Focus Economics Consensus Forecast - Euro Area

FOCUSECONOMICS
CONSENSUS Contents
Summary .................................... 2
FORECAST Euro area ................................. 1 2
France ...................................... 2 1
Euro Area Germany .................................. 2 9
Italy ........................................... 3 7
Spain ........................................ 4 5
Austria ..................................... 5 3
Belgium .................................... 5 9
Finland ..................................... 6 5
Greece ..................................... 7 1
Ireland ...................................... 7 7
Netherlands ............................ 8 3
Portugal ................................... 8 9
Slovakia ................................... 9 5
Slovenia ................................. 101
Cyprus ................................... 107
Luxembourg .......................... 109
Malta ....................................... 111
Notes ....................................... 113
Order Form ............................. 114
November 2010
Publication date: 2 November 2010
Information available: up to and including 31 October
Forecasts collected: 26 - 29 October 2010
Next edition: 30 November 2010
Arne Pohlman Gerardo Morán Marcos Felipe Casarin

Chief Economist Senior Economist Economist
Armando Ciccarelli Ricardo Aceves Joan Enric Domene

Senior Economist Economist Economist
© FocusEconomics 2010 Gran Via 657 E-08010 Barcelona, Spain

ISSN 2013-9284 Phone: +34 932 651 040
Fax: +34 932 650 804
info@focus-economics.com
Economic Forecasts from the World’s Leading Economists www.focus-economics.com
FOCUSECONOMICS Summary November 2010
Summary
Strong Euro Clouds Outlook
• In Portugal, a budget crisis was averted when the minority govern-
Euro area ment reached an agreement with the opposition on how to further
reduce the fiscal deficit in 2011. However, concerns about the fiscal
consolidation process in the Eurozone’s periphery persist. Moreover,
the European Council agreed on a new crisis-prevention mechanism
that will also involve the private sector in sharing the burden of res-
cuing insolvent countries, which is likely to push borrowing costs
for countries at risk even higher. Meanwhile, recent economic data
reports were mixed but, on balance, still positive, as resilient figures
for Germany compensated for weaker numbers in Southern Europe.
However, sluggish growth in the United States and Japan as well as
the strengthening euro are raising doubts about the strength of the
recovery going forward.
• Consensus Forecast panellists have raised their 2010 GDP growth

forecast for the Euro area by 0.1 percentage points over last month
to the current 1.6%, the fourth consecutive month of improving pros-
pects. For 2011, panellists expect the Eurozone economy to expand
by 1.4%.
• Inflation forecasts for 2010 remained unchanged at last month’s 1.5%.

Moreover, forecasts for 2011 also remain contained at 1.6%, provid-
Arne Pohlman ing the European Central Bank with sufficient time to reach an agree-
Chief Economist
ment on exiting from the controversial bond purchase programme.
Forecast Changes over last Month
Change in 2010 GDP Growth Forecast Change in 2010 Inflation Forecast
Finland Ireland
Slovenia Greece
Germany Portugal
Portugal Belgium
Malta Austria
Slovakia Germany
Luxembourg Euro area
Netherlands Spain
Austria Finland
Euro area Italy
Cyprus Slovakia
Belgium Malta
France France
Ireland Cyprus
Italy Luxembourg
Spain Netherlands
Greece Slovenia
-0.1 0.0 0.1 0.2 0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4
Note: Change between November and October 2010 in percentage points. Note: Change between November and October 2010 in percentage points.
Source: FocusEconomics Consensus Forecast. Source: FocusEconomics Consensus Forecast.
FocusEconomics Consensus Forecast Euro Area | 2

Forecasts
Current Developments
2010 2011
On 29 October, leaders of the European Union member states agreed on an amendment of

the Lisbon Treaty, creating a new permanent crisis-prevention mechanism aimed at avoiding GDP 1.6 ↑ 1.4 =
the repetition of a Greek-style sovereign debt crisis.
Euro area
According to a preliminary estimate, inflation inched up from 1.8% in September to 1.9% in

