© 2014 IHS

Global Consumer Markets Outlook

© 2014 IHS

A gradual acceleration in the global economy

• Led by the United States, global growth is picking up.

• Improving household finances, strengthening private investment, and reduced fiscal drag will support the US expansion.

• After stalling last year, the Eurozone’s slow recovery will resume as the policy focus shifts from austerity to growth.

• A downturn in housing markets will restrain China’s growth.

• Growth paths in emerging markets will depend on structural reforms that raise productivity and allocate capital more efficiently.

• Financial markets are more resilient than a few years ago.

• Nevertheless, there is an abundance of geopolitical risks.

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Global Consumer Markets Outlook / Q3 2014

© 2014 IHS

Global real GDP growth will strengthen in 2015-16

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Global Consumer Markets Outlook / Q3 2014

Real GDP

© 2014 IHS

Crude oil prices will reach a low in spring 2015 and rise in the long term

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© 2014 IHS

Winners and losers from low oil prices

• Winners: • US consumers are the biggest winners• European consumers benefit proportionally less because of high gasoline taxes• Emerging-market consumers will also benefit less because of large fuel subsidies• Energy-intensive industries, such as agriculture and transportation • Governments in oil-importing countries with large fuel subsidies

• Losers:• Oil producers, especially those with high costs• Major oil exporters, especially those at a “fiscal break-even point” above USD100 per

barrel such as Iran, Russia, Venezuela, Ecuador, and Angola

• Net effect:• In the United States and worldwide, the net effect on consumers and producers is

positive, boosting real GDP growth by roughly 0.5 percentage point in 2015.• A USD60 drop in oil prices represents a transfer of USD2 trillion from oil exporters to

oil importers—the latter have a higher marginal propensity to spend than the former.

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World Outlook/ January 2015

© 2014 IHS 6

Disappointing economic growth in emerging markets

Real GDP

Global Consumer Markets Outlook / Q3 2014

© 2014 IHS 7

Why has growth in emerging markets slowed?

Global Consumer Markets Outlook / Q3 2014

© 2014 IHS 8

Key risks to the global economy

Risk Signposts

China hard landing • Loan defaults by developers and local governments trigger a banking crisis and a credit squeeze.

• Real estate market bubbles burst.• The government responds with only limited fiscal stimulus.

Eurozone setback• Banking problems intensify, reducing credit availability.• Growth stalls and deflation sets in.• High unemployment leads to social unrest.

Energy price shock • Conflicts in the Middle East and Africa lead to disruptions in oil production and transportation.

• Oil prices soar initially, until markets adapt.• The Russia-Ukraine conflict cuts gas supplies to Europe.

US recovery stalls • Businesses and households spend more cautiously.• Recoveries in housing and automotive markets relapse.

Global Consumer Markets Outlook / Q3 2014