0.7 -HSBC 3.4 3.2 5.4 4.7 14.4 10.5 3.1 3.0 - -ING - - - - 11.2 6.7 - - -0.2 0.4JPMorgan - - - - 16.0 8.2 3.5 3.2 -0.5 0.5KERI 4.2 - - - - - 3.8 - - -Korea Invest. & Securities 4.4 3.5 6.3 5.2 - - 3.3 3.2 - -LG 4.5 - 4.7 - 12.1 - 3.2 - - -Morgan Stanley - - - - - - - - -0.5 -0.2RBC Capital Markets - - - - - - 3.3 - - -SERI 3.7 - - - - - 3.6 - - -Standard Chartered Bank - - - - - - - - - -UBS 3.8 2.8 6.5 2.7 - - - - - -United Overseas Bank - - - - - - 3.4 3.1 - -Woori I&S 5.8 4.5 6.1 4.3 13.0 6.4 3.3 3.2 -1.5 -0.5SummaryMinimum 3.4 2.5 4.7 2.3 11.2 6.1 2.8 2.5 -1.5 -0.5Maximum 6.1 4.8 8.4 6.0 17.6 10.5 3.8 3.4 0.5 1.0Median 4.3 3.5 6.1 4.3 14.4 7.5 3.3 3.2 -0.3 0.3Consensus 4.4 3.5 6.3 4.2 14.1 7.8 3.3 3.0 -0.4 0.3History30 days ago 4.3 3.5 6.1 4.4 13.5 7.7 3.3 3.0 -0.9 0.060 days ago 4.2 3.7 5.6 4.6 12.0 7.1 3.3 3.1 -0.8 0.190 days ago 4.0 3.6 5.2 4.5 10.2 7.1 3.5 3.2 -1.5 -0.5


Industry% variation


Consumption % variation


| 59



0

4

8

12

1995 2000 2005 2010


-4

0

4

8

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

1

2

3

4

5



2.0

2.5

3.0

3.5

4.0



-30

0

30

60

1995 1998 2001 2004 20070

2

4

6

2004 2005 2006 2007 2008 2009

Core Price IndexPPI

3.5

4.5

5.5

6.5

7.5

2002 2004 2006 2008 2010500

1,000

1,500

2,000



19 | Core and Producer Prices | % var.

15 | Inflation | 1995-2004 | in % Inflation | annual avg. var. of consumer price index in %


21 | 10-Year Bond | in % 22 | Stock Market | KOSPI



16 | Inflation | Q1 07 - Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Korea National Statistics Office(KOSTAT), Korean Statistical Information Service (KOSIS), Korea Exchange(KRX) and the Bank of Korea (BoK). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: KOSTAT-KOSIS16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: KOSTAT-KOSIS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009. Source: KOSTAT-KOSIS.20 Money, annual variation of M1 in %. 1995-2009. Source: BoK.21 10-year bond yield in %. Jan 2002 until end of previous month.Source: BoK.22 Daily index levels, KOSPI. Jan. 2008 until end of previous month.Source: KRX.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Capital Economics 3.5 3.0Citigroup Global Markets Inc. 2.9 3.0Credit Suisse 3.0 3.6Daiwa Capital Markets 2.8 2.7DBS Bank 2.9 3.1Deutsche Bank 2.9 3.9Goldman Sachs 3.2 3.2HSBC 2.7 3.1ING 2.4 2.7JPMorgan 3.0 3.5KERI 2.9 -Korea Invest. & Securities 2.7 2.9LG 2.8 -Morgan Stanley 3.1 3.2RBC Capital Markets - -SERI 3.1 -Standard Chartered Bank 2.7 2.8UBS 2.7 2.6United Overseas Bank 2.8 3.2Woori I&S 3.0 3.3SummaryMinimum 2.4 2.6Maximum 3.5 3.9Median 2.9 3.1Consensus 2.9 3.1History30 days ago 2.9 3.160 days ago 3.0 3.290 days ago 3.0 3.1Additional ForecastsCentral Bank (July 2010) 2.8 3.4IMF (Apr. 2010) 2.9 3.0ADB (Mar. 2010) 3.0 3.0

| 60



0

2

4

6

Q1 07 Q1 08 Q1 09 Q1 10 Q1 110

8

16

24

1995 2000 2005 2010


0

2

4

6



2

3

4

5

6



800

1,000

1,200

1,400

1,600



800

1,000

1,200

1,400

1,600



600

1,000

1,400

1,800

1995 2000 2005 2010800

1,000

1,200

1,400

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


29 | KRW/USD 2010 | evolution of fcst

27 | Exchange Rate | KRW per USD 28 | Exchange Rate | KRW per USD

23 | Interest Rate | 1995-2004| in % 24 | Interest Rate | Q1 07 - Q4 11 | in %


30 | KRW/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Bank of Korea (BoK).Forecasts based on FocusEconomics Consensus Forecast.

23 Interest rate, Overnight Call Rate in % (eop).24 Quarterly interest rate, Overnight Call Rate in % (eop).25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, KRW per USD (eop).28 Quarterly exchange rate, KRW per USD (eop).29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP.32 Trade balance, imports and exports, in USD bn.33 International reserves, months of imports.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %.36 External debt as % of GDP.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ - - 1,345 1,200Capital Economics 3.00 3.50 1,050 1,000Citigroup Global Markets Inc. - - 1,150 1,060Credit Suisse 2.75 4.25 1,120 1,050Daiwa Capital Markets 2.50 2.75 1,100 1,060DBS Bank 3.00 - 1,150 -Deutsche Bank 3.00 - 1,180 1,150Goldman Sachs - - 1,100 1,050HSBC 2.50 3.50 1,130 -ING 2.25 3.75 1,200 1,150JPMorgan 2.50 3.50 1,150 1,120KERI - - - -Korea Invest. & Securities - - 1,060 1,050LG 2.50 - 1,070 -Morgan Stanley - - - -RBC Capital Markets 2.75 3.25 1,050 1,000SERI 2.50 - 1,100 -Standard Chartered Bank 2.50 3.50 1,140 1,050UBS 2.75 2.75 1,275 1,175United Overseas Bank 2.75 - 1,160 -Woori I&S 2.50 3.50 1,050 980SummaryMinimum 2.25 2.75 1,050 980Maximum 3.00 4.25 1,345 1,200Median 2.50 3.50 1,130 1,055Consensus 2.65 3.43 1,136 1,078History30 days ago 2.65 3.42 1,133 1,07660 days ago 2.70 3.50 1,095 1,04290 days ago 2.68 3.47 1,071 1,021

Interest Rate Exchange Rate% KRW per USD

| 61



-6

0

6

12

1995 2000 2005 2010


-300

0

300

600

900

1995 2000 2005 2010


-30

-15

0

15

30

45

1995 2000 2005 2010


0

5

10

15

20

1995 2000 2005 2010


0

20

40

60

1995 2000 2005 2010


0

10

20

30


20102011






Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 23.1 16.0 35.0 24.0 467 499 432 475 313 330Credit Suisse 14.9 6.5 42.1 37.9 479 551 437 513 293 311Daiwa Capital Markets 29.3 24.4 44.6 38.1 476 526 432 488 284 305DBS Bank 18.0 9.0 21.0 12.0 463 507 442 495 298 316Deutsche Bank 10.1 5.4 34.1 26.3 462 514 428 487 287 301Goldman Sachs 15.3 - - - - - - - - -HSBC 15.4 12.6 39.1 38.0 460 499 421 461 320 368ING 23.0 20.0 41.0 43.0 454 518 413 475 285 300JPMorgan 18.6 3.9 36.7 22.6 431 488 394 466 290 308KERI 20.0 - 42.6 - 464 - 421 - - -Korea Invest. & Securities 13.2 10.7 19.4 12.7 431 490 411 478 - -LG 12.4 - 16.3 - 444 - 428 - - -Morgan Stanley 19.1 7.8 36.5 28.6 - - - - - -RBC Capital Markets 13.5 17.5 - - - - - - - -SERI 16.1 - 24.0 - 453 - 429 - - -Standard Chartered Bank 18.1 9.7 - - - - - - - -UBS 24.0 30.0 34.4 27.4 454 473 420 445 - -United Overseas Bank 13.5 11.6 - - - - - - - -Woori I&S 19.0 12.0 24.8 15.0 459 510 435 495 276 279SummaryMinimum 10.1 3.9 16.3 12.0 431 473 394 445 276 279Maximum 29.3 30.0 44.6 43.0 479 551 442 513 320 368Median 18.0 11.6 35.0 26.8 460 507 428 478 290 308Consensus 17.7 13.1 32.8 27.1 457 507 424 480 294 313History30 days ago 18.0 13.3 33.1 27.2 454 507 421 480 293 31260 days ago 16.8 11.2 31.9 24.8 447 500 416 475 289 30390 days ago 16.8 11.4 31.3 25.1 436 487 405 462 292 310



| 62



Industrial materials

30%

Fuels 35%

Other capital goods 11%

Electric & electronic machine

14%

Consumer goods 10%

India38%

Other10%

Korea 2%

Indonesia7%

China43%

India15%

Indonesia6%

Other16%

Korea10%

China53%

0%

25%

50%

75%

100%


37.6 39.3

7.3 7.06.0 6.24.2 4.09.6 9.9

7.0 6.3

24.9 25.0

3.3 2.3

0%

25%

50%

75%

100%Agriculture, hunting,forestry

Manufacturing

Construction

Wholesale and retailtrade

Transport, storage andcommunication

Financialintermediation

Real estate, renting andbusiness activities

Other

2004 2009

Other Asia13%

Other28%

EU-2712%

Japan6%USA

11%

China30%

Other Asia11%

Other36%

China20%

USA9%

Japan15%

EU-279%

Heavy industry products

79%

Crude materials and fuels

11%

Fishing6%Food and

consumer goods

1%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Korea in the Region

Fact Sheet

• Highly dependent on energyimports

• Quickly ageing population

• Lingering geopoliticaluncertainty regarding NorthKorea

• Highly developed infra-structure

• Globally leading position ininternet penetration

• Highly educated labour force

Official name: Republic of KoreaCapital: Seoul (9.6 m)Other cities: Pusan (4.6 m)

Daegu (3.2 m)Area (km2): 99,268Population (million, 2009 est.): 48.6Population density (per km2, 2009 est.): 489Population growth rate (%, 2009 est.): 0.3Life expectancy (years, 2009 est.): 78.7Illiteracy rate (%, 2000): 2.1Language: KoreanMeasures: Metric systemTime: 9 hours ahead of GMT

President: Lee Myung-bakLast elections: 19 December 2007Next elections: December 2012Central Bank Governor: Kim Chong-soo


Energy (2007) Primary Energy Production (trillion Btu): 1,461Primary Energy Consumption (trillion Btu): 9,647Electricity Generation (billion kW-h): 402Electricity Consumption (billion kW-h): 386Oil Supply (thousand bpd): 30.0Oil Consumption (thousand bpd): 2,241CO2 Emmissions (million metric tons): 516

Transportation (2009) Airports: 116Railways (km): 3,381Roadways (km): 103,029Waterways (km): 1,608Chief Ports: Incheon, Pusan, Pohang

Agency Rating OutlookMoody’s: A1 StableS&P: A StableFitch Ratings: A+ Stable

| 63

Malaysia September 2010FOCUSECONOMICS


REAL SECTOR | Economic growth slows down in second quarterIn the second quarter, gross domestic product (GDP) expanded 8.9% over thesame period last year. The reading came in below the 10.1% expansion recordedin the first quarter but overshot market expectations of an 8.1% increase.Although the figure confirms a strong economic recovery, it also reflects a lowbase of comparison, as GDP had fallen 3.9% in the same quarter last year.Consequently, growth rates are expected to continue moderating in the comingquarters as the base effect fades away.

The second quarter’s deceleration was mostly the result of a lower netcontribution from the external sector to overall growth, which fell from minus2.7 percentage points in the first quarter to minus 5.3 percentage points in thesecond quarter as growth in imports (Q2: +21.9% year-on-year) continued tooutpace that of exports (Q2: +13.8% yoy). In contrast, the domestic sectorcontinued to improve. Gross fixed investment led the way by expanding 12.9%(Q1: +5.4% yoy), while private consumption increased 7.9% (Q1: +5.1% yoy).

At the sector level, the deceleration was broad-based, with all major sectorsslowing down compared to the previous quarter. That said, deceleration wasmostly driven by the services sector, which accounts for more than a half oftotal GDP, and which moderated from an 8.5% expansion in the first quarter toa 7.3% increase. Meanwhile, the manufacturing sector, which accounts fornearly a quarter of total GDP, expanded a robust 15.9% (Q1: +17.0% yoy).

Despite the slowdown in exports, International Trade Minister, MustapaMohamed, stated that the country is on track to achieve the 6.0% growth targetset for this year. Consensus Forecast panellists are more optimistic and seeGDP growing 7.1% this year, which is up 0.2 percentage points from last month’sforecast. Next year, the panel expects the economy to grow 5.3%.

MalaysiaOutlook improves


• The economy continues to recover vigorously from last year’s slumpalbeit gradually moderating the pace. In the second quarter, GDPincreased 8.9% in annual terms, which was below the previousquarter’s 10.1% expansion.

• Consensus Forecast panellists raised their growth forecast by 0.2percentage and now see the economy growing 7.1% this year. Nextyear, the panel expects economic growth to moderate to 5.3%.

• Inflation maintained on its upward trend, in place since the beginningof the year, rising from 1.7% in June to 1.9% in July. Panellists expectthe trend to continue and project inflation to average 2.0% this year,which is unchanged from last month’s projection. Next year, the panelsees inflation at 2.6%.

Malaysia


2000-04 2005-09 2010-14Population (million): 24.5 27.2 29.8GDP (USD bn): 99 180 304GDP per capita (USD): 4,034 6,589 10,159GDP growth (%): 5.5 4.1 5.8Fiscal Balance (% of GDP): -5.0 -4.4 -4.3Inflation (%): 1.5 2.9 2.7Current Account (% of GDP): 10.3 16.2 11.8External Debt (% of GDP): 48.4 33.4 24.1


Note: Year-on-year changes in %.Source: Department of Statistics Malaysia (DSM) and FocusEconomics cal-culations.

6.9

7.7

7.9

8.9

12.9

13.8

21.9

0.0 8.0 16.0 24.0

Governmentconsumption

Total consumption

Private consumption

GDP

Investment

Exports

Imports

%

| 64




Note: Annual and monthly variation of consumer price index in %.Source: Department of Statistics Malaysia (DSM).

0.1

0.2

0.3

0.1

0.3

0.2 0.2

0.0 0.0 0.0

0.3

0.2

0.3

0.0

0.1

0.2

0.3

0.4


%

-4.0

-2.0

0.0

2.0

4.0

%



Note: Year-on-year and annual average variation of industrial production in-dex in %.Source: Department of Statistics Malaysia (DSM) and FocusEconomics cal-culations.

-9.7

-7.0 -6.1

0.9

-0.8

7.5

13.8

4.8

14.2

10.712.3

9.4

-7.9

-16.0

-8.0

0.0

8.0

16.0


%


REAL SECTOR | Industrial output growth slows downIn June, industrial output increased 9.4% over the same month last year. Thefigure represented a deceleration compared to May’s 12.3% expansion(previously reported: +12.5% year-on-year) and also came in below marketexpectations, which had industrial output rising 11.4%.

The deceleration was broad-based, as only output in the mining sector improvedin annual terms compared to the previous month (May: -0.2 yoy; June: +1.3 %yoy). In contrast, growth in the all-important manufacturing sector, whichaccounts for nearly two thirds of total industrial production, slowed to a 13.3%expansion (May: +18.5% yoy), while electricity production moderated to a 5.2%increase (May: +11.5% yoy).

Based on monthly figures, in the second quarter, industrial output increased10.8% compared to the same quarter last year, which was down from the 11.1%expansion recorded in the first quarter. Moreover, annual average growth inindustrial production jumped from 2.2% in May to 3.9%.

Consensus Forecast panellists anticipate industrial output to grow 7.2% thisyear, which is 0.1 percentage points above last month’s forecast. Next year,the panel sees industrial production adding 4.7%.

MONETARY SECTOR | Inflation rises amid cut in fuel and sugar subsidiesIn July, consumer prices added 0.3% over the previous month, which came inabove June’s 0.2% increase but was in line with market expectations. Themonthly reading was mostly driven by higher prices for transportation, as thegovernment recently cut fuel subsidies in an attempt to rein in the fiscal deficit,which reached a 20-year high in 2009. Owing to the monthly reading, annualinflation rose for the fifth consecutive month, increasing from 1.7% in June to1.9% in July. Moreover, annual average inflation also increased from 0.1% inJune to 0.4%.

Amid the steady rise in prices, on 8 July the Central Bank raised the overnightpolicy rate from 2.50% to 2.75%, which represented the third interest rate hikethis year, as the economy is showing signs of a strong recovery. Monetarypolicy makers stated that the current monetary policy stance remains supportiveof economic growth.