Inflation 1.5 = 1.6 =
October.
On 26 October, the French parliament approved a plan to reform the pension system, which
raises the retirement age by two years. The reform triggered a wave of nationwide protests
and strikes in the oil sector that brought oil refining and distribution to a virtual standstill. GDP 1.6 ↑ 1.5 =
France Nonetheless, Finance Minister Christine Lagarde stated that the consequences of protests
will not alter the government’s economic growth forecast for this year.
Inflation rose from 1.4% in August to 1.6% in September. Inflation 1.6 ↓ 1.5 ↓
Recent data suggest that the recovery shows no signs of cooling. In August, industrial
production grew 1.7% month-on-month, exceeding even upbeat market expectations.
Moreover, unemployment fell below 3 million in October, the lowest level in 18 years,
GDP 3.3 ↑ 2.2 ↑
buttressing consumer confidence and supporting household consumption. In addition,
Germany
business confidence jumped to a new record high, bolstering the notion of accelerating
domestic demand in the months ahead.
In October, annual inflation remained unchanged at 1.3%, according to preliminary estimates. Inflation 1.1 = 1.4 =
On 14 October, the government approved the draft budget for next year. The budget paves
the way for a series of spending cuts and tax increases, totalling EUR 25 billion, which were GDP 1.1 ↑ 1.1 =
Italy already approved by the parliament during the summer, including a wage-freeze in the public
sector.
Preliminary data for October show inflation inching up from September’s 1.6% to 1.7%. Inflation 1.6 = 1.7 =
The economic recovery remains fragile, even though the government’s commitment to cut
the fiscal deficit to 6.0% of GDP in 2011 should restore some confidence in the country’s
public finances. Meanwhile, labour market figures improved for the first time since the third GDP -0.4 = 0.4 =
Spain quarter of 2007, as the unemployment rate fell from 20.1% in the second quarter to 19.8% in
the third.
Preliminary figures show that inflation rose from 2.0% in September to 2.2% in October. Inflation 1.6 = 1.4 =
Industrial production rebounded in August, expanding 8.2% over the same month last year.
Additional economic indicators point to a resilient recovery, suggesting that the economy is
GDP 1.7 ↑ 1.7 =
back on track, favoured by a strong external sector, which benefits from healthy growth in the
Austria
country’s main trade partner, Germany.
Inflation rose from 1.7% in August to 1.9% in September. Inflation 1.5 = 1.6 =
Preliminary estimates confirm that the recovery is gaining steam, as gross domestic product
rose 0.5% in the third quarter. In particular, the industrial sector is picking up, with output GDP 1.8 ↑ 1.6 ↓
rising 7.1% annually in August, which marked the sixth consecutive month of growth.
Belgium
Inflation rose from 2.9% in September to 3.0% in October, which marked the highest level
Inflation 1.9 ↑ 1.8 ↑
since November 2008.
Indicators across the board point towards sustained growth in the coming quarters, as the
recovery in the external sector is filtering to the domestic economy. That said, growth is
GDP 2.4 ↑ 2.5 =
expected to decelerate compared to the strong 1.9% quarter-on-quarter expansion tallied in
Finland
the second quarter.
In September, harmonised consumer price inflation increased a notch to 1.4%. Inflation 1.3 = 2.0 =

Forecasts
Current Developments (continued)
2010 2011
On 4 October, the government presented the budget draft for 2011, which aims at reducing
the fiscal deficit to 7.0% of GDP next year, following on an estimated 7.8% of GDP deficit this GDP -3.8 = -2.2 ↓
Greece year. Final numbers for the 2009 deficit will be published by 15 November. The final deficit
number is expected to be corrected from the current 13.6% of GDP to 15.5% of GDP.
Inflation rose from 5.5% in August to 5.6% in September. Inflation 4.3 ↑ 1.8 ↑
On 6 October, international credit rating agency Fitch downgraded Ireland’s rating from A+ to
AA-, as the cost of the Irish banking sector bailout is expected to weigh heavily on the GDP -0.3 ↑ 1.4 ↓
Ireland country’s finances going forward.
Inflation swung from minus 0.1% in July to a positive 0.2% in August. Inflation -0.9 ↑ 0.7 =
In August, the country continued to benefit from strong growth in the industrial sector, with
output expanding 7.3% annually. Moreover, additional data confirm the healthy state of the GDP 1.9 ↑ 1.7 =
Netherlands economy, with unemployment at the lowest level in over a year.
Inflation rose a notch from 1.5% in August to 1.6% in September. Inflation 1.0 = 1.3 ↓
Government and opposition reached an agreement on the draft budget for 2011 after bond
markets reacted nervously to the political stalemate, pushing borrowing costs to a temporary GDP 1.3 ↑ -0.1 ↓
high on 29 October. Meanwhile, industrial production continued to recover in August, exiting
Portugal negative territory for the first time in two years.
In September, inflation remained unchanged at August’s 2.0%, which represents the highest
Inflation 1.2 = 1.4 ↑
level since October 2008.

