WEALTH + ECONOMIC...

WEALTH + ECONOMIC OUTLOOK

KOEN DE LEUS Overijse, 11/10/2017

OUR OUTLOOK 2017

(% YoY)

2018 (% YoY)

Interest rates

Fed funds 1.00-1.25 1.75-2.00

US-10Y 2.25 2.75

ECB refi rate 0.00 0.00

GE. 10Y 0.70 1.25

GDP growth

USA 2.1 2.7

Eurozone 2.2 1.9

Belgium 1.6 1.6

Brent oil 60 US$ 63 US$

EUR/USD

EUR/USD 1.17 1.23

EUR/GBP 0.90 0.85

GBP/USD 1.26 1.41

Source: BNP Paribas Global Outlook or latest available

%

Wealth+ - Overijse 2 11/10/2017

OUR OUTLOOK 2017

(% YoY)

2018 (% YoY)

Interest rates

Fed funds 1.00-1.25 1.75-2.00

US-10Y 2.25 2.75


GE. 10Y 0.70 1.25

GDP growth

USA 2.1 2.7

Eurozone 2.2 1.9

Belgium 1.6 1.6


EUR/USD

EUR/USD 1.17 1.23

EUR/GBP 0.90 0.85

GBP/USD 1.26 1.41


%


CHAPTER I

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WHICH PROPOSALS STAND A CHANCE?

9 11/10/2017

Wealth+ - Overijse 10

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TRUMPONOMICS

Individual tax plan

Corporate tax plan

Infrastructure spending

Border Adjustment Tax

Source: Haver Analytics, CBO, Tax Policy Center, BNP Paribas

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Wealth+ - Overijse

HOW HIGH IS THE CURRENT TAX RATE?

Source: IRS

60%

50%

40%

30%

20%

10%

0%

1950 1960 1970 1980 1990 2000 2010

US Corporate income tax rate (Top Bracket, marginal rate)

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Wealth+ - Overijse

TRUMPONOMICS

Individual tax plan

Corporate tax plan

Infrastructure spending

Border Adjustment Tax

Source: Haver Analytics, CBO, Tax Policy Center, BNP Paribas

11/10/2017 23

Wealth+ - Overijse

2017

Wealth+ - Overijse

2017

2018

Wealth+ - Overijse

2017

2019

2018

CHAPTER II

Wealth+ - Overijse

SELF-SUSTAINING RECOVERY IN EUROZONE

27 11/10/2017

…maar ook voor populisme

28 11/10/2017 Wealth+ - Overijse

…maar ook voor populisme

29 11/10/2017 Wealth+ - Overijse


UNEMPLOYEMENT RATE AND WAGES

Source: Eurostat, Macrobond, BNP Paribas

11/10/2017




11/10/2017


WHAT ABOUT BREXIT

Source: Macrobond

11/10/2017


«Go Whistle !!»

Boris Johnson


«I am not hearing

any whistling,

just a clock ticking!»

Michel Barnier

BREXIT CALENDAR


Status quo

End of 2

year period

Q1 2019

Invoking

“Article 50”

Q1 2017

11/10/2017

BREXIT CALENDAR


Status quo

End of 2

year period

Q1 2019

Invoking

“Article 50”

Q1 2017

After

German

elections:

Real start of

negotiations

Q4 2017

11/10/2017

End of 2

year period

Q1 2019

BREXIT CALENDAR


Status quo

Transition period

Negotiating a

stable trade

agreement

Invoking

“Article 50”

Q1 2017

After

German

elections:

Real start of

negotiations

Q4 2017 2019-2021?

11/10/2017


CONSEQUENCES BREXIT: CUSTOM UNION

11/10/2017


CONSEQUENCES BREXIT : SINGLE MARKET

11/10/2017


CONSEQUENCES BREXIT: CONSUMPTION SLOWDOWN

11/10/2017

CONSEQUENCES BREXIT: UNCERTAINTY

11/10/2017 Wealth+ - Overijse 46

CHAPTER III

Wealth+ - Overijse

ECONOMIC SITUATION IN BELGIUM

48 11/10/2017

IN A NUTSHELL


STEADY GROWTH JOB CREATION STABLE DEFICIT

11/10/2017

-5

5

10

15

Belgium, Capacity Utilization, Total, RHS

Corporate investment growth (yoy%), LHS

Capacity limits spur on investment growth

2011

-10 72,5

0

%

75,0

77,5

80,0

82,5

85,0

87,5

2012 2013 2014 2015 2016 2017

%

Loans to Non-Financial Corporations, Total, EUR Ihs [c.o.p. 1year, c.m.a.4 quarters], yoy, LHS

Gross Profit Share of Non-Financial Corporations, [c.m.a.4 quarters), RHS

2000 2002 2004 2006 2008 2010 2012 2014 2016

15,0

12,5

10,0

7,5

5,0

2,5

0,0

-2,5

-5,0

-7,5

44

43

42

41

40

38

37

36

45

35

39

% %

CORPORATE INVESTMENT PICKING UP

51

Belgium

Source: BNP Paribas Fortis, Macrobond

Wealth+ - Overijse 11/10/2017

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STRONG JOBCREATION UNDER MICHEL-I…