The Central Bank expects inflation to average between 2.0% and 2.5% thisyear. Consensus Forecast panellists broadly share the Bank’s assessment andanticipate inflation to average 2.0% this year, which is unchanged over lastmonth’s forecast. For next year, participants expect average inflation to inch upto 2.6%.

| 65




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 26.1 26.6 27.2 27.7 28.3 28.8 29.3 29.8 30.3 30.8GDP per capita (USD) 5,280 6,062 6,849 7,992 6,763 8,403 9,376 10,132 10,957 11,926GDP (USD bn) 138 161 186 222 191 242 275 302 332 368Economic Growth (GDP, annual var. in %) 5.3 5.8 6.3 4.6 -1.7 7.1 5.3 5.7 5.6 5.4 Private Consumption (ann. var. in %) 9.1 6.5 10.8 8.5 0.8 5.4 5.6 6.3 6.7 6.3 Government Consumption (ann. var. in %) 6.5 4.9 6.6 10.9 3.7 - - - - - Fixed Investment (ann. var. in %) 5.0 7.9 9.2 0.8 -5.5 6.6 5.8 5.7 6.5 6.4Manufacturing (annual variation in %) 3.6 4.8 2.3 0.8 -7.7 7.2 4.7 5.8 6.5 5.3Unemployment (eop, % of active population) 3.8 3.0 3.0 3.1 3.4 3.4 3.3 3.3 3.2 3.2Fiscal Balance (% of GDP) -3.6 -3.3 -3.2 -4.8 -7.0 -5.6 -4.8 -4.1 -3.6 -3.4Public Debt (% of GDP) 43.8 42.2 41.7 41.5 53.7 - - - - -Monetary and Financial Sector Money (annual variation of M1 in %) 8.5 13.7 19.6 8.3 9.8 - - - - -Inflation (CPI, annual variation in %) 3.5 3.1 2.4 4.4 1.1 - - - - -Inflation (CPI, annual average variation in %) 3.1 3.6 2.0 5.4 0.6 2.0 2.6 2.9 3.0 3.0Inflation (WPI, annual variation in %) 6.3 5.9 5.1 1.2 1.8 - - - - -Overnight Policy Rate (%, eop) 3.00 3.50 3.50 3.25 2.00 2.80 3.21 3.47 3.59 3.77Stock Market (var. of FTSE BM KLCI in %) -0.8 21.8 31.8 -39.3 45.2 - - - - -Exchange Rate (MYR per USD, eop) 3.78 3.53 3.31 3.46 3.42 3.17 3.09 3.10 3.01 2.97Exchange Rate (MYR per USD, average) 3.79 3.55 3.44 3.33 3.52 3.30 3.13 3.09 3.06 2.99External Sector Current Account Balance (% of GDP) 15.0 16.3 15.7 17.5 16.7 14.0 12.7 11.6 10.6 9.9Current Account Balance (USD bn) 20.7 26.3 29.2 38.9 32.0 33.9 34.8 35.0 35.2 36.4Trade Balance (USD bn) 27.3 31.3 37.1 51.2 40.1 41.2 43.7 40.4 39.4 39.7Exports (USD bn) 142 166 176 199 157 187 208 230 249 269Imports (USD bn) 114 135 139 148 117 146 164 189 210 230Exports (annual variation in %) 11.8 17.1 6.3 13.1 -21.1 18.7 11.2 10.7 8.4 8.2Imports (annual variation in %) 8.7 17.7 3.4 6.5 -21.0 24.7 12.5 15.3 10.7 9.6International Reserves (USD bn) 70 82 101 93 97 104 113 127 138 146International Reserves (months of imports) 7.4 7.4 8.7 7.5 9.9 8.6 8.2 8.1 7.9 7.6External Debt (USD bn) 52.3 52.2 56.7 68.2 68.3 68.7 69.2 73.0 73.3 75.5External Debt (% of GDP) 37.9 32.4 30.5 30.8 35.7 28.4 25.2 24.2 22.1 20.5

Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 4.9 0.1 -6.2 -3.9 -1.2 4.4 10.1 8.9 5.7 4.8Inflation (CPI, annual average variation in %) 8.4 5.9 3.7 1.3 -2.3 -0.2 1.3 1.6 2.1 2.3Overnight Policy Rate (%, eop) 3.50 3.25 2.00 2.00 2.00 2.00 2.25 2.50 2.79 2.80Exchange Rate (MYR per USD, eop) 3.46 3.46 3.65 3.52 3.47 3.42 3.27 3.26 3.19 3.17

Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Manufacturing (annual variation in %) -0.8 7.5 13.8 4.8 14.2 10.7 12.3 9.4 - -Unemployment (eop, % of active population) 3.5 3.4 3.6 3.6 3.6 3.2 3.3 3.7 - -Inflation (CPI, mom variation in %) 0.3 0.2 0.2 0.0 0.0 0.0 0.3 0.2 0.3 -Inflation (CPI, annual variation in %) -0.1 1.1 1.3 1.2 1.3 1.5 1.6 1.7 1.9 -Exchange Rate (MYR per USD, eop) 3.39 3.42 3.41 3.41 3.27 3.19 3.25 3.26 3.19 3.14

| 66




3

4

5

6

7

8


2010 2011

3

4

5

6

7


2010 2011

-50

-25

0

25

50

1995 2000 2005 2010

MalaysiaAsia (ex Japan)

-12

-6

0

6

12

18

1995 2000 2005 2010


2

4

6

8



0

2

4

6

8

10



-10

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

MalaysiaAsia (ex Japan)World

-10

-5

0

5

10

15

1995 2000 2005 2010




2 | Real GDP | Q1 07-Q4 11 | % variation


1 | Real GDP | 1995 - 2014 | % variation Real GDP growth in %

Individual Forecasts 2010 2011ANZ 7.7 6.1Capital Economics 7.5 5.5Citigroup Global Markets Inc. 7.2 5.0Credit Suisse 6.7 5.5Daiwa Capital Markets 7.8 5.6DBS Bank 8.0 5.5Deutsche Bank 6.7 4.5Goldman Sachs 7.3 5.2HSBC 7.1 5.2ING 6.9 6.0JPMorgan 7.7 4.8Kenanga Investment Bank 6.8 5.5Maybank Investment Bank 7.5 6.1Morgan Stanley 6.5 5.0OCBC Bank 6.7 5.4RHB Research Institute 7.3 5.0Standard Chartered Bank 6.2 4.5UBS 7.0 5.0United Overseas Bank 6.1 5.1Summary Minimum 6.1 4.5Maximum 8.0 6.1Median 7.1 5.2Consensus 7.1 5.3History 30 days ago 6.9 5.460 days ago 6.6 5.490 days ago 6.3 5.3Additional Forecasts Central Bank 4.5 - 5.5 -IMF (Aug. 2010) 6.7 5.3ADB (July 2010) 6.8 5.0

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allreal sector data are from the Department of Statistics Malaysia (DSM)and the Central Bank (BNM, Bank Negara Malaysia). See below fordetails. Forecasts based on FocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: DSM.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: DSM.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: DSM.6 Gross fixed investment, annual variation in %. Source: DSM.7 Private consumption, change in 2010 and 2011 forecasts during thelast 18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: DSM.10 Unemployment, % of active population. Source: DSM.11 Balance of central government, % of GDP. Source: BNM.12 Industrial production, evolution of 2010 and 2011 forecasts duringthe last 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last18 months.14 Balance of central government, evolution of 2010 and 2011forecasts during the last 18 months.

Notes and sources

| 67



-8

-7

-6

-5

-4


2010 20113.0

3.5

4.0

4.5


2010 2011

2

4

6

8


2010 2011

-8

-4

0

4

1995 2000 2005 2010


2

3

4

5

1995 2000 2005 2010


-10

0

10

20

30

1995 2000 2005 2010









Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics 6.0 4.0 5.0 2.0 - - 3.2 3.0 -5.0 -5.0Citigroup Global Markets Inc. 4.9 6.7 6.9 6.0 - - 3.7 3.5 -5.7 -4.5Credit Suisse 5.2 7.0 5.0 6.5 - - - - -5.4 -4.5Daiwa Capital Markets 4.2 4.8 2.8 3.0 - - - - -7.8 -6.7DBS Bank 5.5 4.1 7.1 6.1 - - - - -5.0 -4.3Deutsche Bank 3.7 4.5 8.4 5.5 5.3 1.9 3.3 3.2 -4.5 -3.0Goldman Sachs - - - - - - - - -6.0 -HSBC 6.5 6.7 7.4 6.5 11.7 6.3 3.2 3.3 -4.5 -3.2ING 4.5 5.5 10.1 8.6 5.2 5.9 - - -7.2 -6.4JPMorgan 6.1 6.1 - - 5.1 3.8 - - -5.2 -4.5Kenanga Investment Bank 6.1 5.3 6.3 4.5 7.9 4.7 3.4 3.4 -5.8 -5.5Maybank Investment Bank 6.5 6.9 7.0 8.8 8.7 4.1 3.5 3.5 -5.5 -4.5Morgan Stanley - - 2.0 5.0 - - - - - -OCBC Bank 5.2 5.5 11.7 5.2 5.0 3.5 3.5 3.3 - -RHB Research Institute 5.6 6.0 8.9 8.6 8.3 7.5 3.5 3.4 -5.3 -4.4Standard Chartered Bank - - - - - - - - - -UBS 5.6 5.3 4.2 5.3 - - - - -6.2 -5.7United Overseas Bank - - - - - - 3.3 3.1 -5.3 -4.5Summary Minimum 3.7 4.0 2.0 2.0 5.0 1.9 3.2 3.0 -7.8 -6.7Maximum 6.5 7.0 11.7 8.8 11.7 7.5 3.7 3.5 -4.5 -3.0Median 5.6 5.5 7.0 5.8 6.6 4.4 3.4 3.3 -5.4 -4.5Consensus 5.4 5.6 6.6 5.8 7.2 4.7 3.4 3.3 -5.6 -4.8History 30 days ago 5.4 5.6 6.6 5.8 7.1 5.0 3.4 3.3 -5.6 -4.660 days ago 5.3 5.5 6.5 5.8 6.9 5.0 3.4 3.3 -5.6 -4.690 days ago 5.2 5.5 6.6 5.3 6.3 5.1 3.5 3.3 -5.8 -4.7


Industry % variation


Consumption % variation

Investment % variation

| 68





Individual Forecasts 2010 2011ANZ - -Capital Economics 2.5 2.8Citigroup Global Markets Inc. 2.0 3.0Credit Suisse 1.7 2.8Daiwa Capital Markets 2.2 2.4DBS Bank 1.8 2.4Deutsche Bank 1.5 2.0Goldman Sachs 2.8 3.0HSBC 2.0 2.6ING 1.6 2.0JPMorgan 2.2 2.4Kenanga Investment Bank 2.0 2.5Maybank Investment Bank 2.0 2.7Morgan Stanley 1.7 1.9OCBC Bank 2.0 3.3RHB Research Institute 2.0 2.8Standard Chartered Bank 2.0 2.5UBS 1.9 2.2United Overseas Bank 2.3 3.6Summary Minimum 1.5 1.9Maximum 2.8 3.6Median 2.0 2.6Consensus 2.0 2.6History 30 days ago 2.0 2.660 days ago 2.1 2.690 days ago 2.2 2.6Additional Forecasts Central Bank 2.0-2.5 -IMF (Aug. 2010) 2.0 2.1ADB (Mar. 2010) 2.4 3.0


15 Inflation, annual average variation in consumer price index (CPI) in%. Source: DSM.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: DSM.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Producer price indiex, annual variation in % (eop). 1995-2009.Source: DSM.20 Money, annual variation of M1 in %. 1995-2009. Source: BNM.21 Daily MSCI Price index in USD. From Jan. 2008 until end ofprevious month. Source: MSCI Barra.22 Daily index levels, FTSE Bursa Malaysia KLCI. From Jan. 2008until end of previous month. Source: FTSE Bursa Malaysia.

Notes and sources

200

300

400

500


-4

0

4

8

12

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

3

6

9

12

1995 2000 2005 2010


1

2

3

4



0

1

2

3

4

5



-4

0

4

8

12

1995 1998 2001 2004 2007-20

0

20

40

1995 1998 2001 2004 2007

800

1,000

1,200

1,400

1,600


19 | Producer Prices | % variation

15 | Inflation | 1995 - 2014 | in %


21 | MSCI Price Index 22 | Stock Market | FTSE BM KLCI



16 | Inflation | Q1 07-Q4 11 | in %

| 69



1

2

3

4

Q1 07 Q1 08 Q1 09 Q1 10 Q1 110

2

4

6

8

10

1995 2000 2005 2010

0

2

4

6

8



1

2

3

4



2.5

3.0

3.5

4.0



3.0

3.5

4.0

4.5



2.5

3.0

3.5

4.0

1995 2000 2005 20103.0

3.2

3.4

3.6

3.8

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


29 | MYR/USD 2010 | evolution of fcst

27 | Exchange Rate | MYR per USD 28 | Exchange Rate | MYR per USD



30 | MYR/USD 2011 | evolution of forecasts


Individual Forecasts 2010 2011 2010 2011ANZ 2.75 3.25 3.38 3.20Capital Economics 3.00 3.50 3.10 -Citigroup Global Markets Inc. - - 3.19 3.12Credit Suisse 2.50 3.00 3.18 3.08Daiwa Capital Markets - - 3.08 2.97DBS Bank 3.00 - 3.20 -Deutsche Bank 3.00 - 3.15 3.06Goldman Sachs - - 3.10 3.05HSBC 2.75 3.00 3.05 -ING 2.75 2.75 3.21 3.21JPMorgan 3.00 3.00 3.10 3.05Kenanga Investment Bank 2.75 3.50 3.15 3.07Maybank Investment Bank 2.75 3.25 3.13 3.03Morgan Stanley - - 3.32 3.15OCBC Bank 2.75 3.50 3.20 3.12RHB Research Institute 2.75 3.25 3.15 3.10Standard Chartered Bank 2.75 3.50 3.15 3.00UBS 2.75 3.00 3.30 3.15United Overseas Bank 2.75 - 3.18 -Summary Minimum 2.50 2.75 3.05 2.97Maximum 3.00 3.50 3.38 3.21Median 2.75 3.25 3.15 3.08Consensus 2.80 3.21 3.17 3.09History 30 days ago 2.77 3.08 3.21 3.1160 days ago 2.76 3.09 3.21 3.1290 days ago 2.74 3.06 3.20 3.13

Interest Rate Exchange Rate% MYR per USD


23 Interest rate, Central Bank Overnight Policy Rate in % (eop).Source: BNM.24 Quarterly interest rate, Central Bank Overnight Policy Rate in %(eop). Source: BNM.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, MYR per USD (eop). Source: BNM.28 Quarterly exchange rate, MYR per USD (eop). Source: BNM.29 Exchange rate, evolution of 2010 forecast during the last 18months.30 Exchange rate, evolution of 2011 forecast during the last 18months.31 Current account balance as % of GDP. Source: DSM.32 Trade balance, imports and exports, in USD bn. Source: BNM.33 International reserves, months of imports. Source: BNM.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: DSM.36 External debt as % of GDP. Source: BNM.

Notes and sources

| 70




Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 27.9 30.0 31.7 37.4 189 214 157 176 105 120Credit Suisse 36.6 38.7 49.7 52.0 200 227 151 175 98 107Daiwa Capital Markets 34.2 37.0 43.8 54.6 176 195 133 140 105 112DBS Bank 36.0 39.0 48.0 56.0 201 218 153 162 108 119Deutsche Bank 31.2 26.7 40.9 36.1 186 200 146 164 109 121Goldman Sachs 38.3 - - - - - - - - -HSBC 36.9 41.1 48.7 53.5 197 219 148 165 102 115ING 24.0 26.0 30.0 32.0 142 157 112 125 107 112JPMorgan 34.7 36.4 42.9 43.8 179 204 137 160 101 104Kenanga Investment Bank 31.0 35.7 - - - - - - 108 115Maybank Investment Bank 38.6 38.8 40.5 41.3 195 222 154 181 - -Morgan Stanley 34.6 33.6 47.2 47.6 - - - - - -OCBC Bank 32.7 35.2 38.8 42.3 180 201 142 159 99 105RHB Research Institute 31.0 29.7 33.1 30.7 200 227 167 196 100 107Standard Chartered Bank 35.2 33.2 - - - - - - - -UBS 39.1 39.6 40.6 40.4 194 208 153 167 108 118United Overseas Bank 34.8 35.8 - - - - - - - -Summary Minimum 24.0 26.0 30.0 30.7 142 157 112 125 98 104Maximum 39.1 41.1 49.7 56.0 201 227 167 196 109 121Median 34.7 35.8 40.9 42.3 192 211 149 165 105 113Consensus 33.9 34.8 41.2 43.7 187 208 146 164 104 113History 30 days ago 34.3 35.0 41.2 43.6 187 207 146 164 104 11360 days ago 34.6 35.3 42.3 44.8 191 212 149 168 105 11490 days ago 34.0 35.1 40.6 43.9 188 209 148 166 108 118



20

25

30

35

40


2010 2011

-30

-15

0

15

30

1995 2000 2005 2010

0

5

10

15

20

1995 2000 2005 2010


-100

0

100

200

300

1995 2000 2005 2010


-10

0

10

20

1995 2000 2005 2010


0

20

40

60

80

1995 2000 2005 2010






| 71



India38%

Other9%

Indonesia7%

Korea 2%

Malaysia1%

China43%

India15%

Other14%

Indonesia6%

China53%

Malaysia2%

Korea10%

Other9%

Capital goods15%

Intermediate goods 68%

Consumer goods

7%

Other42%

Oil & derivative

8%Palm oil & derivative

9%

Electronics & electric

equipment 41%

Other Asia19%

Other17%

China15%

USA8%

Japan10%

EU-2710%

Singapore 22%

Other Asia16%

Other18%

EU-2711%

Japan10%

USA13%

China16%

Singapore 16%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Malaysia in the Region

Fact Sheet

Official name: MalaysiaCapital: Kuala Lumpur (1.4 m)Other cities: Pinang (1.2 m)

Ipoh (1.0 m)Area (km2): 329,750Population (million, 2009 est.): 28.3Population density (per km2, 2009 est.) 85.8Population growth rate (%, 2009 est.): 1.7Life expectancy (years, 2009 est.): 73.3Illiteracy rate (%, 2000): 11.3Language: Bahasa Malaysia,

EnglishMeasures: Metric systemTime: 8 hours ahead of GMT


Energy (2007) Primary Energy Production (trillion Btu): 3,517Primary Energy Consumption (trillion Btu): 2,413Electricity Generation (billion kW-h): 103Electricity Consumption (billion kW-h): 99.2Oil Supply (thousand bpd): 704Oil Consumption (thousand bpd): 540CO2 Emmissions (million metric tons): 157.2

Transportation (2009) Airports: 118Railways (km): 1,849Roadways (km): 98,721Waterways (km): 7,200Chief Ports: Port Kelang

Agency Rating OutlookMoody’s: A3 StableS&P: A- StableFitch Ratings: A- Stable

Prime Minister: Najib Tun RazakLast elections: 8 March 2008Next elections: March 2013Central Bank Governor: Zeti Akhtar Aziz

• Scarcity of qualified labour

• Vulnerability to external shocks

• Low productivity

• Competitive labour costs

• Advanced financial sector

• Net exporter of oil and gas

0%

25%

50%

75%

100%

2003 2005 2007 2009

Private Consumption Government ConsumptionInvestment Net exports

25.8 27.4

11.013.2

9.911.7

4.35.3

30.726.9

10.0 7.9

8.2 7.7

0%

25%

50%

75%

100%Agriculture, hunting,forestry

Mining and Quarrying

Manufacturing

Real Estates andBusiness Services

Finance and Insurance

Wholesale and RetailTrade

Other

2004 2009

| 72

Philippines September 2010FOCUSECONOMICS


REAL SECTOR | Economy expands faster-than-expected in the secondconsecutive quarterIn the second quarter, gross domestic product (GDP) expanded 7.9% over thesame period the year before, marking the fastest growth rate since the secondquarter of 2007 and the second consecutive quarter with annual growth rateabove 7%. The reading virtually mirrored the robust 7.8% annual expansion(previously reported: +7.3% year-on-year) registered in the first quarter andalso overshot market expectations of a 6.3% annual expansion.