Quarterly Data | Economic Growth and Inflation | Q1 2009 - Q4 2011
Gross domestic product 2009 2010 2011

yoy var. in % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Austria -5.4 -5.7 -3.6 -0.9 0.0 2.4 2.3 2.3 2.6 1.7 1.3 1.3
Belgium -3.7 -4.1 -2.7 -0.1 1.7 2.6 2.1 1.4 1.7 1.3 1.4 1.4
Cyprus 0.6 -1.8 -2.7 -2.9 -1.3 0.5 - - - - - -
Finland -9.1 -9.7 -8.1 -5.2 0.0 3.7 3.8 4.2 4.0 3.0 2.6 2.3
France -3.9 -3.1 -2.7 -0.5 1.2 1.7 1.8 1.5 1.6 1.3 1.3 1.4
Germany -6.6 -5.5 -4.4 -2.0 2.0 3.7 3.7 3.9 3.8 1.9 1.7 1.6
Greece -1.0 -1.9 -2.5 -2.5 -2.3 -3.7 -4.5 -4.5 -4.1 -2.6 -1.5 -0.4
Ireland -9.2 -7.8 -7.4 -5.8 -0.8 -1.8 0.9 0.5 1.1 1.5 2.0 1.0
Italy -6.5 -6.2 -4.7 -2.8 0.5 1.3 1.1 1.2 1.2 1.1 1.1 1.3
Luxembourg -5.4 -8.1 -3.1 2.1 2.8 5.3 - - - - - -
Malta -1.5 -2.9 -1.8 1.8 4.2 3.9 - - - - - -
Netherlands -4.5 -5.3 -3.7 -2.2 0.6 2.2 2.3 2.1 1.7 1.3 1.4 1.4
Portugal -3.8 -3.1 -2.3 -1.0 1.8 1.5 1.1 1.3 0.2 0.0 0.0 -0.7
Slovakia -5.7 -5.5 -4.9 -2.6 4.8 4.7 2.9 2.7 3.0 3.0 3.5 3.6
Slovenia -8.4 -9.4 -8.8 -5.7 -1.1 2.2 1.8 1.0 2.5 2.3 1.5 3.3
Spain -3.5 -4.4 -3.9 -3.0 -1.3 -0.1 -0.1 0.1 0.1 0.1 0.6 1.0
Euro area -5.2 -4.9 -4.0 -2.0 0.8 1.9 1.8 2.0 1.9 1.2 1.1 1.2
GDP, yoy var. in % Inflation, yoy var. of quarterly avg. CPI in %

8 6
Euro area France Germany Euro area France Germany
Italy Netherlands Spain Italy Netherlands Spain
4 4
0 2
-4 0
-8 -2
Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11
Inflation, yoy var. of 2009 2010 2011

quarterly avg. CPI in % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Austria 1.1 0.1 -0.1 0.6 1.3 1.8 1.7 1.8 1.8 1.6 1.8 1.7
Belgium 1.6 -0.2 -1.2 -0.2 1.2 2.4 2.6 2.4 2.1 1.8 2.0 2.1
Cyprus 1.0 0.5 -1.0 0.9 2.5 2.0 3.1 - - - - -
Finland 2.4 1.7 1.2 1.2 1.5 1.4 1.3 1.8 2.1 2.0 2.1 2.1
France 0.7 -0.2 -0.5 0.4 1.5 1.8 1.6 1.6 1.4 1.4 1.6 1.7
Germany 0.8 0.3 -0.2 0.4 0.8 1.1 1.2 1.4 1.4 1.4 1.5 1.5
Greece 1.8 0.8 0.8 2.0 3.0 5.1 5.6 4.8 4.2 2.2 0.7 0.6
Ireland 0.2 -1.6 -2.6 -2.8 -2.4 -2.1 -1.2 -0.8 -0.1 0.4 0.6 0.9
Italy 1.4 0.9 0.1 0.7 1.3 1.6 1.7 1.7 1.6 1.5 1.6 1.7
Luxembourg 0.2 -0.7 -0.7 1.3 2.8 2.8 2.7 - - - - -
Malta 3.5 3.4 0.9 -0.3 0.9 - - - - - - -
Netherlands 2.2 2.1 1.3 1.0 0.6 0.4 0.7 1.3 1.4 1.0 1.5 1.4
Portugal 0.0 -1.1 -1.6 -0.7 0.3 1.0 0.6 2.9 1.4 1.4 1.3 1.4
Slovakia 3.4 2.2 1.2 0.7 0.8 1.2 2.0 2.1 2.5 3.2 3.3 3.4
Slovenia 1.9 1.0 0.1 0.8 1.5 1.3 1.8 2.2 2.3 2.2 1.9 2.1
Spain 0.5 -0.7 -1.0 0.2 1.2 1.6 1.9 2.0 1.9 1.6 1.2 1.3
Euro area 1.0 0.2 -0.4 0.4 1.1 1.5 1.7 1.8 1.8 1.6 1.6 1.6