Source: INR (2016)

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…DRIVEN BY PRIVATE SECTOR AND AGEING POPULATION

Private sector Public (administration) Public (care)

Source: INR (2016)

11/10/2017 53


UBERISATION OF LABOUR MARKET IS NOT MOST IMPORTANT TREND…

0%

5%

10%

15%

20%

25%

30%

1992 1997 2002 2007 2012

Labour market trends (% of the total number of employees)

Temporary Part time Flex work

Source: Eurostat, Statbel

11/10/2017


…AND DEFINITELY NOT IN BELGIUM

0%

5%

10%

15%

20%

25%

30%Temporary employees

(% of the total number of employees)

Source: Eurostat (2016)

11/10/2017

Wealth+ - Overijse

STRUCTURAL BUDGET OPTIMISM…

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Budget optimism: projected government deficit paths per publication date

2017

2016

2015

2014

2013

2012

2011

Source: Stabiliteitspact

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-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


2017

2016

2015

2014

2013

2012

2011


11/10/2017 58

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-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


2017

2016

2015

2014

2013

2012

2011


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…AS PUBLIC DEBT STAYS STUBBORNLY HIGH

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%Government debt to GDP (%)

Source: Eurostat (2016)

11/10/2017

Wealth+ - Overijse

Not to mention government inefficiencies

11/10/2017 Wealth+ - Overijse 62

0

1

2

3

4

5

6

7

Effi

cie

ncy

of

pu

blic

sp

en

din

g (1

-7, 7

= e

xtre

me

ly

eff

icn

en

t)

Efficiency of government spending

Source: World Economic Forum (2016-2017)

#60

#136

#10

CHAPTER IV

Wealth+ - Overijse

MONETARY POLICY

63 11/10/2017


WHERE WILL RATES GO?

Source: Federal Reserve, ECB - Dotted lines = forecasts BNP Paribas Fortis

Policy rates for FED and ECB

0%

1%

2%

3%

4%

5%

6%

2006 2008 2010 2012 2014 2016 2018

ECB FED

Projections

11/10/2017


WHERE WILL LONG TERM RATES GO?

11/10/2017


FED READY TO UNWIND MASSIVE POSITION

11/10/2017

Fed liabilities

0.0 Jan 07 Jan 10 Jan 13 Jan 16 Jan 19 Jan 22 Jan 25

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

USD, trillion

FED BALANCE SHEET

Midyear Economic & Investment Outlook 2017 67

4.5

2.9

1.9

2.6

3.5

Low reserves

scenario

High reserves

scenario

HOW WILL THE FED REDUCE ITS BALANCE SHEET?

Midyear Economic & Investment Outlook 2017 68

Source: BNP Paribas, Yellen speech (January, 2017)

*Hikes refer to 25bp increases.

The Equivalent amounts of fed funds rate tightening shown above reflect the following relationship between short-term and long-term interest rates, cited by Chair

Yellen in a January 19, 2017 speech: a 15bp increase in the 10yr Treasury yield is roughly equivalent to two 25bp fed funds rate hikes.

• Initial cap: 10 bn, +10 bn. / trimester

till 50 bn US$

• 10y premium: +/- 90 bp

• Equivalent to Fed funds rate tightening of

300bp

• 12 rate hikes (4/yr for 3 years)

SCENARIO FED


VALUATION STOCK MARKETS

11/10/2017

CHAPTER I

Wealth+ - Overijse

WHICH PROPOSALS STAND A CHANCE?

71 11/10/2017

CHAPTER II

Wealth+ - Overijse

SELF-SUSTAINING RECOVERY IN EUROZONE

72 11/10/2017

CHAPTER III

Wealth+ - Overijse

ECONOMIC SITUATION IN BELGIUM

73 11/10/2017

CHAPTER IV

Wealth+ - Overijse

MONETARY POLICY

74 11/10/2017

WEALTH + ECONOMIC OUTLOOK

KOEN DE LEUS Overijse, 11/10/2017

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76 Wealth+ - Overijse 11/10/2017

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DISCLAIMER This presentation has been prepared by BNP Paribas Fortis SA/NV (together with its affiliates, “BNPPF”) for information purposes only. No representation or warranty, express or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by BNP Paribas Fortis or any of their respective officers or employees as to or in relation to the accuracy or completeness of this presentation or any further written or oral information made available to the recipient or its advisers. BNPPF expressly disclaims any and all liability which may be based on such information, errors therein or omissions therefrom. In particular, no representation or warranty is given as to the accuracy or completeness of any financial information contained herein or as to the achievement or reasonableness of any forecasts, projections, management targets, prospects or returns. Recipient(s) hereof should make their own judgment and assessment of the information contained in this presentation and should not base any decisions solely on the basis upon the information and opinions contained in this presentation. Any views expressed herein reflect the judgment of BNP Paribas Fortis as of the date of this presentation and may be subject to change without notice if BNP Paribas Fortis becomes aware of any information which may have a material impact on any such views. BNP Paribas Fortis will not be responsible for any consequences resulting from the use of this presentation or reliance upon any view or statement contained herein or for any omission. © BNP Paribas Fortis SA/NV. All rights reserved.


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