According to the Philippine National Statistical Coordination Board (NSCB),growth was driven by the external demand, as the domestic demand deceler-ated over the previous quarter. In particular, growth in private consumptionslowed from 5.4% in the first quarter to 4.9%. Furthermore, investment slowedto 11.0%, well below the strong 21.9% surge recorded in the first quarter.

In the external sector, exports accelerated strongly to grow 27.4% (Q1: 22.4%yoy), while imports also improved, albeit less sharply (Q1: +22.4% yoy; Q2:+23.9% yoy). As a result, the net contribution from the external sector to over-all economic growth improved from a 0.1 percentage-point detraction in thefirst quarter to a 1.6 percentage-point contribution in the second.

At the sector level, the second quarter reading was driven by the 15.8% ex-pansion recorded in industry, as the El Niño phenomenon negatively affectedthe agricultural sector, which contracted 3.0% annually (Q1: -2.7% yoy). Sea-sonally adjusted figures corroborate the strong growth suggested by the an-nual data, as the economy grew 1.3% over the first three months of the year.Accordingly, the National Economic Development Authority revised thegovernment’s official 2010 GDP growth target from 5.0% to 6.0% to 5.9% to6.9%.

PhilippinesOutlook improves


• The government raised the official GDP forecast to 5.9 - 6.9% (from aprevious 5.0 - 6.0% estimate) after the economy posted a 7.9% ex-pansion in the second quarter. The reading, which marked the fast-est pace since 2007, came in slightly above the previous quarter’srobust 7.8% expansion and was driven by strong investment and abuoyant external sector.

• Consensus Forecast panellists accordingly raised their 2010 GDPforecasts for a third consecutive month and now expect economicgrowth to reach 5.6%. In 2011, growth is expected to moderate to4.8%.

• In July, inflation remained unchanged at June’s 3.9%. Panellists low-ered their forecasts for a third consecutive month and now expectconsumer prices to increase 4.4% in 2010. In 2011, the panel antici-pates inflation to moderate slightly to 4.2%.

Philippines


2000-04 2005-09 2010-14Population (million): 80.2 88.7 97.7GDP (USD bn): 78 138 230GDP per capita (USD): 973 1,547 2,344GDP growth (%): 4.6 4.4 5.0Fiscal Balance (% of GDP): -4.4 -1.8 -2.8Inflation (%): 4.4 5.8 4.4Current Account (% of GDP): -0.7 3.7 2.9External Debt (% of GDP): 69.1 40.7 27.8


Note: Year-on-year changes in %.Source: National Statistical Coordination Board (NSCB) and FocusEconomicscalculations.

4.9

5.6

7.9

11.0

23.9

27.4

0.0 7.5 15.0 22.5 30.0

PrivateConsumption


GDP

Investment

Imports

Exports

%

| 73



The Consensus Forecast panel also raised their forecasts and expects eco-nomic growth to reach 5.6% in 2010, which is 0.2 percentage points above lastmonth’s Consensus Forecast. The panel expects the economy to grow 4.8%next year.

MONETARY SECTOR | Inflation remains unchanged in JulyIn July, consumer prices added 0.24% over the previous month, which mir-rored June’s reading of a 0.24% rise (previously reported: +0.18% month-on-month). The monthly price rise was broad-based, as prices rose in all the sixmain categories surveyed by that compose the index. In particular, the 0.43%mom price increase for services was the main driver of July’s reading.

Despite the monthly increase, annual headline inflation remained unchangedat 3.9% in July, undershooting market expectations of a 4.1% rate. Meanwhile,core inflation, which excludes more volatile price categories such as oil andfresh food, increased 0.25% over the previous month. As a result, annual coreinflation inched up to 3.9% (June: +3.8% year-on-year).

Annual average inflation, which is the reference rate for the Central Bank’spolicy making, accelerated further to 3.2% (June: +2.9%), although still re-mains well below the target of 4.5% with a ± 1.0 percentage-point tolerancemargin set for this year. Therefore, owing to the benign inflation outlook and tothe increasing productive capacity of the economy, the monetary board de-cided to keep interest rates unchanged at its most recent meeting on 26 Au-gust. Furthermore, monetary authorities also announced the new inflation tar-get for the 2012-14 period at 4.0% with a ± 1.0 percentage-point tolerancemargin.

Consensus Forecast panellists anticipate annual inflation to average 4.4% thisyear, which is down 0.1 percentage points from last month’s forecast. For 2011,the panel expects consumer prices to moderate to 4.2%.


Note: Annual and monthly variation of consumer price index in %.Source: National Statistics Office (NSO).

0.57

0.31

0.12

0.56

0.43

0.24

-0.18

0.24 0.240.24

0.55

0.19

0.550.62

-0.3

0.0

0.3

0.6

0.9

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

%

0.0

2.0

4.0

6.0

%


| 74




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 85.2 86.9 88.6 90.4 92.1 93.9 95.8 97.7 99.6 101.5GDP per capita (USD) 1,161 1,352 1,625 1,847 1,747 1,988 2,196 2,364 2,492 2,681GDP (USD bn) 99 118 144 167 161 187 210 231 248 272Economic Growth (GDP, annual var. in %) 5.0 5.3 7.1 3.7 1.1 5.6 4.8 5.2 4.8 4.5 Private Consumption (ann. var. in %) 4.8 5.5 5.8 4.7 4.1 5.0 4.8 4.6 4.3 4.4 Fixed Investment (annual variation in %) -6.6 3.9 10.9 2.9 -3.5 6.7 4.6 5.9 6.2 5.9Manufacturing (annual variation in %) 3.8 4.5 6.8 0.3 -11.9 5.8 4.1 3.9 3.7 3.6Unemployment (eop, % of active population) 8.1 7.8 7.4 6.8 7.1 7.7 7.5 7.4 7.7 7.7Fiscal Balance (% of GDP) -2.7 -1.1 -0.2 -0.9 -3.9 -3.7 -3.1 -2.5 -2.4 -2.5Public Debt (% of GDP) 71.4 63.9 55.8 56.9 57.3 - - - - -Monetary and Financial Sector Money (ann. var. of M1 in %) 9.9 24.6 15.1 21.0 14.1 - - - - -Inflation (CPI, annual variation in %) 6.7 4.3 3.9 8.0 4.3 - - - - -Inflation (CPI, annual average variation in %) 7.6 6.3 2.8 9.3 3.2 4.4 4.2 4.4 4.8 4.5Inflation (Core, annual variation in %) 5.9 4.6 2.6 7.3 3.1 - - - - -Inflation (PPI, annual variation in %) 12.9 5.9 0.9 1.8 5.7 - - - - -Treasury Bill Rate 91 Days (%, eop) 5.61 5.26 3.71 6.12 3.89 4.52 5.12 5.00 5.20 4.77Exchange Rate (PHP per USD, eop) 53.1 49.1 41.4 47.5 46.4 44.9 43.4 44.8 45.1 44.2Exchange Rate (PHP per USD, average) 55.0 51.3 46.1 44.5 47.6 45.6 44.1 44.1 44.9 44.6External Sector Current Account Balance (as % of GDP) 2.0 4.5 4.4 2.2 5.3 4.2 3.8 2.8 2.0 1.8Current Account (USD bn) 2.0 5.3 6.4 3.6 8.6 7.9 8.1 6.5 5.0 4.8Trade Balance (USD bn) -7.8 -6.7 -8.2 -12.9 -8.9 -7.7 -8.9 -11.3 -14.3 -16.2Exports (USD bn) 40.3 46.5 49.3 48.3 37.5 45.2 49.1 53.7 58.2 60.2Imports (USD bn) 48.0 53.3 57.6 61.1 46.4 52.9 58.1 64.8 72.5 76.4Exports (annual variation in %) 3.8 15.6 6.0 -2.2 -22.3 20.0 8.7 9.3 8.4 3.5Imports (annual variation in %) 8.0 10.9 8.1 6.2 -24.1 19.1 9.7 11.6 11.8 5.4International Reserves (USD bn) 18.4 23.0 33.8 37.6 44.2 48.0 53.6 58.9 60.7 62.6International Reserves (months of imports) 4.6 5.2 7.0 7.4 11.1 10.9 11.1 10.9 10.0 9.8External Debt (USD bn) 54.2 53.4 54.9 53.9 53.3 58.4 59.7 65.6 65.7 66.5External Debt (% of GDP) 54.7 45.4 38.1 32.3 33.1 31.3 28.4 28.4 26.5 24.4 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 4.6 2.8 0.5 1.2 0.2 2.1 7.8 7.9 5.4 5.0Inflation (CPI, annual average variation in %) 12.2 9.7 6.9 3.2 0.3 2.9 4.3 4.2 4.5 4.3Treasury Bill Rate 91 Days (%, eop) 5.70 6.12 4.41 4.44 3.99 3.89 3.88 3.99 4.11 4.52Exchange Rate (PHP per USD, eop) 46.9 47.5 48.4 48.3 47.6 46.4 45.2 46.3 45.6 44.9 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Inflation (CPI, mom variation in %) 0.62 0.55 0.24 0.43 0.24 0.55 -0.18 0.24 0.24 -Inflation (CPI, annual variation in %) 2.8 4.3 4.3 4.2 4.4 4.4 4.3 3.9 3.9 -Exchange Rate (PHP per USD, eop) 46.8 46.4 46.7 46.3 45.2 44.6 46.2 46.3 45.8 45.2Remittances (USD bn) 1.5 1.6 1.4 1.4 1.6 1.5 1.6 1.6 - -

| 75



-6

0

6

12

1995 2000 2005 2010

PhilippinesAsia (ex Japan)World

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

3

6

9

1995 2000 2005 2010

PhilippinesAsia (ex Japan)

-20

-10

0

10

20

30

1995 2000 2005 2010


2

4

6

8



2

4

6

8



3.0

3.5

4.0

4.5

5.0

5.5


20102011

2

4

6

8


2010

2011






General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the National Statistical Coordination Board (NSCB),the National Statistics Office (NSO) and the Central Bank of Philippines(BSP, Bangko Sentral ng Pilipinas). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: NSCB.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: NSCB.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: NSCB.6 Gross fixed investment, annual variation in %. Source: NSCB.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: NSO.10 Unemployment, % of active population. Source: NSO.11 Balance of national government, % of GDP. Source: BSP.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance national government, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources


Individual Forecasts 2010 2011ANZ 7.4 6.6Banco de Oro 5.0 5.5BPI AMTG 5.0 -Capital Economics 5.5 5.0Citigroup Global Markets Inc. 5.8 4.9Credit Suisse 5.7 3.9DBS Bank 6.2 5.0Deutsche Bank 4.5 5.0Goldman Sachs 4.2 5.0HSBC 5.0 4.6ING 6.1 4.2JPMorgan 6.8 4.3Metropolitan Bank and Trust 5.9 -Philippine Equity Partners 5.0 4.0Standard Chartered Bank 5.9 5.0UBS 5.5 4.6United Overseas Bank - -SummaryMinimum 4.2 3.9Maximum 7.4 6.6Median 5.6 5.0Consensus 5.6 4.8History30 days ago 5.4 4.760 days ago 5.1 4.590 days ago 3.9 4.4Additional ForecastsADB (July 2010) 5.0 4.6IMF (July 2010) 6.0 4.0

| 76



-15

-5

5

15

1995 2000 2005 2010


0

3

6

9

12

1995 2000 2005 2010

Philippines Asia (ex Japan)-8

-4

0

4

1995 2000 2005 2010


3

4

5

6


20102011

7.0

7.5

8.0

8.5

9.0


20102011

-4

-3

-2

-1


20102011








Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - -Banco de Oro 3.8 3.4 4.0 3.3 8.0 8.0 -3.6 -4.1BPI AMTG - - - - - - -3.1 -Capital Economics 4.0 4.0 5.0 4.5 - - -3.8 -3.0Citigroup Global Markets Inc. 4.8 5.0 9.9 7.6 - - -4.0 -3.5Credit Suisse 5.9 4.9 8.9 3.9 - - -3.8 -3.0DBS Bank 6.5 4.1 2.7 1.7 - - -4.0 -3.0Deutsche Bank 3.9 5.2 7.9 6.2 8.1 7.9 -3.5 -2.6Goldman Sachs - - - - - - -3.2 -HSBC 5.4 5.3 6.3 5.7 7.6 7.1 -4.3 -3.4ING 5.2 5.6 - - 7.3 7.0 -3.6 -3.0JPMorgan - - - - - - -3.5 -2.5Metropolitan Bank and Trust - - - - - - - -Philippine Equity Partners 5.5 5.3 - - - - -3.8 -3.0Standard Chartered Bank - - - - - - - -UBS 5.4 4.9 8.5 3.8 - - -3.6 -3.2United Overseas Bank - - - - - - - -SummaryMinimum 3.8 3.4 2.7 1.7 7.3 7.0 -4.3 -4.1Maximum 6.5 5.6 9.9 7.6 8.1 8.0 -3.1 -2.5Median 5.3 5.0 7.1 4.2 7.8 7.5 -3.6 -3.0Consensus 5.0 4.8 6.7 4.6 7.7 7.5 -3.7 -3.1History30 days ago 5.0 4.8 7.2 4.9 7.7 7.5 -3.7 -3.160 days ago 4.8 4.7 7.0 4.9 7.6 7.4 -3.6 -3.190 days ago 4.4 4.6 3.6 4.7 7.6 7.4 -3.6 -3.0





| 77



1,000

2,000

3,000

4,000

Jan Jul Jan Jul Jan Jul140

220

300

380


0

2

4

6

8



0

2

4

6

8



0

4

8

12

1995 2000 2005 2010

Philippines Asia (ex Japan)

-4

0

4

8

12

16

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

Philippines Asia (ex Japan)

-15

0

15

30

45

1995 1998 2001 2004 20070

5

10

15

2004 2005 2006 2007 2008 2009

Core Price IndexPPI





21 | MSCI Price Index 22 | Stock Market | Phisix Composite



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the National Statistics Office (NSO) and theCentral Bank of Philippines (BSP, Bangko Sentral ng Pilipinas). See belowfor details. Forecasts based on FocusEconomics Consensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: NSO.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: NSO.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009. Source: NSO.20 Money, annual variation of M1 in %. 1995-2009. Source: BSP.21 Daily MSCI Price Index in USD. Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, Phisix Composite Index. Jan. 2008 until end ofprevious month. Source: The Philippine Stock and Exchange.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Banco de Oro 4.0 3.8BPI AMTG 4.8 -Capital Economics 4.5 3.0Citigroup Global Markets Inc. 3.8 3.4Credit Suisse 4.4 4.4DBS Bank 4.0 4.4Deutsche Bank 4.4 5.0Goldman Sachs 4.7 4.2HSBC 4.7 4.6ING 4.5 4.8JPMorgan 5.3 4.9Metropolitan Bank and Trust 4.1 -Philippine Equity Partners 4.3 4.5Standard Chartered Bank 3.8 3.3UBS 4.1 4.2United Overseas Bank - -SummaryMinimum 3.8 3.0Maximum 5.3 5.0Median 4.4 4.4Consensus 4.4 4.2History30 days ago 4.5 4.260 days ago 4.6 4.590 days ago 4.7 4.6Additional ForecastsCentral Bank (June 2010) 4.7 3.0 - 5.0IMF (Apr. 2010) 5.0 4.0ADB (Mar. 2010) 4.7 4.5

| 78



2

4

6

8

Q1 07 Q1 08 Q1 09 Q1 10 Q1 110

4

8

12

16

20

1995 2000 2005 2010

20

30

40

50

60

1990 1995 2000 2005 201040

42

44

46

48

50

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

3

4

5

6

7



3

4

5

6

7



30

40

50

60



30

40

50

60




29 | PHP/USD 2010 | evolution of fcst

27 | Exchange Rate | PHP per USD 28 | Exchange Rate | PHP per USD



30 | PHP/USD 2011 | evolution of forecasts

Interest Rate and Exchange Rate

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the National Statistics Office(NSO) and the Central Bank of Philippines (BSP, Bangko Sentral ngPilipinas). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.