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

2008 2009 2010 2011 2012 2013 2014 Slovakia
Austria 2.2 -3.9 1.7 1.7 2.0 2.0 2.0 Germany
Belgium 1.0 -2.8 1.8 1.6 1.9 2.1 2.0 Finland
Cyprus 3.6 -1.7 -0.1 1.4 - - - Luxembourg
Finland 0.9 -8.0 2.4 2.5 2.6 2.5 2.4 Netherlands
France 0.2 -2.5 1.6 1.5 1.8 1.8 2.0 Belgium
Germany 1.0 -4.7 3.3 2.2 1.9 1.9 2.1 Austria
Euro area
Greece 2.0 -2.0 -3.8 -2.2 1.0 1.8 2.0
France
Ireland -3.5 -7.6 -0.3 1.4 2.4 2.8 3.0
Malta
Italy -1.3 -5.1 1.1 1.1 1.2 1.4 1.4
Portugal
Luxembourg 0.0 -3.4 2.2 2.5 - - - Italy
Malta 1.7 -1.5 1.5 1.9 - - - Slovenia
Netherlands 1.9 -3.9 1.9 1.7 1.8 2.0 2.0 Cyprus
Portugal 0.0 -2.6 1.3 -0.1 1.0 1.5 1.6 Ireland
Slovakia 6.4 -4.7 3.4 3.4 3.9 4.2 4.2 Spain
Greece
Slovenia 3.7 -8.1 1.1 2.1 3.1 3.2 3.3
Spain 0.9 -3.7 -0.4 0.4 1.3 1.7 1.9 -4 -2 0 2 4
Euro area 0.6 -4.1 1.6 1.4 1.6 1.8 1.8
4 Notes and sources

2008 2009 2010 2011 Note: Gross domestic product, real annual variation in %.
2 Sources: National statistical institutes and Eurostat.
-2
-4
-6
Euro area France Germany Italy Spain Netherlands
GDP per capita, EUR GDP per capita, 2010

2008 2009 2010 2011 2012 2013 2014
Netherlands
Austria 33,957 32,802 33,669 34,639 35,760 36,983 38,255
Austria
Belgium 32,378 31,609 32,543 33,407 34,404 35,513 36,630
Finland
Cyprus 21,853 21,266 21,153 21,606 - - -
Belgium
Finland 34,752 32,088 33,034 34,338 35,727 37,074 38,424 Ireland
France 31,227 30,574 31,067 31,824 32,731 33,679 34,741 France
Germany 30,218 29,222 30,209 31,328 32,439 33,587 34,873 Germany
Greece 21,311 21,073 21,088 20,927 21,278 21,785 22,416 Euro area
Ireland 37,169 32,764 31,721 31,741 32,352 33,200 34,209 Italy
Italy 26,298 25,401 25,616 26,233 26,930 27,714 28,533 Spain
Luxembourg 81,332 76,505 78,681 80,739 - - - Cyprus
Malta 13,839 13,830 14,308 14,827 - - - Greece
Netherlands 36,166 34,705 35,591 36,558 37,729 38,951 40,237 Slovenia
Portugal 16,200 15,800 16,094 16,250 16,537 16,954 17,428 Portugal
Slovakia 11,824 11,520 12,436 13,066 13,830 14,612 15,423 Malta
Slovenia 19,620 16,190 17,523 18,267 19,279 20,473 21,829 Slovakia
Spain 23,582 22,487 22,576 22,799 23,206 23,761 24,406 10,000 17,500 25,000 32,500 40,000
Euro area 28,195 27,258 27,767 28,470 29,260 30,127 31,040
40,000 Notes and sources

