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Expected changes in business conditions

General business conditions

We anticipate that the economic difficulties facing the industrialized nations will recede only gradually during 2013. Even the growth markets may not be able to escape the effects of the challenging environment in the established economic regions. Therefore, the global economy is likely to expand only slightly again in 2013, with projected growth of 2.0% for the year.

Even this cautious forecast is still subject to significant risks, among them the political uncertainty surrounding the fiscal situation in the United States and the public debt situation in Europe. The Middle East and Africa present the biggest risk in terms of political instability.

We estimate that GDP growth in the NAFTA region will be close to the prior-year level at 2.0%. Since the problems in Europe remain unsolved, but are not expected to worsen further, we project that the region’s economy will stagnate. Recessionary trends are likely to dominate in the first half of 2013, but could be followed by a recovery in the second half of the year. We therefore anticipate zero growth in Western Europe, too. Asia is likely to grow at 4.0%, slightly stronger than 2012.

Expected Growth in GDP
       
Change vs. prior year in real terms (%)1) Gross domestic product
     
2013 2014 2015–2017
       
Americas 2.0 3.0 3.0
NAFTA 2.0 3.0 3.0
Latin America 3.5 4.5 4.0
EMEA 0.5 1.5 2.5
Germany 0.5 1.0 1.5
Western Europe 0.0 0.5 2.0
Central and Eastern Europe 2.0 3.5 4.0
Asia-Pacific 4.0 5.0 5.0
World 2.0 3.0 3.5
1) Rounded to the nearest 0.5%
Data based mainly on forecasts by IHS Global Insight in February 2013

We expect geopolitical conditions to continue contributing to high volatility on the raw material markets. The trend toward higher procurements costs, especially for petrochemical raw materials, is likely to persist. It can be assumed that energy prices will continue to increase in the coming years.

We predict volatility for the U.S. dollar against the euro in 2013 within the range of US$1.25 to US$1.40, compared with US$1.32 at December 31, 2012.

Future performance of the chemical industry

We expect the chemical industry to follow the macroeconomic trend. Growth in 2013 is likely to be below average at 3.0%, shaped again by lower demand in the NAFTA region and Western Europe. The emerging economies will remain the principal drivers of global growth. We expect growth of 7.5% in China and 5.5% in India, for example. Growth in the Asia-Pacific region overall is expected to be 5.5%. We predict that South America will again provide more positive momentum for the industry, with growth of 3.5%.

Expected Growth in Chemical Production
       
Change vs. prior year in real terms (%)1) Chemical production
     
2013 2014 2015–2017
       
Americas 1.5 2.5 3.0
NAFTA 1.5 2.0 3.0
Latin America 3.5 4.0 4.0
EMEA 0.5 1.5 2.5
Germany 1.5 2.0 1.5
Western Europe 0.0 1.0 2.0
Central and Eastern Europe 2.5 3.5 4.5
Asia-Pacific 5.5 7.0 6.5
World 3.0 4.5 4.5
1) Rounded to the nearest 0.5%
Data based mainly on forecasts by IHS Global Insight in February 2013

Future evolution of selling markets

According to our forecasts, the tire industry is expected to expand by 4.5% overall in 2013, with a rebound in the demand for replacement tires, in particular. We project growth of 6.5% for the Asia-Pacific region with its growth engines China and India. In Europe, however, we must expect a slight decline. The downward momentum of the previous year is expected to continue in Western Europe, with a contraction of 7.5%, while Central and Eastern Europe could achieve substantial growth of 7.5%. We predict only marginal growth of 0.5% for the NAFTA region.

The automotive industry is expected to post much lower growth of only 2.5% in 2013. We anticipate a strong contraction of around 8.5% in Western Europe on account of the weak economy there, but believe there is scope for a 6.0% improvement in Central Europe. We expect growth to normalize to 3.0% in the NAFTA region. Automotive production in Asia is projected to expand by 6.0%. China is likely to record strong growth of 10.5%, while output in Japan, at minus 6.0%, is poised to fall significantly.

The market for agrochemicals should continue to grow due to solid global demand. Asia is likely to post the strongest growth at 4.5%. Europe could continue to raise output slightly from the current high level of production. We anticipate the weakest growth of 0.5% in the NAFTA region given the low demand in 2012 and the corresponding increase in inventories held by customers.

We expect global growth in the construction industry to remain moderate. In our opinion, the eurozone crisis will cause a further contraction of 0.5% in Europe. We predict slight growth of 3.0% in the NAFTA region. Most of the industry’s growth is likely to continue to come from Asia with 7.0%. China will be the main driver.

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Expected Evolution of Major User Industries
                         
Change vs. prior year in real terms (%)1) Tires Automotive Agrochemicals Construction
                         
  2013 2014 2015 – 2017 2013 2014 2015 – 2017 2013 2014 2015 – 2017 2013 2014 2015 – 2017
                         
Americas 2.5 2.0 1.0 3.5 5.5 3.5 2.0 2.5 2.5 3.5 8.0 6.0
NAFTA 0.5 0.0 (0.5) 3.0 5.0 2.5 0.5 2.0 2.0 3.0 8.5 6.0
Latin America 9.5 8.5 5.0 5.0 6.5 6.0 3.5 3.0 3.0 5.5 6.0 5.0
EMEA 0.5 1.5 2.0 (5.5) 5.0 6.5 1.0 2.0 3.0 0.5 1.5 3.0
Germany (3.5) (1.0) (0.5) (10.0) 0.5 5.5 1.5 2.0 2.5 (0.5) 0.5 1.0
Western Europe (7.5) (4.0) (1.0) (8.5) 1.5 6.0 1.5 1.5 2.0 (0.5) 0.5 2.0
Central and Eastern Europe 7.5 6.0 4.0 6.0 9.0 5.0 1.0 2.5 3.0 2.0 4.0 5.0
Asia-Pacific 6.5 8.5 7.5 6.0 10.0 7.0 4.5 5.5 5.5 7.0 6.5 5.5
World 4.5 5.5 5.0 2.5 7.5 6.0 3.0 4.0 4.0 3.5 5.0 4.5
1) Rounded to the nearest 0.5%
Data based mainly on forecasts by IHS Global Insight, LMC and other sources in February 2013

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