23 Treasury Bill 91-days interest rate in % (eop). Source: BSP.24 Quarterly Treasury Bill 91-days interest rate in % (eop). Source: BSP.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, PHP per USD (eop). Source: BSP.28 Quarterly exchange rate, PHP per USD (eop). Source: BSP.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: NSO.32 Trade balance, imports and exports, in USD bn. Source: NSO.33 International reserves, months of imports. Source: BSP.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: NSO.36 External debt as % GDP. Source: BSP.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ 4.50 - 48.3 46.9Banco de Oro 4.00 4.00 44.5 43.5BPI AMTG 5.00 - 43.2 -Capital Economics 4.50 5.25 43.0 -Citigroup Global Markets Inc. 6.00 6.50 43.5 43.3Credit Suisse - - 45.0 43.0DBS Bank 4.50 - 45.5 -Deutsche Bank 4.80 5.20 45.0 43.5Goldman Sachs - - 44.0 42.0HSBC 4.25 5.00 44.0 41.5ING 4.00 4.50 47.3 42.8JPMorgan 4.25 5.00 43.8 42.3Metropolitan Bank and Trust 4.25 - 44.5 -Philippine Equity Partners 4.50 5.00 45.5 46.0Standard Chartered Bank 4.25 5.25 44.5 41.5UBS 4.50 5.50 46.0 44.0United Overseas Bank 4.50 - 45.4 -SummaryMinimum 4.00 4.00 43.0 41.5Maximum 6.00 6.50 48.3 46.9Median 4.50 5.10 44.5 43.1Consensus 4.52 5.12 44.9 43.4History30 days ago 4.67 5.26 44.9 43.560 days ago 4.85 5.42 44.6 43.490 days ago 4.96 5.43 44.3 43.3

Interest Rate Exchange Rate% PHP per USD

| 79



2

4

6

8

10


20102011

-8

-4

0

4

8

1995 2000 2005 2010


-60

0

60

120

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


0

5

10

15

20

1995 2000 2005 2010


0

20

40

60

80

1995 2000 2005 2010







Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Banco de Oro 2.5 2.5 -6.9 -5.1 40.1 38.0 47.0 43.1 43.6 44.9BPI AMTG - - - - - - - - - -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 6.5 3.8 -12.3 -15.8 45.0 51.1 57.3 66.9 47.5 50.0Credit Suisse 8.9 7.3 -9.5 -11.7 44.1 48.1 53.7 59.8 - -DBS Bank 8.0 10.0 -4.0 -2.0 45.0 50.0 49.0 52.0 50.0 54.0Deutsche Bank 11.9 13.7 -8.0 -8.8 47.7 52.5 55.7 61.3 48.5 64.1Goldman Sachs 6.8 - - - - - - - - -HSBC 10.2 11.4 -11.9 -16.1 43.5 46.8 55.4 62.9 55.1 59.0ING 6.3 7.4 -11.8 -10.8 49.5 58.4 61.3 69.2 43.0 47.0JPMorgan 9.7 9.4 -5.2 -7.7 43.4 46.9 48.6 54.6 41.7 44.7Metropolitan Bank and Trust - - -6.0 - 47.0 - 53.0 - - -Philippine Equity Partners 5.5 4.5 -4.5 -5.5 44.6 49.0 49.1 54.5 - -Standard Chartered Bank 9.7 9.9 - - - - - - - -UBS 9.1 8.9 -5.0 -5.9 47.3 50.6 52.3 56.5 54.9 65.3United Overseas Bank - - - - - - - - - -SummaryMinimum 2.5 2.5 -12.3 -16.1 40.1 38.0 47.0 43.1 41.7 44.7Maximum 11.9 13.7 -4.0 -2.0 49.5 58.4 61.3 69.2 55.1 65.3Median 8.5 8.9 -6.9 -8.3 45.0 49.5 53.0 58.1 48.0 52.0Consensus 7.9 8.1 -7.7 -8.9 45.2 49.1 52.9 58.1 48.0 53.6History30 days ago 7.9 8.1 -7.7 -8.9 45.1 49.1 52.8 58.1 48.0 53.660 days ago 8.0 8.1 -7.8 -8.9 44.6 48.1 52.4 57.1 48.3 53.990 days ago 7.7 7.7 -7.9 -9.1 44.2 47.6 52.2 56.8 47.8 53.2



| 80



India38%

Other7%

Indonesia7%

Philippines3%

Korea 2%

China43%

India15%

Other14%

Indonesia6%

China53%

Korea10%

Philippines2%

-25%

0%

25%

50%

75%

100%

2003 2005 2007 2009Private Consumption Government ConsumptionInvestment Net Exports

47% 50%

33% 32%

20% 18%

0%

25%

50%

75%

100%

Agriculture

Industry

Services

2004 2009

Other Asia20%

Other9%

Latin America

1%

EU-2711%

Japan12%

USA13%

China34%

Other Asia27%

Latin America

2%

Other22%

China15%

USA12%

Japan14%

EU-278%

Other Manufactur

es25%

Electronics58%

Other11%

Agro-based

6%

5.627902577

Mineral Fuels,

Lubricants & Related

goods22%

Other13%

Capital goods28%

Raw Materials & Intermediat

e Goods37%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Philippines in the Region

Fact Sheet

• Weak fiscal structure

• Large government andexternal debt

• Guerilla group activitiesremains a serious securitythreat on southern islands

• Widespread English proficiency

• Well-educated labour force

• Solid telecom infrastructure

• Large domestic market

Agency Rating OutlookMoody’s: Ba3 StableS&P: BB- StableFitch Ratings: BB Stable

Transportation (2009) Airports: 254Railways (km): 897Roadways (km): 201,910Waterways (km): 3,219Chief Ports: Manila

Energy (2007) Primary Energy Production (trillion Btu): 489Primary Energy Consumption (trillion Btu): 1,305Electricity Generation (billion kW-h): 56.6Electricity Consumption (billion kW-h): 49.0Oil Supply (thousand bpd): 25Oil Consumption (thousand bpd): 326CO2 Emmissions (million metric tons): 77.7


Official name: Republic of thePhilippines

Capital: Manila (9.9 m)Other cities: Cebu (1.3 m)

Davao (0.8 m)Area (km2): 300,000Population (million, 2009 est.): 92.1Population density (per km2, 2009 est.): 307Population growth rate (%, 2009 est.): 2.0Life expectancy (years, 2009 est.): 71.1Illiteracy rate (%, 2000): 7.4Language: Filipino and EnglishMeasures: Metric systemTime: 8 hours ahead of GMT

President: Benigno AquinoLast elections: 10 May 2010Next elections: May 2014Central Bank Governor: Amando M. Tetangco Jr.

| 81

Singapore September 2010FOCUSECONOMICS


REAL SECTOR | Government maintains full-year growth forecasts de-spite downwards revisionAccording to revised figures released by the Ministry of Trade and Industry(MTI) on 11 August, gross domestic product (GDP) soared 18.8% over thesame quarter the previous year, which came in slightly below the 19.3% ex-pansion first reported on 14 July. In seasonally adjusted annualised terms, thesecond quarter reading is equivalent to a 24.0% jump.

Based on the expenditure approach, the strong second quarter figure reflectedresilient external demand, as growth in exports rose faster than imports. Incontrast, domestic demand decelerated to a 9.7% annual expansion, com-pared to the first quarter’s 11.4% rise, amid an 1.2% drop in investment (Q1:+10.6% year-on-year). On the other hand, private consumption improved froma 5.9% expansion in the first quarter to a 6.7% rise in the second. In addition,exports of goods and services rose 23.3% (Q1: +20.0% yoy) and imports ex-panded 21.1% annually, up from a 16.9% rise in the first quarter. As a result,the net contribution from the external sector to overall economic growth rosefrom 14.7 percentage points in the first to 17.3 in the second quarter.

The downward adjustment reflected a less buoyant manufacturing sector thanpreviously estimated, which was the result of a 50% monthly drop in the vola-tile pharmaceutical production in June. That said, the main driver of the sec-ond quarter reading was the industrial sector, as manufacturing soared 44.5%over the same period last year (previously reported: +45.5% yoy). Construc-tion growth was also revised downwards but remained strong, acceleratingfrom a 9.7% expansion in the first quarter to an 11.5% rise in the second (pre-viously reported: +13.5% yoy). In addition, the all-important services sector –

SingaporeOutlook improves


• Revised second quarter data confirm the strength of the country’seconomic recovery, as GDP expanded 18.8% over the same periodlast year. However, going forward, growth is likely to slow as indus-trial production rose 9.9% year-on-year, less than half of the previ-ous month’s expansion.

• Consensus Forecast participants raised their GDP forecasts for thesixth consecutive month and now expect the economy to grow 12.8%this year, which is up 0.8 percentage points from last month’s esti-mate. In 2011, growth is likely to moderate to 5.2%.

• Inflation rose from 2.7% to 3.1% in July due to a sharp monthly pricespike. Nevertheless, Consensus Forecast panellists maintained theirprojections and expect consumer prices to average 2.7% this year.In 2011, the panel anticipates inflation to remain virtually unchangedat 2.6%.

Singapore


2000-04 2005-09 2010-14Population (million): 4.1 4.6 5.2GDP (USD bn): 94 160 261GDP per capita (USD): 22,736 34,418 50,470GDP growth (%): 4.9 5.0 6.6Fiscal Balance (% of GDP): 5.7 6.2 0.5Inflation (%): 0.8 2.1 2.2Current Account (% of GDP): 16.5 22.7 14.9

-1.2

6.7

18.8

21.1

23.3

5.0

-6.0 0.0 6.0 12.0 18.0 24.0 30.0

Gross FixedInvestment


Private Consumption

GDP

Imports

Exports

%


Note: Year-on-year changes in %.Source: Ministry of Trade and Industry (MTI) and FocusEconomics calcula-tions.

| 82



which accounts for two thirds of GDP – remained virtually unchanged postingan 11.2% annual expansion (Q1: +11.4% yoy).

Despite the downward revision, the government maintained its official forecastfor 2010 GDP growth at 13.0% – 15.0%. If attained, the figure would representthe fastest rate of expansion in more than two decades. Accordingly, Consen-sus Forecast panellists revised their forecasts upwards and now expect theeconomy to grow 12.8% this year. For 2011, the panel anticipates GDP toexpand 5.2%.

MONETARY SECTOR | Inflation soars in JulyIn July, consumer prices rose 1.3% over the previous month, which contrastedthe 1.0% decrease registered in June. The monthly price fall was broad-based,as all eight categories registered higher prices compared to the previous month.In particular, higher prices for clothing and footwear (+3.2% month-on-month),transport (+1.7% mom) as well as for housing (+2.6% mom) were the maindrivers behind the July figure.

As a result of the monthly price increase, annual inflation jumped from 2.7% inJune to 3.1%, which broadly matched market expectations. After falling unex-pectedly in June, inflation is now back to the upward trend, which has been inplace since the first quarter and is partially the result of the exuberant growthrecorded during the first half of the year. In July, the annual average inflationrose for the fourth consecutive month to 1.1%, from 0.9% in June.

The Monetary Authority of Singapore (MAS) conducts its monetary policythrough the management of the exchange rate, instead of using interest rates.Monetary authorities last tightened its policy stance on 14 April, when theyannounced a revaluation of the currency, while announcing they would allow agradual appreciation of the Singaporean dollar.

Monetary authorities expect inflation to range between 2.5% and 3.5% thisyear. Consensus Forecast panellists anticipate inflation to average 2.7% thisyear, which is unchanged from last month’s estimate. For 2011, the panel ex-pects average inflation to inch down to 2.6%.

1.2

0.4

-0.1

0.60.4

-0.5

0.4

0.1

0.9

0.6

-1.0

1.3

0.7

-2.0

-1.0

0.0

1.0

2.0


%

-1.0

0.0

1.0

2.0

3.0

4.0

%

Monthly (left scale)

Annual (right scale)


Note: Annual and monthly variation of consumer price index in %.Source: Statistics Singapore (Singstat).

| 83




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 4.3 4.4 4.6 4.8 5.0 5.0 5.1 5.2 5.2 5.3GDP per capita (USD) 28,351 31,932 37,389 38,904 35,514 43,724 47,748 50,756 53,331 56,791GDP (USD bn) 121 141 172 188 177 221 244 262 278 300Economic Growth (GDP, annual var. in %) 7.3 8.7 8.5 1.8 -1.3 12.8 5.2 5.3 4.8 4.9 Private Consumption (annual var. in %) 3.8 3.1 6.5 2.7 0.4 5.3 4.6 4.8 4.8 4.6 Fixed Investment (annual variation in %) -0.1 14.6 19.9 13.6 -3.3 11.3 8.0 6.4 6.6 6.9Manufacturing (annual variation in %) 9.5 11.9 5.9 -4.2 -4.2 26.8 8.4 6.9 6.9 6.6Unemployment (eop, % of active population) 2.6 2.6 1.6 2.4 2.0 2.1 2.1 2.3 2.3 2.2Fiscal Balance (% of GDP) 8.1 7.2 12.1 5.7 -2.0 -1.1 0.5 0.6 0.9 1.5Public Debt (% of GDP) 99.4 92.4 90.5 95.9 113.1 - - - - -Monetary and Financial Sector Money (ann. var. of M1 in %) 4.4 13.4 22.4 18.4 23.5 - - - - -Inflation (CPI, annual variation in %) 1.3 0.8 4.4 4.3 -0.6 - - - - -Inflation (CPI, annual average variation in %) 0.5 1.0 2.1 6.5 0.6 2.7 2.6 2.1 1.9 1.6Inflation (DSPI, annual variation in %) 11.3 -1.4 9.9 -18.8 12.7 - - - - -Interbank 3-Month Interest Rate (%, eop) 3.25 3.44 2.63 1.00 0.69 0.72 1.56 2.05 2.50 2.55Exchange Rate (SGD per USD, eop) 1.66 1.53 1.44 1.44 1.40 1.36 1.33 1.36 1.34 1.33Exchange Rate (SGD per USD, average) 1.66 1.59 1.51 1.41 1.45 1.38 1.35 1.35 1.35 1.33External Sector Current Account Balance (% of GDP) 22.7 24.9 27.6 19.2 19.1 17.7 16.2 14.1 13.3 13.5Current Account Balance (USD bn) 27.5 35.0 47.3 36.2 33.8 39.0 39.4 36.8 37.2 40.4Trade Balance (USD bn) 29.6 33.1 36.3 18.3 23.9 35.4 36.9 41.8 43.1 38.4Exports (USD bn) 230 272 299 337 269 336 373 410 449 499Imports (USD bn) 200 238 263 319 245 299 334 368 404 447Exports (annual variation in %) 15.7 18.2 10.1 12.7 -20.2 23.5 11.1 9.8 9.7 11.2Imports (annual variation in %) 15.3 19.1 10.2 21.3 -23.1 22.8 11.8 10.0 10.0 10.6International Reserves (USD bn) 116 136 163 174 188 211 230 247 256 244International Reserves (months of imports) 7.0 6.9 7.4 6.6 9.2 8.5 8.3 8.1 7.6 6.6 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) 0.0 -2.5 -8.9 -1.7 1.8 3.8 16.9 18.8 9.4 10.7Inflation (CPI, annual average variation in %) 6.6 5.4 2.1 -0.5 -0.4 -0.8 0.2 0.9 3.6 3.1Interbank 3-Month Interest Rate (%, eop) 1.88 1.00 0.69 0.69 0.69 0.69 0.69 0.56 0.61 0.72Exchange Rate (SGD per USD, eop) 1.43 1.44 1.52 1.45 1.41 1.40 1.40 1.40 1.37 1.36 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Manufacturing (annual variation in %) -9.6 15.3 42.0 20.5 53.4 49.8 59.4 29.5 9.9 -Inflation (CPI, mom variation in %) 0.0 -0.6 0.7 0.4 0.1 0.9 0.6 -1.0 1.3 -Inflation (CPI, annual variation in %) -0.2 -0.6 0.2 1.0 1.6 3.2 3.2 2.7 3.1 -Exchange Rate (SGD per USD, eop) 1.38 1.40 1.40 1.41 1.40 1.37 1.40 1.40 1.36 1.35

| 84



-5

0

5

10

15

1995 2000 2005 2010

SingaporeAsia (ex Japan)World

-10

0

10

20

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-5

0

5

10

15

1995 2000 2005 2010

SingaporeAsia (ex Japan)

-20

-10

0

10

20

30

1995 2000 2005 2010


0

5

10

15

20



0

2

4

6

8



2

3

4

5

6


2010

2011

2

4

6

8

10

12


20102011






General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from Statistics Singapore (Singstat), the Ministry ofManpower, the Ministry of Trade and Industry (MTI) and the InternationalMonetary Fund (IMF). See below for details. Forecasts based onFocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: MTI and Singstat.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: MTI and Singstat.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: MTI and Singstat.6 Gross fixed investment, annual variation in %. Source: MTI and Singstat.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: Singstat.10 Unemployment, % of active population. Source: Ministry of Manpower.11 Balance of general government, % of GDP. Source: IMF.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of general government, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources


Individual Forecasts 2010 2011ANZ 10.4 4.3Capital Economics 14.0 6.0Citigroup Global Markets Inc. 15.5 4.6Credit Suisse 10.0 5.0Daiwa Capital Markets 16.0 6.5DBS Bank 15.0 4.5Deutsche Bank 17.0 6.0Goldman Sachs 16.5 5.2HSBC 9.7 5.5ING 15.3 5.8JPMorgan 10.5 4.3Morgan Stanley 9.0 6.0OCBC Bank 14.0 5.5OSK-DMG Group - -RBC Capital Markets 11.0 5.0Standard Chartered Bank 11.0 4.0UBS 14.5 5.0United Overseas Bank 9.0 5.0SummaryMinimum 9.0 4.0Maximum 17.0 6.5Median 14.0 5.0Consensus 12.8 5.2History30 days ago 12.3 5.260 days ago 8.8 5.390 days ago 7.8 5.3Additional ForecastsMTI (July 2010) 13.0 - 15.0 -IMF (July 2010) 9.9 4.9ADB (July 2010) 12.5 5.0

| 85



-16

-8

0

8

16

24

32

1995 2000 2005 2010


1

2

3

4

5

1995 2000 2005 2010


-8

0

8

16

1995 2000 2005 2010


0

10

20

30


20102011

1

2

3

4

5


20102011

-2

0

2

4


20102011








Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics 4.5 4.0 8.5 7.0 - - 2.0 2.0 -1.5 1.0Citigroup Global Markets Inc. 5.6 4.3 12.9 8.4 - - 2.0 2.0 -1.8 2.0Credit Suisse 5.5 5.2 10.0 9.0 - - 2.2 2.2 -0.7 0.1Daiwa Capital Markets 9.7 5.9 21.5 11.9 36.8 8.4 - - -2.7 -1.3DBS Bank 3.0 3.5 5.0 6.7 24.2 6.3 2.0 1.8 - -Deutsche Bank 2.7 3.3 13.7 4.6 38.2 7.8 1.5 1.0 0.8 1.1Goldman Sachs - - - - - - - - -2.5 -HSBC 4.8 3.2 8.4 7.7 19.3 6.5 1.5 1.7 -0.2 1.4ING 5.3 4.8 7.3 8.5 12.4 8.5 - - 0.2 1.2JPMorgan - - - - 28.9 11.6 2.3 2.1 - -Morgan Stanley - - - - - - - - - -OCBC Bank 6.9 4.7 10.0 7.8 28.0 10.0 2.0 2.2 - -OSK-DMG Group - - - - - - 2.8 3.0 -2.5 1.0RBC Capital Markets - - - - - - - - 0.0 1.0Standard Chartered Bank - - - - - - - - - -UBS 5.2 6.9 15.2 8.3 - - - - -1.0 0.7United Overseas Bank - - - - - - 2.3 2.5 -1.1 -2.3SummaryMinimum 2.7 3.2 5.0 4.6 12.4 6.3 1.5 1.0 -2.7 -2.3Maximum 9.7 6.9 21.5 11.9 38.2 11.6 2.8 3.0 0.8 2.0Median 5.3 4.5 10.0 8.0 28.0 8.4 2.0 2.1 -1.1 1.0Consensus 5.3 4.6 11.3 8.0 26.8 8.4 2.1 2.1 -1.1 0.5History30 days ago 5.2 4.6 11.1 8.0 23.2 7.7 2.1 2.0 -1.1 0.560 days ago 4.9 4.6 10.2 7.7 18.9 7.7 2.1 2.1 -0.8 1.090 days ago 5.6 4.6 9.5 7.7 12.3 7.4 2.0 2.0 -1.2 0.8




Industry% variation


| 86



2.0

2.5

3.0

3.5

4.0

2005 2006 2007 2008 2009 2010

-4

0

4

8

12

1995 2000 2005 2010


-5

0

5

10

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-2

0

2

4



0

1

2

3

4



-10

0

10

20

30

1995 1998 2001 2004 2007-21

-14

-7

0

7

14

2004 2006 2008

1,000

2,000

3,000

4,000



19 | DSPI | annual variation in %



21 | 10-year Bond Yield | in % 22 | Stock Market | Straits Times Index



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from Statistics Singapore (Singstat) and theMonetary Authority of Singapore (MAS). See below for details. Forecastsbased on FocusEconomics Consensus Forecast.