2008 2009 2010 2011 Note: GDP per capita in current EUR. Chart excludes
Luxembourg due to methodological inconsistencies.
35,000 Sources: National statistical institutes, central banks and
Eurostat.
30,000
25,000
20,000

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

2008 2009 2010 2011 2012 2013 2014 Finland
Austria 0.7 0.4 0.9 1.0 1.5 1.7 1.7 Portugal
Belgium 1.5 -0.3 1.3 1.1 1.7 2.0 1.9 France
Cyprus 8.4 -3.0 -1.5 1.8 - - - Belgium
Finland 1.7 -1.9 2.1 1.9 2.2 2.4 2.5 Malta
France 0.6 0.6 1.4 1.2 1.6 2.0 2.2 Luxembourg
Germany 0.7 -0.2 0.1 1.2 1.2 1.6 1.7 Austria
Spain
Greece 2.3 -1.8 -3.5 -3.6 0.0 0.6 1.6
Euro area
Ireland -1.5 -7.0 -0.9 1.1 2.1 2.4 2.8
Slovakia
Italy -0.8 -1.8 0.5 0.7 1.1 1.5 1.6
Italy
Luxembourg 3.2 -0.7 1.0 2.2 - - - Netherlands
Malta 5.1 1.3 1.1 1.9 - - - Germany
Netherlands 1.1 -2.5 0.5 1.0 1.3 1.6 1.7 Slovenia
Portugal 1.8 -1.0 1.5 -0.4 0.5 1.3 1.5 Ireland
Slovakia 6.1 -0.7 0.5 1.9 3.6 4.0 4.3 Cyprus
Greece
Slovenia 3.0 -0.6 -0.2 1.9 2.2 2.9 3.0
Spain -0.6 -4.3 0.8 0.1 1.1 1.4 1.7 -4 -2 0 2 4
Euro area 0.4 -1.1 0.7 0.9 1.3 1.7 1.8
2 Notes and sources

Note: Private consumption.
Sources: National statistical institutes and Eurostat.
0
-2
-4
2008 2009 2010 2011
-6
Investment, annual variation in % Investment Growth, 2010

2008 2009 2010 2011 2012 2013 2014 Malta
Austria 1.0 -8.1 -1.8 1.9 3.2 3.7 3.5 Germany
Belgium 2.9 -5.3 -1.2 2.4 3.1 3.3 2.9 Slovakia
Cyprus 8.6 -12.0 -6.3 -0.3 - - - Luxembourg
Italy
Finland -0.4 -14.7 0.6 4.6 4.8 4.3 4.2
Finland
France 0.1 -7.1 -1.9 2.2 3.0 3.5 3.7
Euro area
Germany 2.5 -10.1 5.4 3.6 2.9 3.9 4.0
Belgium
Greece -7.4 -13.9 -10.8 -5.5 1.9 3.5 3.8 Austria
Ireland -14.3 -31.0 -17.0 0.5 2.8 4.0 3.4 France
Italy -4.0 -12.2 1.5 1.3 2.0 2.6 2.9 Netherlands
Luxembourg -0.1 -14.9 1.6 3.8 - - - Portugal
Malta -21.7 -18.8 5.6 5.7 - - - Slovenia
Netherlands 5.1 -12.7 -3.2 3.7 2.8 3.1 3.3 Cyprus
Spain
Portugal -1.8 -11.9 -3.9 -2.6 2.1 2.9 3.0
Greece
Slovakia 1.8 -10.5 2.3 3.6 5.3 5.0 4.9
Ireland
Slovenia 8.5 -21.6 -4.4 4.5 3.9 4.3 4.5
Spain -4.8 -16.0 -7.2 -1.5 2.0 2.8 3.1 -18 -12 -6 0 6
Euro area -1.0 -11.3 -0.5 2.2 2.8 3.2 3.2
6 Notes and sources

Note: Gross fixed investment, real annual variation in %.
0
-6
-12
2008 2009 2010 2011