15 Inflation, annual variation in consumer price index (CPI) in % (eop).Source: Singstat.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in % (eop). Source: Singstat.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Domestic supply price index, annual variation in % (eop). 2004-2009.Source: Singstat20 Money, annual variation of M1 in %. 1995-2009. Source: MAS.21 10-year bond yield in %. Jan. 2005 until the end of previous month.Source: MAS.22 Daily index levels, Straits Times Index. Source: Singapore ExchangeLimited. Jan. 2008 until end of previous month.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Capital Economics 3.0 2.5Citigroup Global Markets Inc. 3.3 3.2Credit Suisse 3.0 2.7Daiwa Capital Markets 1.9 2.0DBS Bank 3.0 2.7Deutsche Bank 2.3 1.5Goldman Sachs 2.5 2.8HSBC 2.4 1.9ING 2.5 2.0JPMorgan 3.2 3.8Morgan Stanley 2.0 2.0OCBC Bank 3.1 2.6OSK-DMG Group 2.5 2.8RBC Capital Markets 3.0 3.0Standard Chartered Bank 2.9 2.5UBS 2.8 1.9United Overseas Bank 3.0 3.5SummaryMinimum 1.9 1.5Maximum 3.3 3.8Median 2.9 2.6Consensus 2.7 2.6History30 days ago 2.7 2.660 days ago 2.7 2.790 days ago 2.4 2.5Additional ForecastsADB (Mar. 2010) 2.3 2.0IMF (July 2010) 2.5 2.1

| 87



0

1

2

3

Q1 07 Q1 08 Q1 09 Q1 10 Q1 110

2

4

6

8

1995 2000 2005 2010

1.3

1.5

1.8

2.0

1995 2000 2005 20101.3

1.4

1.5

1.6

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

0

1

2

3



0

1

2

3

4



1.2

1.4

1.6

1.8



1.2

1.4

1.6

1.8




29 | SGD/USD 2010 | evolution of fcst

27 | Exchange Rate | SGD per USD 28 | Exchange Rate | SGD per USD



30 | SGD/USD 2011 | evolution of forecasts

Interest Rate and Exchange Rate

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from Statistics Singapore (Singstat),the Monetary Authority of Singapore (MAS) and the Ministry of Trade andIndustry (MTI). See below for details. Forecasts based on FocusEconomicsConsensus Forecast.

23 Interbank 3-month interest rate in % (eop). Source: MAS.24 Quarterly Interbank 3-month interest rate in % (eop). Source: MAS.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, SGD per USD (eop). Source: MAS.28 Quarterly exchange rate, SGD per USD (eop). Source: MAS.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: MTI.32 Trade balance, imports and exports, in USD bn. Source: MTI andSingstat.33 International reserves, months of imports. Source: MAS.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: MTI and Singstat.36 International reserves in USD bn., evolution of 2010 and 2011forecasts during the last 18 months.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ 0.55 - 1.45 1.37Capital Economics - - 1.35 1.36Citigroup Global Markets Inc. 0.50 0.70 1.35 1.32Credit Suisse 0.55 1.50 1.35 1.30Daiwa Capital Markets - - 1.35 1.31DBS Bank 0.41 - 1.37 -Deutsche Bank 0.50 1.50 1.33 1.27Goldman Sachs 0.70 0.90 1.33 1.31HSBC 0.65 1.10 1.39 1.34ING 0.50 1.30 1.39 1.39JPMorgan - - 1.36 1.34Morgan Stanley 1.30 2.30 1.38 1.32OCBC Bank 0.75 1.25 1.35 1.34OSK-DMG Group 0.85 2.40 1.33 1.38RBC Capital Markets 1.10 3.00 1.36 1.32Standard Chartered Bank 0.50 - 1.35 1.28UBS 0.80 1.25 1.39 1.35United Overseas Bank 1.10 - 1.36 -SummaryMinimum 0.41 0.70 1.33 1.27Maximum 1.30 3.00 1.45 1.39Median 0.65 1.30 1.36 1.33Consensus 0.72 1.56 1.36 1.33History30 days ago 0.72 1.64 1.36 1.3360 days ago 0.78 1.69 1.36 1.3490 days ago 0.97 1.91 1.35 1.34

Interest Rate Exchange Rate% SGD per USD

| 88



150

175

200

225

250


20102011

-10

0

10

20

30

1995 2000 2005 2010


0

200

400

600

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


5

10

15

20

1995 2000 2005 2010


20

25

30

35

40


20102011




36 | Int. Reserves (USD bn) | evol. of fcst 35 | Exports | annual variation in %


Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics - - - - - - - - - -Citigroup Global Markets Inc. 36.9 35.1 34.6 39.8 335 380 300 340 - -Credit Suisse 39.1 43.0 29.7 32.3 330 386 301 354 208 228Daiwa Capital Markets 41.3 39.6 39.0 38.5 334 364 295 325 212 228DBS Bank 32.0 34.0 - - - - - - 195 201Deutsche Bank 43.3 54.3 40.1 48.5 334 380 294 332 220 256Goldman Sachs 57.2 - - - - - - - - -HSBC 38.2 42.3 34.9 37.6 332 364 297 327 217 252ING 44.0 45.0 49.0 51.0 321 354 272 303 200 210JPMorgan 29.5 25.7 31.9 25.5 356 400 324 375 231 254Morgan Stanley 41.9 49.0 - - - - - - - -OCBC Bank 37.3 40.3 34.2 35.4 346 356 312 320 - -OSK-DMG Group - - 30.4 30.4 - - - - - -RBC Capital Markets - - - - - - - - - -Standard Chartered Bank 37.5 35.2 - - - - - - - -UBS 40.0 40.0 30.0 30.1 - - - - 202 214United Overseas Bank 28.0 29.2 - - - - - - - -SummaryMinimum 28.0 25.7 29.7 25.5 321 354 272 303 195 201Maximum 57.2 54.3 49.0 51.0 356 400 324 375 231 256Median 38.7 40.0 34.4 36.5 334 372 299 329 210 228Consensus 39.0 39.4 35.4 36.9 336 373 299 334 211 230History30 days ago 38.8 39.3 35.0 36.5 330 373 294 335 213 23560 days ago 37.0 38.5 34.6 36.2 330 374 294 336 208 22890 days ago 35.9 38.6 34.5 36.2 329 372 293 335 209 228



| 89



India38%

Other10%

China43%

Korea 1.5%

Singapore0.2%

Indonesia7%

India15%

Other14%

Indonesia6%

China53%

Korea10%

Singapore2%

0%

25%

50%

75%

100%


28% 26%

13% 14%

12% 13%

17% 16%

4% 5%

27% 25%

0%

25%

50%

75%

100%Manufacturing

Construction

Wholesale & RetailTrade

Financial Services

Business Services

Other Services

2004 2009

Other Asia39%

Latin America

3%

Other19%

EU-279%

Japan4%

USA6%

China20%

Other Asia31%

Latin America

2%

Other24%

China12%

USA11%

Japan8%

EU-2712%

Basic metals15%

Motor vehicles

13%

Fishing6%

Agriculture and

forestry4%Other

2%

Other manufactures

57%

Mineral fuels25%

Manufactured goods

7%

Chemicals 6%

Other 14%

Machinery and

equipment48%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Singapore in the Region

Fact Sheet

• Small domestic market

• Dependence on externalsector

• Comparatively high labourcosts

• Lack of natural resources

• High-level education system

• High-tech and stable economy

• Excellent infra-structure andcommunications

• Low inflationary environment

Official name: Republic of SingaporeCapital: Singapore (4.5m)

Area (km2): 710Population (million, 2009 est.): 5.0Population density (per km2, 2009 est.): 7,023Population growth rate (%, 2009 est.): 3.1Life expectancy (years, 2009 est.): 82.0Illiteracy rate (%, 2000): 7.5Language: Mandarin, English,

Malay and TamilMeasures: Metric systemTime: 8 hours ahead of GMT

President: Sellapan Rama NathanLast elections: 17 August 2005Next elections: August 2011Monetary Authority, Chairman: Goh Chok Tong


Transportation (2009) Airports: 8Roadways (km): 3,325Chief Ports: Singapore

Agency Rating OutlookMoody’s: Aaa StableS&P: AAA StableFitch Ratings: AAA Stable

Energy (2007) Primary Energy Consumption (trillion Btu): 2,293Electricity Generation (billion kW-h): 38.7Electricity Consumption (billion kW-h): 36.6Oil Supply (thousand bpd): 9Oil Consumption (thousand bpd): 907CO2 Emmissions (million metric tons): 154

| 90

Taiwan September 2010FOCUSECONOMICS


REAL SECTOR | Government upgrades growth forecast as economycontinues to surgeIn the second quarter, gross domestic product surged 12.5% over the sameperiod last year. The reading came in below the 13.7% expansion recorded inthe first quarter (previously reported: +13.3% year-on-year) but well exceededmarket expectations, which had anticipated the economy would expand 10.5%.That said, the result continued to be aided by a favourable base effect, as theeconomy had plunged 6.9% in the second quarter of 2009.

The second quarter figure was mainly fuelled by strong growth in the domesticsector. Private consumption accelerated from a 3.1% increase in the first quarterto a 4.4% expansion. Furthermore, gross fixed capital formation soared 30.8%annually (Q1: +29.3% yoy). On the external side of the economy, both exportsand imports of goods and services expanded at the same 34.3% annual rate.As a result, the net contribution from the external sector to overall growth was+4.5 percentage points (Q1: +1.8 percentage points).

A quarter-on-quarter comparison corroborates the strong growth suggested bythe annual figures, as the economy increased 1.8% over the previous quarterin seasonally adjusted terms. Owing to the strong economic performance inthe first half of the year, the government recently revised its growth forecast forthe whole year to 8.2% (previously expected: +6.1%).

Consensus Forecast panellists expect the economy to expand 7.3% this year,which is up 0.4 percentage points from last month’s forecast. For 2011, thepanel anticipates economic growth to moderate to 4.3%.

TaiwanOutlook improves


• Growth remained strong in the second quarter, as the economy ex-panded a faster-than-expected 12.5% over the same period last year.Going forward, growth is likely to cool a bit, but will remain robust.

• Consensus Forecast panellists raised their growth outlook by 0.4percentage points over last month and anticipate the economy toexpand 7.3% this year. For 2011, the panel expects economic growthto moderate to 4.3%.

• Inflation inched up from 1.2% in June to 1.3% in July. ConsensusForecast participants expect inflation to average 1.3% this year, whichis unchanged over last month’s forecast. For next year, the panelsees average inflation rising to 1.6%.

Taiwan


2000-04 2005-09 2010-14Population (million): 22.5 23.0 23.4GDP (USD bn): 312 380 491GDP per capita (USD): 13,860 16,538 21,025GDP growth (%): 3.9 3.0 5.2Fiscal Balance (% of GDP): -4.0 -1.2 -2.2Inflation (%): 0.5 1.5 1.6Current Account (% of GDP): 6.7 7.6 7.4External Debt (% of GDP): 16.3 23.2 21.1


Note: Year-on-year changes in %.Source: Directorate-General of Budget, Accounting and Statistics andFocusEconomics calculations.

3.9

4.4

12.5

30.8

34.3

34.3

1.7

0.0 10.0 20.0 30.0 40.0

Government consumption

Total consumption

Private consumption

GDP

Investment

Exports

Imports

%

| 91



REAL SECTOR | Industrial production continues to ease but remainsstrongIn July, industrial production expanded 20.7% over the same month last year.The figure came in below the 24.7% expansion recorded in June (previouslyreported: +24.3% year-on-year) but was broadly in line with market expectations,which had anticipated industrial output would grow 21.0%.

The monthly slowdown was driven by slower growth in the manufacturing sector,which expanded 22.2% (June: +26.5% yoy). Mining and quarrying slowed froma 10.5% expansion in June to 8.4% growth. Finally, electricity, gas and watersupply added 5.2% (June: +1.3% yoy).

A month-on-month comparison corroborates the deceleration suggested byannual figures, as industrial production declined 0.64% over the previous monthin seasonally adjusted terms, which contrasted the 0.16% rise recorded in June.

The trend in industrial production continues to point up. As a result of the monthlyreading, annual average growth in industrial production jumped from 22.1% inJune to 25.0%. Consensus Forecast panellists anticipate industrial productionto grow 19.7% this year.

MONETARY SECTOR | Inflation remains subduedIn July, consumer prices added 0.31% over the previous month. The readingwas broadly unchanged from the 0.34% price rise recorded in June but overshotmarket expectations, which had anticipated prices would add only 0.10%. Higherprices for food (+0.84% month-on-month) was the main driver behind themonthly price rise.

As a result of the monthly reading, annual inflation inched up from 1.2% inJune to 1.3%. Meanwhile, the core inflation index, which excludes volatilecategories such as fresh food and energy, added a more subdued 0.10% overthe previous month. As a result, annual core inflation inched up from 0.6% inJune to 0.7%. Finally, annual average inflation stepped up from minus 0.1% inJune to 0.2%, thus returning to positive territory for the first time in a year.

The government expects inflation to average 1.4% this year. ConsensusForecast panellists share this assessment and anticipate average inflation torise to 1.3% this year, which is unchanged from last month’s forecast. For2011, the panel expects average inflation to rise further to 1.6%.


Note: Monthly and annual variation of consumer price index in %.Source: Directorate-General of Budget, Accounting and Statistics andFocusEconomics calculations.

0.19

1.80

-0.66

0.41

-0.76

-0.46

0.10

0.53

-0.95

0.84

-0.16

0.34 0.31

-2.0

-1.0

0.0

1.0

2.0


%

-4.0

-2.0

0.0

2.0

4.0

%



Note: Year-on-year and annual average variation of industrial productionindex in %.Source: Directorate-General of Budget, Accounting & Statistics (DGBAS)and FocusEconomics calculations.

-7.2 -9.0

2.87.4

32.0

47.8

70.1

35.539.5

32.0 31.024.7

20.7

-25.0

0.0

25.0

50.0

75.0


%


| 92




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 22.8 22.9 23.0 23.0 23.1 23.2 23.3 23.4 23.4 23.5GDP per capita (USD) 15,484 16,456 17,347 16,630 16,775 18,198 19,560 21,011 22,290 24,068GDP (USD bn) 353 376 398 383 388 422 456 491 522 566Economic Growth (GDP, annual var. in %) 4.7 5.4 6.0 0.7 -1.9 7.3 4.3 4.8 4.6 4.8 Private Consumption (annual var. in %) 2.9 1.5 2.1 -0.6 1.5 2.5 2.6 3.3 3.1 3.0 Fixed Investment (annual variation in %) 2.7 0.1 0.6 -11.2 -11.8 14.4 5.7 3.9 3.7 3.9Industrial Production (annual variation in %) 3.8 4.7 7.8 -1.8 -8.1 19.7 7.9 6.8 5.7 6.2Unemployment (eop, % of active population) 3.9 3.8 3.8 5.0 5.7 5.1 4.6 4.3 4.1 3.5Fiscal Balance (% of GDP) -0.6 -0.3 -0.4 -0.9 -4.0 -2.7 -2.2 -2.2 -2.0 -1.9Monetary and Financial Sector Money (annual variation of M1A in %) 7.4 2.9 2.8 2.1 21.8 - - - - -Inflation (CPI, annual variation in %) 2.2 0.7 3.3 1.3 -0.2 - - - - -Inflation (CPI, annual average variation in %) 2.3 0.6 1.8 3.5 -0.9 1.3 1.6 1.6 1.6 1.7Inflation (Core, annual variation in %) 0.5 0.7 2.6 2.1 -0.7 - - - - -Inflation (WPI, annual variation in %) 1.7 6.5 8.4 -9.1 5.6 - - - - -CB Discount Rate (%, eop) 2.25 2.75 3.38 2.00 1.25 1.64 2.02 1.94 2.12 2.28Stock Market (variation of TAIEX in %) 6.7 19.5 8.7 -41.8 65.4 - - - - -Exchange Rate (TWD per USD, eop) 32.9 32.6 32.4 32.9 32.0 31.5 30.8 30.7 30.7 29.7Exchange Rate (TWD per USD, average) 33.3 32.5 32.4 33.1 32.3 31.7 31.1 30.7 30.7 30.2External Sector Current Account (% of GDP) 5.0 7.0 8.3 6.6 11.0 8.0 7.2 6.9 7.4 7.4Current Account (USD bn) 17.6 26.3 33.0 25.1 42.6 33.6 32.8 33.9 38.4 42.0Trade Balance (USD bn) 19.5 24.2 30.4 18.5 30.8 23.0 21.1 22.4 23.7 23.5Exports (USD bn) 198 224 247 255 203 241 265 287 303 320Imports (USD bn) 179 200 216 236 173 218 244 265 279 297Exports (annual variation in %) 8.8 12.8 10.1 3.4 -20.2 18.6 9.9 8.2 5.6 5.6Imports (annual variation in %) 8.5 11.5 8.2 9.4 -27.0 26.5 11.8 8.4 5.6 6.2International Reserves (USD bn) 253 266 270 292 348 376 405 440 472 497International Reserves (months of imports) 17.0 16.0 15.0 14.8 24.2 20.7 19.9 19.9 20.3 20.1External Debt (USD bn) 87 86 95 90 82 95 99 103 107 113External Debt (% of GDP) 24.6 22.8 23.7 23.6 21.1 22.5 21.8 20.9 20.4 19.9

Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, annual var. in %) -0.8 -7.1 -9.1 -6.9 -1.0 9.1 13.7 12.5 5.6 2.4Inflation (CPI, annual average variation in %) 4.5 1.9 0.0 -0.8 -1.3 -1.2 1.3 1.1 1.3 1.3CB Discount Rate (%, eop) 3.50 2.00 1.25 1.25 1.25 1.25 1.25 1.38 1.50 1.64Exchange Rate (TWD per USD, eop) 32.1 32.9 33.9 32.8 32.2 32.0 31.8 32.3 31.8 31.5

Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Industrial Production (annual variation in %) 32.0 47.8 70.1 35.5 39.5 32.0 31.0 24.7 20.7 -Unemployment (eop, % of active population) 5.9 5.7 5.7 5.8 5.7 5.4 5.1 5.2 5.2 -Inflation (CPI, mom variation in %) -0.76 -0.46 0.10 0.53 -0.95 0.84 -0.16 0.34 0.31 -Inflation (CPI, annual variation in %) -1.6 -0.2 0.3 2.3 1.3 1.3 0.7 1.2 1.3 -Exchange Rate (TWD per USD, eop) 32.2 32.0 32.0 32.1 31.8 31.4 32.2 32.3 32.1 32.1Exports (annual variation in %) 19.3 46.8 75.8 32.6 50.1 47.7 57.5 34.1 38.5 -

| 93



0

5

10

15


20102011

1

2

3

4


2010

2011

-30

-15

0

15

30

1995 2000 2005 2010

TaiwanAsia (ex Japan)

-3

0

3

6

9

1995 2000 2005 2010


2

3

4

5

6

7



0

3

6

9

12



-10

0

10

20

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

TaiwanAsia (ex Japan)World

-6

0

6

12

1995 2000 2005 2010







General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Directorate-General of Budget, Accounting andStatistics (DGBAS) and National Statistics. See below for details. Fore-casts based on FocusEconomics Consensus Forecast.

1 GDP, annual variation in %. Source: DGBAS2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.Source: DGBAS3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %. Source: DGBAS6 Gross fixed investment, annual variation in %. Source: DGBAS7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %. Source: National Statistics.10 Unemployment, % of active population. Source: National Statistics.11 Balance of central and local government, % of GDP. Source: NationalStatistics.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of central and local government, evolution of 2010 and 2011forecasts during the last 18 months.

Notes and sources


Individual Forecasts 2010 2011ANZ 6.2 5.1Capital Economics 8.5 3.5Chung-Hua Institute 6.9 4.8Citigroup Global Markets Inc. 8.7 4.2Credit Suisse 6.8 4.0Daiwa Capital Markets 9.8 4.9DBS Bank 9.5 3.5Deutsche Bank 6.5 4.2Goldman Sachs 7.2 4.8HSBC 7.3 4.9ING 7.7 5.5JPMorgan 9.2 4.8Morgan Stanley 4.5 3.6Polaris Securities 5.7 3.9Standard Chartered Bank 5.9 4.1UBS 5.7 3.2United Overseas Bank 7.5 4.6SummaryMinimum 4.5 3.2Maximum 9.8 5.5Median 7.2 4.2Consensus 7.3 4.3History30 days ago 6.9 4.360 days ago 6.6 4.290 days ago 6.0 4.2Additional ForecastsDGBAS (Aug. 2010) 8.2 -IMF (July 2010) 7.7 4.3ADB (July 2010) 5.9 4.0

| 94



4

8

12

16

20


20102011

-15

0

15

30

1995 2000 2005 2010


1

2

3

4

5

6

1995 2000 2005 2010


-8

-4

0

4

1995 2000 2005 2010


4

5

6

7


20102011

-4

-3

-2

-1


20102011








Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics 2.0 2.0 18.0 5.0 - - - - - -Chung-Hua Institute 2.4 2.9 15.8 8.6 - - 5.0 4.8 - -Citigroup Global Markets Inc. 2.8 3.0 20.4 8.5 16.1 5.0 5.4 4.9 -3.8 -2.0Credit Suisse 2.5 3.0 14.5 6.0 - - 5.0 4.0 - -Daiwa Capital Markets 5.5 4.7 16.2 5.5 - - - - -2.9 -2.7DBS Bank - - - - - - 5.0 4.6 -2.4 -1.8Deutsche Bank 2.3 2.5 12.8 3.9 15.0 8.0 5.0 4.5 -3.7 -3.3Goldman Sachs - - - - - - - - -2.2 -HSBC 1.6 2.8 13.4 5.7 18.6 8.2 5.3 4.7 -2.0 -1.1ING - - - - - - - - -3.2 -2.7JPMorgan - - - - 29.8 11.0 5.2 4.5 -1.5 -1.0Morgan Stanley - - 6.9 5.6 - - - - -2.0 -1.5Polaris Securities 1.6 1.4 13.7 5.8 18.8 7.3 5.1 4.9 - -Standard Chartered Bank - - - - - - - - - -UBS 1.7 1.0 12.4 2.3 - - - - -3.9 -4.2United Overseas Bank - - - - - - 5.0 4.2 -2.6 -1.9SummaryMinimum 1.6 1.0 6.9 2.3 15.0 5.0 5.0 4.0 -3.9 -4.2Maximum 5.5 4.7 20.4 8.6 29.8 11.0 5.4 4.9 -1.5 -1.0Median 2.3 2.8 14.1 5.7 18.6 8.0 5.0 4.6 -2.6 -2.0Consensus 2.5 2.6 14.4 5.7 19.7 7.9 5.1 4.6 -2.7 -2.2History30 days ago 2.3 2.4 14.1 5.7 19.7 7.9 5.2 4.6 -2.9 -2.360 days ago 2.4 2.4 12.9 5.4 17.8 7.5 5.2 4.6 -2.9 -2.390 days ago 2.4 2.6 9.4 4.9 14.9 7.6 5.3 4.9 -3.1 -2.5


Industry% variation




| 95



-3

0

3

6

9

12

1995 2000 2005 2010


-5

0

5

10

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


-2

-1

0

1

2

3



0

1

2

3

4



-10

-5

0

5

10

1995 2000 2005

Core Price IndexWPI

-10

0

10

20

30

1995 1998 2001 2004 2007

100

200

300

400


6,000

8,000

10,000


Monetary Sector | Inflation, Money, Wholesale Prices and Stock Market

19 | Core and Wholesale Prices | % var.



21 | MSCI Price Index 22 | Stock Market | TAIEX



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Directorate-General of Budget,Accounting and Statistics (DGBAS) and the Central Bank of the Republicof China. See below for details. Forecasts based on FocusEconomics Con-sensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: DGBAS.16 Quarterly inflation, average variation in consumer price index (CPI) in%. Source: DGBAS.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and wholesale price indices, annual variation in % (eop). 1995-2009. Source: DGBAS.20 Money, annual variation of M1 in %. 1995-2009. Source: CentralBank.21 Daily MSCI index in USD. From Jan. 2008 until end of previousmonth. Source: MSCI Barra.22 Daily index levels, TAIEX. Jan. 2008 until end of previous month.Source: Taiwan Stock Exchange.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Capital Economics 1.5 1.0Chung-Hua Institute 1.5 1.5Citigroup Global Markets Inc. 1.0 1.5Credit Suisse 1.9 2.0Daiwa Capital Markets 1.9 1.6DBS Bank 0.9 1.4Deutsche Bank 1.1 1.9Goldman Sachs 1.6 1.9HSBC 1.1 2.2ING 1.5 1.8JPMorgan 1.0 1.8Morgan Stanley 1.0 2.0Polaris Securities 1.2 0.4Standard Chartered Bank 1.3 1.2UBS 0.9 1.1United Overseas Bank 1.5 2.0SummaryMinimum 0.9 0.4Maximum 1.9 2.2Median 1.2 1.7Consensus 1.3 1.6History30 days ago 1.3 1.660 days ago 1.3 1.690 days ago 1.3 1.6Additional ForecastsIMF (Apr. 2010) 1.5 1.5ADB (Mar. 2010) 1.5 1.6

| 96



0

2

4

6

1995 2000 2005 20101

2

3

4

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

0

1

2

3



0

1

2

3



25

30

35

40

1995 2000 2005 201029

31

33

35

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

25

30

35

40



24

28

32

36




29 | TWD/USD 2010 | evolution of fcst

27 | Exchange Rate | TWD per USD 28 | Exchange Rate | TWD per USD



30 | TWD/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Directorate-General ofBudget, Accounting and Statistics (DGBAS) and the Central Bank of theRepublic of China. See below for details. Forecasts based onFocusEconomics Consensus Forecast.

23 Interest rate, Central Bank Overnight Borrowing Rate in % (eop).Source: Central Bank.24 Quarterly interest rate, Central Bank Overnight Borrowing Rate in %(eop). Source: Central Bank.25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, TWD per USD (eop). Source: Central Bank.28 Quarterly exchange rate, TWD per USD (eop). Source: Central Bank.29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP. Source: Central Bank.32 Trade balance, imports and exports, in USD bn. Source: CentralBank.33 International reserves, months of imports. Source: Central Bank.34 Current account in USD bn., evolution of 2010 and 2011 forecastsduring the last 18 months.35 Exports, annual variation in %. Source: Central Bank.36 External debt as % GDP. Source: Central Bank.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ 1.63 - 33.3 32.2Capital Economics 1.50 1.75 30.5 -Chung-Hua Institute - - 30.9 30.6Citigroup Global Markets Inc. - - 31.8 30.5Credit Suisse - - 31.2 30.5Daiwa Capital Markets 1.75 2.00 31.3 30.6DBS Bank 1.75 - 31.7 -Deutsche Bank 1.63 - 31.5 30.5Goldman Sachs - - 31.0 30.0HSBC 1.68 2.13 31.0 -ING 1.25 1.75 32.0 32.0JPMorgan 1.88 2.38 31.0 31.0Morgan Stanley - - - -Polaris Securities - - - -Standard Chartered Bank 1.63 2.13 31.0 30.0UBS 1.63 2.00 32.0 31.0United Overseas Bank 1.75 - 31.8 -SummaryMinimum 1.25 1.75 30.5 30.0Maximum 1.88 2.38 33.3 32.2Median 1.63 2.00 31.3 30.6Consensus 1.64 2.02 31.5 30.8History30 days ago 1.64 2.00 31.6 30.760 days ago 1.63 2.13 31.1 30.390 days ago 1.55 2.00 30.8 29.9

Interest Rate Exchange Rate% TWD per USD

| 97



-10

0

10

20

1995 2000 2005 2010


0

100

200

300

400

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


5

10

15

20

25

1995 2000 2005 2010


0

20

40

60

1995 2000 2005 2010


20

25

30

35


20102011






Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics - - - - - - - - - -Chung-Hua Institute 45.2 47.1 1.9 1.8 27 30 25 29 - -Citigroup Global Markets Inc. 32.8 31.0 13.1 9.2 265 277 252 268 374 405Credit Suisse 33.8 28.3 26.5 24.3 292 331 265 307 388 417Daiwa Capital Markets 34.3 34.8 26.8 26.6 258 286 231 260 370 389DBS Bank 37.0 34.0 24.0 22.0 286 314 262 292 376 400Deutsche Bank 34.7 27.6 23.1 15.5 265 294 242 279 399 435Goldman Sachs 30.4 - - - - - - - - -HSBC 32.1 38.4 27.6 37.4 264 298 236 260 379 422ING 50.0 48.0 33.0 31.0 234 262 201 231 345 355JPMorgan 33.1 35.0 24.7 25.8 246 282 221 256 388 430Morgan Stanley 25.8 23.7 - - - - - - - -Polaris Securities 31.3 32.7 30.1 20.6 244 252 214 232 - -Standard Chartered Bank 30.8 28.0 - - - - - - - -UBS 26.5 20.0 22.1 18.2 275 289 253 271 370 390United Overseas Bank 26.3 31.2 - - - - - - - -SummaryMinimum 25.8 20.0 1.9 1.8 27 30 25 29 345 355Maximum 50.0 48.0 33.0 37.4 292 331 265 307 399 435Median 32.8 32.0 24.7 22.0 264 286 236 260 376 405Consensus 33.6 32.8 23.0 21.1 241 265 218 244 376 405History30 days ago 33.3 32.3 23.6 22.3 262 289 238 267 376 40560 days ago 33.6 32.5 24.1 22.3 255 282 231 260 377 40490 days ago 33.0 31.8 23.8 21.8 247 273 223 251 377 406



| 98



India38%

Other9%

China43%

Korea 2%

Taiwan1%

Indonesia7%

India15%

Other12%

Taiwan4%

Korea10%

China53%

Indonesia6%

33.0 31.0

8.67.2

8.48.8

7.66.7

17.918.2

22.5 26.6

1.9 1.5

0%

25%

50%

75%

100%Agriculture, Forestryand Fishing

Manufacturing

Wholesale and RetailTrade

Finance and Insurance

Real Estate

Public Administrationand Defense

Other

2004 2009

-25%

0%

25%

50%

75%

100%

2003 2005 2007 2009Private Consumption Government ConsumptionNet exports Investment

Other10%

Mainland China27%

United States12%

Asia (ex-China)41%

EU-2710%

Other25%

EU-279%

Asia (ex-China)41%

United States11%

Mainland China14%

Heavy Industries

83%

Non-Heavy

Industries16%

Other1%

Consumer goods

9%

Capital goods15%

Raw Materials

76%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Taiwan in the Region

Fact Sheet

• Limited natural resources

• Risk of armed conflict withChina

• Lack of representation ininternational organisations

• Well educated labour force

• Strong legal system

• Open market economy

Official name: Taiwan / Republic of China

Capital: Taipei (2.6 m)Other cities: Kaohsiung (1.5 m)

Taichung (1.1 m)Tainan (0.8 m)

Area (km2): 35,980Population (million, 2009 est.): 23.0Population density (per km2, 2009 est.) 640Population growth rate (%, 2009 est.): 0.2Life expectancy (years, 2009 est.): 78.0Illiteracy rate (%, 2000): 3.9Language: Mandarin Chinese and

TaiwaneseMeasures: Metric systemTime: 8 hours ahead of GMT

President: Ma Ying-jeouLast elections: 22 March 2008Next elections: March 2012Central Bank President: Perng Fai-nan


Energy (2007) Primary Energy Production (trillion Btu): 479Primary Energy Consumption (trillion Btu): 4,746Electricity Generation (billion kW-h): 225Electricity Consumption (billion kW-h): 215Oil Supply (thousand bpd): 12Oil Consumption (thousand bpd): 962CO2 Emmissions (million metric tons): 308

Transportation (2009) Airports: 42Railways (km): 1,582Roadways (km): 41,279Chief Ports: Chilung, Hualien, Kaohsiung

Agency Rating OutlookMoody’s: Aa3 StableS&P: AA- StableFitch Ratings: A+ Stable

| 99

Thailand September 2010FOCUSECONOMICS


REAL SECTOR | Economic activity expands more than expectedIn the second quarter, gross domestic product expanded 9.1% over the sameperiod last year. The reading came in below the 12.0% expansion registeredin the previous quarter, but overshot market expectations, which had antici-pated the economy would rise 8.0%. In addition, the reading was aided by afavourable base of comparison, as the economy had contracted 4.9% in thesecond quarter 2009.

The slowdown in the second quarter was the result of a weaker expansion ofthe domestic demand, which was adversely affected by violent anti-govern-ment protests. In contrast, the net contribution from the external sector im-proved. On the domestic side, private consumption accelerated and expanded6.5% (Q1: +4.0% year-on-year) while government consumption increasedan annual 6.3%, down from the 7.3% expansion seen in the first quarter.Gross fixed capital formation decelerated somewhat and grew a 12.2% an-nually (Q1: +12.9 year-on-year). Finally, the domestic sector was adverselyaffected by a marked downward shift in inventories.

In the external sector, exports accelerated compared to with previous quarter,while imports slowed somewhat. Exports expanded 22.3% annually (Q1:+16.2 yoy), while imports grew an annual 23.6% in the second quarter, wellbelow the 31.5% expansion in the January-March period. As a result, the netcontribution from the external sector to overall growth swung from a 2.4 per-centage-point contraction in the first quarter to a positive 2.8 percentagepoints in the second quarter.

At the sector level, the second quarter reflected a further deterioration inagriculture, as well as slower growth in industry and services. A quarter-on-quarter comparison confirms the deceleration suggested by annual figures,

ThailandOutlook improves

Ricardo AcevesEconomist

• Gross domestic product expanded 9.1% in the second quarter,prompting the government to raise the official forecast for 2010 eco-nomic growth to 6.5% - 7.5%, up from a previous 3.5% - 4.5% projec-tion. The Central Bank also revised its forecast and now shares thegovernment’s assessment.

• Consensus Forecast participants revised their 2010 growth projec-tions upwards and now expect the economy to grow 6.8% this year,which is up 0.8 percentage points from last month’s forecast. In 2011,the panel sees economic growth moderating to 4.4%.

• Inflation inched up to 3.4% in July and the Central Bank continued themonetary tightening cycle by raising policy rates from 1.50% to 1.75%in its 25 August meeting. Consensus Forecast panellists expect infla-tion to average 3.4% this year, which is up 0.1 percentage points fromlast month’s projection. In 2011, the panel expects inflation to fall to3.1%.

Thailand


2000-04 2005-09 2010-14Population (million): 62.2 65.2 68.1GDP (USD bn): 134 233 358GDP per capita (US$): 2,148 3,568 5,248GDP growth (%): 5.1 3.0 5.4Fiscal Balance (% of GDP): -1.1 -1.3 -3.1Inflation (%): 1.7 3.2 3.0Current Account (% of GDP): 4.2 2.3 2.8External Debt (% of GDP): 47.7 26.8 21.3

6.3

6.5

7.5

9.1

12.2

22.3

23.6

6.5

0.0 10.0 20.0 30.0

Government Consumption

Total Consumption

Private Consumption

Domestic Demand

GDP

Gross Fixed Investment

Exports

Imports

%


Note: Year-on-year changes in %.Source: Bureau of Trade and Economics (BTE) and FocusEconomics calcu-lations.

| 100



as the economy expanded a seasonally adjusted 0.16% over the previousquarter, which was down from the 3.30% expansion registered in the firstquarter.

According to the secretary general of the National Economic and Social De-velopment Board, the economy would have grown an annual 12.0% in thesecond quarter without the political unrest, which caused the temporary shut-down of several businesses in the commercial and financial district ofBangkok.

Meanwhile, the government recently raised its growth forecast for this year to6.5% - 7.5%, up from the previous 3.5% - 4.5% projection. In the same vein,the Central Bank lifted its 2010 growth forecast in its July inflation report fromthe 4.3% to 5.8% range expected previously to the current 6.5% - 7.5%. TheBank stated that for the rest of the year, the economy will continue to recoveron the back of strong fundamentals, gradual growth of the global economy,as well as improving consumer and investor confidence, reflecting easingpolitical risks.

Consensus Forecast participants broadly share the Central Bank’s assess-ment and anticipate overall economic activity to expand 6.8%, which is up 0.8percentage points from last month’s forecast. Next year, participants expecteconomic growth to moderate to 4.4%.

REAL SECTOR | Industrial production accelerates more than expected inJuneIn June, manufacturing production expanded 21.3% over the same monthlast year. The figure came in above the revised 17.5% rise (previously re-ported: 17.2% year-on-year) registered in May and beat market expectations,which saw industrial output adding 18.5%. Furthermore, June’s readingmarked the seventh consecutive month of double-digit growth in industrialproduction.

The main drivers behind June’s improvement were a sharp rebound in foodsproduction, which expanded 8.9%, contrasting the 18.4% contraction regis-tered in May. In addition, the production of textiles and textiles products in-creased 8.5% in June, contrasting the 2.8% decline in May. Meanwhile, elec-tronic products output also continued to expand, yet at a slower pace (May:+14.6% yoy; June: +12.9% yoy).

A month-on month comparison confirms the improvement suggested byannual figures, as manufacturing production rose a sharp 5.31% over theprevious month in seasonally adjusted terms, which contrasted the 3.93%decline recorded in May. Meanwhile, on a quarterly basis manufacturing out-put expanded 20.2% in the second quarter over the same period last year,falling short the 31.2% expansion recorded in the first quarter. As a result ofJune’s reading, the trend in manufacturing production continued to show astrong recovery, as the annual average growth in manufacturing outputjumped from 11.6% in May to 14.2% in June. Consensus Forecast panellistsanticipate manufacturing production to rise 13.9% this year.

MONETARY SECTOR | Inflation inches up in JulyIn July, consumer prices added 0.09% over the previous month, which camein at a fraction the 0.28% increase recorded in June. The main driver behindJuly’s subdued reading were lower prices for clothing and footwear, whichwere nearly offset by an increase in prices for food and beverages, especiallyfor rice.

2.09 1.82

-4.09

9.56

1.000.11

10.66

-4.01

2.754.50

-2.91-3.93

5.31

-10.0

-5.0

0.0

5.0

10.0

15.0


%

-12.0

-6.0

0.0

6.0

12.0

18.0

%

MoM s.a. (left scale) Annual Average (right scale)

Manufacturing Production | variation in %

Note: Annual average and seasonally adjusted month-on-month variation ofmanufacturing production index in %.Source: Bank of Thailand (BoT) and FocusEconomics calculations.

| 101



0.00

0.38

0.19 0.19

0.28

-0.09

0.57 0.56

0.19

0.56

0.19

0.28

0.09

-0.2

0.0

0.2

0.4

0.6


%

-6.0

-3.0

0.0

3.0

6.0

%



Note: Annual and monthly variation of consumer price index in %.Source: Bureau of Trade and Economics.

Despite July’s subdued price increase, annual headline inflation steppedinched up a notch from 3.3% in June to 3.4% in July, undershooting marketexpectations, which had expected inflation rising 3.6%. Core inflation, whichstrips out more volatile items such as fresh food and energy, added 0.10%over the previous month. As a result, annual core inflation inched up from1.1% in June to 1.2% in July.

The inflation trend continues to point upwards, as annual average inflationjumped from 1.6% in June to 2.3% in July, which marked the highest readingsince May 2009. Nonetheless, at the current level, inflation remains withinthe Central Bank’s target range of 0.5% - 3.0%, which is based on quarterlyaverage core inflation (the current quarterly average is 1.1%).

Meanwhile, at its last monetary policy meeting on 25 August, the Bank ofThailand (BoT) decided to raise the one-day repurchase rate by 25 basispoints for the second consecutive month from 1.50% to 1.75%, in a decisionexpected by the market. Monetary authorities last raised the policy rate in 14July, when the BoT began tightening monetary policy after rates had remainedat the record low of 1.25% since April 2009. Monetary authorities argued thatthe economy is recovering at a faster-than-expected pace and that inflation-ary pressures are likely to rise in 2011 amid strong domestic demand andrising production costs. In addition, the BoT Assistant Governor PaiboonKittisrikangwan said that “interest rates remain very low compared to eco-nomic growth even after the increase” and that “rates are on an upwardtrend”. The next monetary policy meeting is scheduled for 20 October.

In its last inflation report, monetary authorities expected annual average infla-tion to rise to 4.8% this year and to moderate to 4.3% in 2011. ConsensusForecast panellists expect average inflation rising to 3.4% by the end of theyear, which is up 0.1 percentage points from last month’s Consensus Fore-cast. For 2011, panellists anticipate that average inflation will moderate to3.1%.

| 102




Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Real Sector Population (million) 64.1 64.6 65.2 65.8 66.4 66.9 67.5 68.1 68.7 69.3GDP per capita (USD) 2,749 3,202 3,784 4,135 3,972 4,439 4,887 5,244 5,621 6,051GDP (USD bn) 176 207 247 272 264 297 330 357 386 419Economic Growth (GDP, ann. var. in %) 4.6 5.1 4.9 2.5 -2.2 6.8 4.4 5.1 5.3 5.2 Private Consumption (ann. var. in %) 4.6 3.2 1.7 2.7 -1.1 3.8 3.7 3.4 3.7 4.3 Fixed Investment (ann. variation in %) 10.5 3.9 1.5 1.2 -9.0 8.5 6.5 8.8 8.8 7.8Manufacturing (annual variation in %) 9.1 7.3 8.2 5.3 -5.1 13.9 8.0 6.0 5.7 5.6Unemployment (eop, % of active population) 1.8 1.5 1.4 1.4 1.5 1.2 1.2 1.2 1.3 1.4Fiscal Balance (% of GDP) -0.6 1.1 -1.7 -1.1 -4.4 -3.6 -3.3 -3.6 -2.1 -2.8Public Debt (% of GDP) 28.6 27.5 26.1 25.0 28.5 - - - - -Monetary and Financial Sector Money (ann. var. of M1 in %) 6.0 2.4 7.6 3.7 12.8 - - - - -Inflation (CPI, annual variation in %) 5.8 3.5 3.2 0.4 3.5 - - - - -Inflation (CPI, annual average variation in %) 4.5 4.7 2.2 5.4 -0.9 3.4 3.1 3.0 2.9 2.5Inflation (Core, annual variation in %) 2.5 1.5 1.3 1.8 0.3 - - - - -Inflation (PPI, annual variation in %) 9.2 7.0 3.3 12.4 -3.8 - - - - -1-day Repurchase Rate (%, eop) 4.00 5.00 3.25 2.75 1.25 2.00 2.60 3.44 3.84 3.98Stock Market (SET variation in %) 6.1 -4.7 26.2 -47.6 63.2 - - - - -Exchange Rate (THB per USD, eop) 41.2 36.2 33.9 35.1 33.5 31.8 31.3 31.8 31.3 31.2Exchange Rate (THB per USD, average) 40.3 37.9 34.6 33.4 34.3 32.6 31.6 31.5 31.5 31.3External Sector Current Account Balance (% of GDP) -4.3 1.1 6.4 0.6 7.7 4.4 3.4 2.0 2.2 2.0Current Account Balance (USD bn) -7.6 2.3 15.7 1.6 20.3 13.1 11.4 7.2 8.4 8.5Trade Balance (USD bn) -8.3 1.0 11.6 0.2 19.4 10.7 8.4 7.7 11.0 13.1Exports (USD bn) 109 128 150 175 151 181 198 221 248 270Imports (USD bn) 118 127 138 175 131 170 189 211 237 257Exports (annual variation in %) 15.2 17.0 17.3 16.8 -13.9 20.1 9.1 11.7 12.3 9.0Imports (annual variation in %) 25.8 7.9 9.1 26.4 -24.9 29.5 11.1 11.7 12.1 8.5International Reserves (USD bn) 52 67 87 111 138 154 167 168 175 177International Reserves (months of imports) 5.3 6.3 7.6 7.6 12.6 10.8 10.6 9.6 8.9 8.3External Debt (USD bn) 52.0 59.6 61.7 65.2 70.0 69.9 71.0 75.8 78.8 82.8External Debt (% of GDP) 29.5 28.8 25.0 24.0 26.6 23.5 21.5 21.2 20.4 19.7 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, ann. var. in %) 2.9 -4.2 -7.1 -4.9 -2.7 5.9 12.0 9.1 5.3 3.0Inflation (CPI, annual average variation in %) 7.3 2.2 -0.3 -2.8 -2.2 1.9 3.8 3.3 3.6 3.41-day Repurchase Rate (%, eop) 3.75 2.75 1.25 1.25 1.25 1.25 1.25 1.25 1.63 2.00Exchange Rate (THB per USD, eop) 34.2 35.1 35.7 34.2 33.7 33.5 32.5 32.6 32.1 31.8Current Account Balance (USD bn) -1.0 -1.5 9.5 2.8 3.7 4.3 5.3 1.5 3.4 4.3 Monthly Data Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10Manufacturing (annual variation in %) 9.5 36.1 29.0 30.6 33.6 21.9 17.5 21.3 - -Inflation (CPI, mom variation in %) 0.28 -0.09 0.57 0.56 0.19 0.56 0.19 0.28 0.09 -Inflation (CPI, annual variation in %) 1.9 3.5 4.1 3.7 3.4 3.0 3.5 3.3 3.4 -Exchange Rate (THB per USD, eop) 33.4 33.5 33.3 33.2 32.5 32.4 32.7 32.6 32.4 31.3

| 103



-15

-10

-5

0

5

10

1995 2000 2005 2010

ThailandAsia (ex Japan)

-50

-25

0

25

1995 2000 2005 2010


0

3

6

9



0

2

4

6

8



2

3

4

5


2010

2011

3

5

6

8

9


2010

2011

-15

-8

0

8

15

1995 2000 2005 2010

ThailandAsia (ex Japan)World

-10

-5

0

5

10

15

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11







General:Long-term chart period from 1995 to 2014 unless otherwise stated. All realsector data are from the Bank of Thailand (BoT). See below for details.Forecasts based on FocusEconomics Consensus Forecast.

1 GDP, annual variation in %.2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.3 GDP, evolution of 2010 forecasts during the last 18 months.4 GDP, evolution of 2011 forecasts during the last 18 months.5 Private consumption, annual variation in %.6 Gross fixed investment, annual variation in %.7 Private consumption, change in 2010 and 2011 forecasts during the last18 months.8 Gross fixed investment, change in 2010 and 2011 forecasts during thelast 18 months.9 Industrial production, annual variation in %.10 Unemployment, % of active population.11 Balance of central government, % of GDP.12 Industrial production, evolution of 2010 and 2011 forecasts during thelast 18 months.13 Unemployment, evolution of 2010 and 2011 forecasts during the last 18months.14 Balance of the central government, evolution of 2010 and 2011 forecastsduring the last 18 months.

Notes and sources


Individual Forecasts 2010 2011ANZ 7.4 4.2Capital Economics 8.0 4.0CIMB Thai Bank 6.5 4.0Citigroup Global Markets Inc. 6.6 5.3Credit Suisse 6.4 4.5Daiwa Capital Markets 7.7 4.3DBS Bank 8.0 4.0Deutsche Bank 5.5 4.1Goldman Sachs 4.2 4.5HSBC 7.6 5.3ING 6.8 5.2JPMorgan 8.5 5.0Kasikorn Research Center 6.2 3.5Ktzmico 7.5 5.5Morgan Stanley 4.6 4.8Phatra Securities 6.7 4.2Standard Chartered Bank 6.3 4.5TISCO Securities 7.4 3.5UBS 7.7 4.0United Overseas Bank 5.5 4.7SummaryMinimum 4.2 3.5Maximum 8.5 5.5Median 6.7 4.4Consensus 6.8 4.4History30 days ago 6.0 4.460 days ago 5.4 4.490 days ago 4.7 4.5Additional ForecastsCentral Bank (Apr. 2010) 4.3-5.8 3.0-5.0IMF (July 2010) 7.0 4.5ADB (July 2010) 5.5 4.5

| 104



4

8

12

16


20102011

0

1

2

3

4


20102011

-6

-4

-2

0


20102011

-10

0

10

20

1995 2000 2005 2010


0

1

2

3

4

5

1995 2000 2005 2010


-8

-4

0

4

1995 2000 2005 2010









Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - -Capital Economics 4.0 3.0 7.0 5.0 - - -4.0 -3.5CIMB Thai Bank 3.1 2.8 10.0 8.5 - - - -Citigroup Global Markets Inc. 4.0 4.1 5.3 10.0 - - -2.9 -2.9Credit Suisse 3.0 3.8 9.5 5.0 - - -4.5 -3.6Daiwa Capital Markets 7.4 4.5 9.2 4.1 - - -4.0 -3.5DBS Bank 4.8 2.8 8.2 6.5 - - -3.0 -2.5Deutsche Bank 2.5 2.7 8.2 4.2 - - -4.8 -3.9Goldman Sachs 3.3 3.6 7.9 4.8 5.9 6.6 -3.7 -3.0HSBC 3.2 4.1 8.4 4.5 15.7 6.5 -2.5 -1.6ING 2.5 3.5 2.9 4.8 4.9 5.9 -4.2 -3.7JPMorgan - - - - 20.1 8.7 -2.5 -3.0Kasikorn Research Center 3.5 2.8 8.1 8.5 14.0 6.0 -4.5 -4.0Ktzmico 5.3 4.4 12.4 10.2 23.0 14.0 -3.0 -3.8Morgan Stanley - - 6.0 7.2 - - -3.8 -Phatra Securities 3.7 4.1 9.9 7.5 - - -2.0 -3.5Standard Chartered Bank - - - - - - - -TISCO Securities 3.5 4.6 12.1 6.1 - - -4.2 -3.0UBS 3.8 4.7 10.2 6.4 - - -3.4 -3.4United Overseas Bank - - - - - - - -SummaryMinimum 2.5 2.7 2.9 4.1 4.9 5.9 -4.8 -4.0Maximum 7.4 4.7 12.4 10.2 23.0 14.0 -2.0 -1.6Median 3.5 3.8 8.3 6.2 14.9 6.6 -3.8 -3.5Consensus 3.8 3.7 8.5 6.5 13.9 8.0 -3.6 -3.3History30 days ago 3.4 3.7 7.5 6.3 10.9 6.7 -3.8 -3.460 days ago 3.2 3.6 7.5 6.5 9.3 7.4 -4.0 -3.490 days ago 3.5 3.4 7.1 6.7 8.3 7.4 -4.4 -3.6




Industry% variation

| 105



200

400

600

800

1,000

Jan Jul Jan Jul Jan Jul Jan Jul

-4

0

4

8

12

1995 2000 2005 2010


-6

0

6

12

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


0

2

4

6

8



1

2

3

4

5



2

4

6

8

2005 2006 2008 2010





21 | 10-Year Bond Yield | in % 22 | Stock Market | SET Index



16 | Inflation | Q1 07-Q4 11 | in %

General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary sector data are from the Bureau of Trade and Economics (BTE)and the Bank of Thailand (BoT). See below for details. Forecasts basedon FocusEconomics Consensus Forecast.

15 Inflation, annual average variation in consumer price index (CPI) in%. Source: BTE.16 Quarterly inflation, year-on-year variation in consumer price index(CPI) in %. Source: BTE.17 Inflation, evolution of 2010 forecasts during the last 18 months.18 Inflation, evolution of 2011 forecasts during the last 18 months.19 Core and producer price indices, annual variation in % (eop). 2004-2009 Source: BTE.20 Money, annual variation of M1 in %. 1995-2009 Source: BoT.21 10-Year Bond Yield. January 2005 until the end of previous month.Source: BoT.22 Monthly index levels, SET Index. January 2000 until end of previousmonth. Source: The Stock Exchange of Thailand.

Notes and sources

Individual Forecasts 2010 2011ANZ - -Capital Economics 3.5 4.0CIMB Thai Bank 3.1 1.5Citigroup Global Markets Inc. 3.3 3.4Credit Suisse 3.2 3.1Daiwa Capital Markets 1.9 2.0DBS Bank 3.0 2.5Deutsche Bank 3.6 4.4Goldman Sachs 3.6 3.0HSBC 3.5 3.7ING 3.0 2.7JPMorgan 4.8 4.0Kasikorn Research Center 3.5 3.2Ktzmico 3.3 3.0Morgan Stanley 3.8 3.0Phatra Securities 3.2 2.8Standard Chartered Bank 3.2 3.7TISCO Securities 3.5 3.4UBS 3.3 2.3United Overseas Bank 3.7 3.5SummaryMinimum 1.9 1.5Maximum 4.8 4.4Median 3.3 3.1Consensus 3.4 3.1History30 days ago 3.3 3.060 days ago 3.3 2.990 days ago 3.4 3.1Additional ForecastsCentral Bank (Apr. 2010) 3.3-4.8 2.3-4.3IMF (Apr. 2010) 3.2 1.9ADB (Mar. 2010) 3.5 3.0

-5

0

5

10

15

2004 2005 2006 2007 2008 2009

Core Price IndexPPI

-10

0

10

20

30

40

1995 1998 2001 2004 2007

| 106



0

1

2

3

4



1

2

3

4

5



28

31

34

37

40



28

31

34

37

40



0

5

10

15

1995 2000 2005 20100

2

4

6

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11

20

30

40

50

1995 2000 2005 201030

32

34

36

Q1 07 Q1 08 Q1 09 Q1 10 Q1 11


29 | THB/USD 2010 | evolution of fcst

27 | Exchange Rate | THB per USD 28 | Exchange Rate | THB per USD



30 | THB/USD 2011 | evolution of forecasts


General:Long-term chart period from 1995 to 2014 unless otherwise stated. Allmonetary and external sector data are from the Bank of Thailand (BoT).Forecasts based on FocusEconomics Consensus Forecast.

23 Interest rate, 1-Day Repurchase Rate in % (eop).24 Quarterly interest rate, 1-Day Repurchase Rate in % (eop).25 Interest rate, evolution of 2010 forecasts during the last 18 months.26 Interest rate, evolution of 2011 forecasts during the last 18 months.27 Exchange rate, THB per USD (eop).28 Quarterly exchange rate, THB per USD (eop).29 Exchange rate, evolution of 2010 forecast during the last 18 months.30 Exchange rate, evolution of 2011 forecast during the last 18 months.31 Current account balance as % of GDP.32 Trade balance, imports and exports, in USD bn.33 International reserves, months of imports.34 Current account in USD bn., evolution of 2010 and 2011 forecastduring the last 18 months.35 Exports, annual variation in %.36 External debt as % of GDP.

Notes and sources

Individual Forecasts 2010 2011 2010 2011ANZ - - 33.9 32.7Capital Economics 2.00 3.00 29.5 29.0CIMB Thai Bank 2.25 1.30 32.5 33.0Citigroup Global Markets Inc. 2.75 3.75 31.9 31.7Credit Suisse 2.00 3.00 31.8 31.0Daiwa Capital Markets - - 32.0 31.8DBS Bank 2.25 - 32.2 -Deutsche Bank 1.75 2.25 32.0 31.5Goldman Sachs 2.20 2.90 32.0 31.2HSBC 2.00 2.00 31.0 30.5ING 1.75 2.25 32.4 32.5JPMorgan 1.75 2.25 31.7 -Kasikorn Research Center 2.00 3.00 31.0 30.4Ktzmico - - 30.8 31.5Morgan Stanley - - 32.3 30.7Phatra Securities 1.75 2.50 32.0 32.5Standard Chartered Bank 2.00 2.50 31.5 30.2TISCO Securities 2.00 3.00 32.0 30.6UBS 1.75 2.75 33.0 31.0United Overseas Bank 1.75 - 31.3 -SummaryMinimum 1.75 1.30 29.5 29.0Maximum 2.75 3.75 33.9 33.0Median 2.00 2.63 32.0 31.2Consensus 2.00 2.60 31.8 31.3History30 days ago 1.88 2.51 32.0 31.360 days ago 1.84 2.63 32.1 31.790 days ago 1.89 2.74 32.0 31.5

Interest Rate Exchange Rate% THB per USD

| 107



-10

0

10

20

1995 2000 2005 2010


-100

0

100

200

300

1995 2000 2005 2010


-30

-15

0

15

30

1995 2000 2005 2010


5

10

15

20

1995 2000 2005 2010


0

25

50

75

100

1995 2000 2005 2010


2

6

10

14


20102011






Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011ANZ - - - - - - - - - -Capital Economics - - - - - - - - - -CIMB Thai Bank - - 15.1 13.2 189 208 174 195 - -Citigroup Global Markets Inc. 14.1 10.7 12.2 6.4 193 215 180 209 155 160Credit Suisse 9.0 6.4 10.5 9.4 178 193 167 184 149 159Daiwa Capital Markets 13.9 13.1 11.5 9.7 170 190 158 180 151 160DBS Bank 16.0 12.0 13.0 10.0 189 204 176 194 - -Deutsche Bank 12.5 10.3 9.7 6.9 178 192 168 185 159 177Goldman Sachs 10.7 10.8 9.7 10.4 174 186 165 176 159 180HSBC 11.4 10.3 8.4 8.7 179 191 171 183 158 179ING 9.0 7.0 6.0 3.0 161 181 155 178 - -JPMorgan 15.0 15.6 17.1 17.2 180 199 163 182 146 151Kasikorn Research Center 11.2 7.4 10.4 5.9 188 203 177 197 - -Ktzmico - - 7.0 2.7 171 194 164 191 - -Morgan Stanley 17.2 14.0 7.8 7.1 - - - - - -Phatra Securities 12.0 8.2 11.4 6.4 186 204 174 198 - -Standard Chartered Bank - - - - - - - - - -TISCO Securities 11.4 9.9 11.8 5.9 189 203 177 197 - -UBS 9.4 14.1 10.4 11.6 194 200 183 188 153 169United Overseas Bank 23.0 20.6 - - - - - - - -SummaryMinimum 9.0 6.4 6.0 2.7 161 181 155 176 146 151Maximum 23.0 20.6 17.1 17.2 194 215 183 209 159 180Median 12.0 10.7 10.5 7.9 180 199 171 188 154 164Consensus 13.1 11.4 10.7 8.4 181 198 170 189 154 167History30 days ago 12.2 10.2 10.2 8.3 179 197 169 188 154 16560 days ago 11.0 8.8 10.2 8.1 178 196 168 188 158 16590 days ago 11.7 7.6 10.4 6.0 173 193 162 187 152 162



| 108



Other:40%

Capital goods:21%

Capital goods21%

Raw Materials and

intermediate goods: 31%

Consumer goods: 8%

Other 1%

High Tech prod.61%

Agricultural prod and mining.

9%

Other manufactured prod.

6%

Labour intensive prod.

11%

Resource based products 12%

India38%

Other9%

Indonesia7%

China44%

Thailand2%

India15%

Other23%

Thailand3%

Indonesia6%

China53%

0%

25%

50%

75%

100%


34.4 34.8

14.0 13.7

9.6 8.9

38.7 39.0

3.53.3

0%

25%

50%

75%

100% Agriculture, hunting,forestry, fishing

Electricity, Gas andWater Supply

Manufacturing

Household Goods

Other

2004 2009

Other Asia24%

Other26%

EU-2713%

Japan11%

USA11%

China15%

Other Asia20%

Other35%

China12%

USA6%

Japan19%

EU-278%



Political Data


ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Thailand in the Region

Fact Sheet

• Weak communications andinformation technology

• Profund political divisions

• Financial system vulnerability

• Sound economic policy

• Diversified trade structure

• Competitive tourism industry

Official name: Kingdom of ThailandCapital: Bangkok (5.7 m)Other cities: Samut Prakan (0.4 m)

Area (km2): 514,000Population (million, 2009 est.): 66.0Population density (per km2, 2009 est.) 128Population growth rate (%, 2009 est.): 0.6Life expectancy (years, 2009 est.): 73.1Illiteracy rate (%, 2000): 7.3Language: Thai, EnglishMeasures: Metric systemTime: 7 hours ahead of GMT

Prime Minister: Abhisit VejjajivaLast elections: 23 December 2007Next elections: December 2011Central Bank Governor: Tarisa Watanagase


Energy (2007) Primary Energy Production (trillion Btu): 1,910Primary Energy Consumption (trillion Btu): 3,868Electricity Generation (billion kW-h): 135Electricity Consumption (billion kW-h): 130Oil Supply (thousand bpd): 345Oil Consumption (thousand bpd): 947CO2 Emmissions (million metric tons): 248

Transportation (2009) Airports: 105Railways (km): 4,071Roadways (km): 180,053Waterways (km): 4,000Chief Ports: Bangkok, Laem Chabang

Agency Rating OutlookMoody’s: Baa1 NegativeS&P: BBB+ NegativeFitch Ratings: BBB Stable

| 109

Vietnam September 2010FOCUSECONOMICS

LatinFocus Consensus Forecast

-9

-6

-3

0

3

2000 2002 2004 2006 2008 2010

VietnamAsia (ex Japan)World

-10

0

10

20

30

2000 2002 2004 2006 2008 2010


5

6

7

8


20102011

-8

-6

-4

-2


20102011

6

8

10

12


20102011

-6

0

6

12

2000 2002 2004 2006 2008 2010

VietnamAsia (ex Japan)World

VietnamVietnam


Outlook stable• Fitch Ratings lowered Vietnam’s debt rating from BB- to B+, with a

stable outlook, as the country could face economic and financialinstability due to the deterioration of its finances and a weak bankingsystem. To maintain control of trade deficit, the State Bank of Vietnamdevalued the exchange rate from 18,544 to 18,932.

• Consensus Forecast panellists anticipate the economy to grow 6.5%this year, which is unchanged from last month’s forecast. For 2011,the panel expects economic growth to accelerate to 7.0%.

• In August, annual inflation remained unchanged at July’s 8.2%. Panellistsexpect inflation to average 9.9% this year, which is unchanged fromlast month’s projection. In 2011, the panel expects inflation to moderateto 8.7%.

1 | GDP | % variation

4 | GDP | evolution of forecasts



3 | Inflation | in %

6 | Inflation | evolution of forecasts


2000-04 2005-09 2010-14Population (million): 79.8 85.2 90.8GDP (USD bn): 37 74 132GDP per capita (USD): 460 861 1,453GDP growth (%): 7.2 7.3 6.8Fiscal Balance (% of GDP): -2.4 -2.0 -3.4Inflation (%): 2.6 10.8 7.7Current Account (% of GDP): -0.6 -5.6 -6.0External Debt (% of GDP): 39.6 32.3 26.7

| 110



14,000

16,000

18,000

20,000

2000 2002 2004 2006 2008 2010-15

-10

-5

0

5

10

2000 2002 2004 2006 2008 2010


17,000

18,000

19,000

20,000

21,000


20102011

-10

-8

-6

-4

-2


20102011


General:Long-term chart period from 2000 to 2011 unless otherwise stated.All data are from General Statistics Office of Vietnam (GSO, TongCuc Thong Ke), the State Bank of Vietnam (SBV) and the Minis-try of Finance. See below for details. Forecasts based onFocuseconomics Consensus Forecast.

1 GDP, annual variation in %. Source: GSO.2 Balance of non-financial public sector, % of GDP. Source: Min-istry of Finance.3 Inflation, annual average variation in consumer price index(CPI) in %. Source: GSO.4 GDP, evolution of 2010 and 2011 forecasts during the last 18months.5 Balance of non-financial public sector, evolution of 2010 and2011 forecasts during the last 18 months.6 Inflation, evolution of 2010 and 2011 forecasts during the last18 months.7 Exchange rate, VND per USD (eop). Source: SBV.8 Current account balance as % of GDP. Source: GSO.9 Exchange rate, evolution of 2010 and 2011 forecasts duringthe last 18 months.10 Current account balance in USD billion, evolution of 2010and 2011 forecasts during the last 18 months.

Notes and sources

7 | Exchange Rate | VND per USD 8 | Current Account | % of GDP

10 | Current Account | evol. of fcst 9 | VND/USD | evolution of fcst

Annual Data 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Real Sector Population (million) 79.7 80.9 82.0 83.1 84.1 85.2 86.3 87.4 88.5 89.6GDP per capita (USD) 440 489 554 637 724 836 1,050 1,056 1,149 1,267GDP (USD bn) 35 40 45 53 61 71 91 92 102 114Economic Growth (GDP, ann. variation in %) 7.1 7.3 7.8 8.4 8.2 8.5 6.2 5.3 6.5 7.0 Private Consumption (ann. variation in %) 7.6 8.0 7.1 7.3 8.3 10.8 9.2 4.8 7.3 7.3 Fixed Investment (annual variation in %) 12.9 11.9 10.4 9.8 9.9 24.2 3.8 5.5 6.8 6.8Manufacturing (annual variation in %) 14.8 16.8 16.6 17.1 16.8 16.7 13.9 6.6 11.3 10.1Unemployment (eop, % of active population) 6.0 5.8 5.6 5.3 4.8 4.6 4.7 5.0 4.8 4.5Fiscal Balance (% of GDP) -1.8 -1.8 -1.1 -0.9 -0.9 -1.8 -2.1 -4.5 -6.1 -4.8Monetary and Financial Sector Inflation (CPI, annual variation in %) 4.0 3.0 9.5 8.4 6.6 12.6 19.9 5.8 - -Inflation (CPI, annual average variation in %) 4.0 3.2 7.7 8.3 7.5 8.3 23.0 6.9 9.9 8.7Base Rate (%, eop) 6.45 6.62 7.50 8.25 8.25 8.25 8.50 8.00 9.39 9.50Exchange Rate (VND per USD, eop) 15,403 15,646 15,777 15,916 16,055 16,020 16,997 18,475 19,484 19,835Exchange Rate (VND per USD, average) 15,280 15,510 15,736 15,859 15,994 16,077 16,313 17,832 18,979 19,659External Sector Current Account Balance (% of GDP) -1.7 -4.9 -2.1 -1.1 -0.3 -9.8 -9.3 -7.8 -7.8 -6.4Current Account Balance (USD bn) -0.6 -1.9 -1.0 -0.6 -0.2 -7.0 -8.4 -7.3 -7.9 -7.2Trade Balance (USD bn) -3.0 -5.1 -5.5 -4.3 -5.1 -14.2 -18.0 -12.2 -12.5 -13.3Exports (USD bn) 16.7 20.1 26.5 32.4 39.8 48.6 62.7 56.6 69.0 80.8Imports (USD bn) 19.7 25.3 32.0 36.8 44.9 62.8 80.7 68.8 81.5 94.1Exports (annual variation in %) 11.2 20.6 31.4 22.5 22.7 21.9 29.1 -9.7 20.5 17.1Imports (annual variation in %) 21.8 27.9 26.6 15.0 22.1 39.8 28.6 -14.7 20.4 15.4International Reserves (USD bn) 4.1 6.4 7.2 9.3 13.6 23.7 23.9 16.0 15.3 19.0International Reserves (months of imports) 2.5 3.0 2.7 3.0 3.6 4.5 3.6 2.8 2.3 2.4External Debt (USD bn) 13.3 16.0 18.0 19.2 20.2 24.2 28.4 25.0 29.2 32.2External Debt (% of GDP) 38.1 40.4 39.7 36.3 33.2 34.0 31.4 26.7 28.8 28.3 Quarterly Data Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10Economic Growth (GDP, ann. variation in %) 6.5 5.6 3.1 4.5 6.0 6.9 5.8 6.2 7.0 7.0Inflation (CPI, annual average variation in %) 20.2 23.0 22.4 17.4 11.0 6.9 5.2 5.9 9.1 9.1Exchange Rate (VND per USD, eop) 16,495 16,997 17,720 17,801 17,481 18,475 18,544 18,544 19,318 19,484

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Petroleum14%

Steel8%

Textiles & Other

Fabrics10%

Other51%

Machinery, Equipment,

Tools & Spare Parts17%

Textiles & Footwear

22%Crude Oil

17%

Other36%

Ag. & Fish.

Products25%

India38%

Other8%

Indonesia7%

Malaysia1%

Vietnam3%

China43%

India15%

Other23%

Indonesia6%

China53%

Malaysia2%

Vietnam1%

-25%

0%

25%

50%

75%

100%


26.7 27.7

20.4 17.0

6.24.4

21.8 24.9

8.6 9.2

16.3 16.8

0%

25%

50%

75%

100%Trade

Construction

Manufacturing

Mining & quarrying

Agriculture, forestry,fishery

Other

2004 2009

Other Asia15%

Other24%

EU-2718%

Japan14%

USA21%

China8% Other

Asia34%

Other21%

China25%

USA4%

Japan10%

EU-276%

• Large public sector

• Insufficient infrastructure

• Weak financial system


• Diversified exports

• Net exporter of crude oil

• Low cost and productive workforce


Political Data

Population | %-share in Latin America GDP | %-share in Latin America

ImportsExports

Exports Imports

Trade Structure



Economic Structure



General Data Vietnam in the Region

Fact Sheet

Agency Rating OutlookMoody’s: Ba3 NegativeS&P: BB NegativeFitch Ratings: B+ Stable

Transportation (2009) Airports: 44Railways (km): 2,347Roadways (km): 222,347Waterways (km): 17,702Chief Ports: Da Nang, Hai Phong

Energy (2007) Primary Energy Production (trillion Btu): 2,183Primary Energy Consumption (trillion Btu): 1,337Electricity Generation (billion kW-h): 66.8Electricity Consumption (billion kW-h): 59.3Oil Supply (thousand bpd): 351Oil Consumption (thousand bpd): 258CO2 Emmissions (million metric tons): 80.8


Prime Minister: Nguyen Minh TrietLast elections: 24 July 2007Next elections: June 2011Governor of State Bank: Nguyen Van Giau

Official name: Socialist Republicof Vietnam

Capital: Ha Noi (3.2 m)Other cities: Ho Chi Minh City (6.2 m)

Haiphong (1.8 m)Area (km2): 331,212Population (million, 2009 est.): 88.6Population density (per km2, 2009 est.) 268Population growth rate (%, 2009 est.): 1.2Life expectancy (years, 2009 est.): 71.7Illiteracy rate (%, 2000): 9.7Language: VietnameseMeasures: Metric systemTime: 7 hours ahead of GMT

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September 2010FOCUSECONOMICS


Notes and Statements

PUBLICATION NOTE

Consensus forecasts are mean averages of projections of economic forecasters surveyed byFocusEconomics for our monthly publication. Quarterly averages may not correspond to the annualfigures due to different forecast panels.

The GDP-weighted averages for the regional aggregates refer to economies surveyed byFocusEconomics on a monthly basis, and include the following countries:

Asia (12 countries): China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines,Singapore, Taiwan, Thailand and Vietnam.Asia ex-Japan (11 countries): China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines,Singapore, Taiwan, Thailand and Vietnam.Asean (Association of Southeast Asian Nations, 6 countries): Indonesia, Malaysia, Philippines,Singapore, Thailand and Vietnam. The remaining four Asean members (Brunei, Burma (Myanmar),Cambodia and Laos) are not included in the calculation of the regional average.NIEs (Newly Industrialized Economies, 4 countries): Hong Kong, Korea, Singapore and Taiwan.

Weights are based on market exchange rates and reflect the latest forecasts on GDP growth, infla-tion and exchange rates.

COPYRIGHT NOTE

© Copyright 2010 FocusEconomics S.L. Duplication, reproduction, transmission, publication or re-distribution in any form or by any means electronic, mechanical, or otherwise without prior writtenconsent of FocusEconomics S.L. is strictly prohibited. Please cite source when quoting. All rightsreserved under International Copyright Conventions.

The FocusEconomics Consensus Forecast Asia is a monthly publication of FocusEconomics. Com-munications to the Editor or FocusEconomics in general should be addressed as follows:

FocusEconomics S.L.Gran Via 657E-08010 BarcelonaSpaintel: +34 932 651 040fax: +34 932 650 804e-mail: [email protected]: http://www.focus-economics.com

DISCLOSURE STATEMENT

The FocusEconomics Consensus Forecast Asia (“Forecast”) is based on information obtained from sources believed to be reliable.FocusEconomics and the participating panellists (“Information Providers”) do not guarantee that the information supplied in the Forecastis accurate, complete or timely. The Information Providers do not make any warranties with regard to the results obtained from theForecast. The Information Providers are not responsible for any errors or omissions, or for any injuries or damages resulting from theuse of this information, including incidental and consequential damages. Recipients should not regard the Forecast as a substitute forthe exercise of their own judgement. The recommendations made in the Forecast may be unsuitable for investors depending on theirspecific investment objectives and financial position. The Forecast has been prepared solely for informational purposes and is not asolicitation of any transaction or an offer to enter into any transaction. Any opinions expressed in this report are subject to change withoutnotice and the Information Providers are under no obligation to update the information contained herein.

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