-18

Industrial Production, annual variation in % Industrial Production Growth, 2010

2008 2009 2010 2011 2012 2013 2014 Slovakia
Austria 1.3 -9.3 4.8 3.8 3.7 3.4 3.5 Germany
Belgium -0.8 -12.1 3.0 2.0 3.2 3.9 3.5 Finland
Cyprus -0.1 -7.5 -2.1 4.6 - - - Netherlands
Finland 0.8 -18.0 6.8 5.4 4.8 4.5 4.8 Italy
France -2.7 -12.1 5.2 2.9 3.2 3.6 3.7 Euro area
Germany 0.6 -15.5 9.2 3.6 2.7 3.2 3.3 France
Austria
Greece -4.0 -9.2 -4.1 -0.1 2.6 3.6 3.0
Luxembourg
Ireland -2.2 -4.5 -2.1 0.8 4.2 4.6 4.9
Slovenia
Italy -3.5 -17.5 5.7 2.4 2.1 1.7 1.7
Belgium
Luxembourg -5.3 -15.8 4.8 3.1 - - - Malta
Malta -6.3 1.5 1.6 1.7 - - - Portugal
Netherlands 1.5 -7.4 6.8 2.6 2.4 2.8 2.9 Spain
Portugal -4.1 -8.1 1.4 1.1 1.7 1.8 1.7 Cyprus
Slovakia 7.4 -13.1 17.0 7.5 6.6 7.0 6.4 Ireland
Greece
Slovenia 2.5 -17.4 3.7 3.5 4.0 3.9 3.9
Spain -7.1 -16.2 0.5 0.9 2.7 2.6 2.8 -5 0 5 10 15 20
Euro area -1.8 -14.8 5.2 2.5 2.4 2.7 2.9
16 Notes and sources

Note: Industrial production, real annual variation in %.
8
-8
-16
2008 2009 2010 2011
-24
Unemployment, % of active population Unemployment, 2010

2008 2009 2010 2011 2012 2013 2014 Spain
Austria 3.8 4.8 4.5 4.3 4.4 4.5 4.4 Slovakia
Belgium 7.0 7.9 8.7 8.7 8.2 8.0 7.7 Ireland
Cyprus 3.6 5.3 6.3 6.4 - - - Greece
Finland 6.4 8.2 8.5 8.0 7.6 7.3 7.1 Portugal
France 7.8 9.4 9.9 9.8 9.5 9.0 8.6 Euro area
Germany 7.8 8.2 7.7 7.3 7.0 6.6 6.3 France
Belgium
Greece 7.7 9.4 12.2 14.1 13.6 13.1 12.9
Italy
Ireland 6.3 11.8 13.7 13.6 12.1 11.3 10.7
Finland
Italy 6.8 7.8 8.5 8.6 8.1 8.1 7.7
Germany
Luxembourg 4.4 5.7 5.9 5.7 - - - Slovenia
Malta 5.9 6.9 7.1 7.0 - - - Malta
Netherlands 3.9 4.9 5.5 5.3 4.9 4.7 4.6 Cyprus
Portugal 7.6 9.5 10.9 11.2 10.8 10.5 10.1 Luxembourg
Slovakia 8.7 13.9 14.3 13.5 11.8 10.6 10.3 Netherlands
Austria
Slovenia 4.3 6.4 7.4 6.8 6.3 5.6 5.3
Spain 11.3 18.0 20.1 20.3 18.9 17.8 16.8 0 6 12 18 24
Euro area 7.6 9.4 10.1 10.1 9.7 9.6 9.2

Note: Average unemployment rate for the year.
18 Sources: National statistical institutes and Eurostat.
2008 2009 2010 2011
15
12
3

Fiscal Balance, % of GDP Fiscal Balance, 2010

2008 2009 2010 2011 2012 2013 2014 Luxembourg
Austria -0.4 -3.4 -4.5 -4.0 -3.2 -2.3 -2.1 Finland
Belgium -1.2 -6.0 -5.0 -4.5 -3.8 -3.3 -3.1 Malta
Cyprus 0.9 -6.1 -6.8 -7.0 - - - Germany
Finland 4.2 -2.2 -3.4 -2.4 -1.4 -1.4 -1.6 Austria
France -3.3 -7.5 -7.7 -6.3 -5.1 -3.6 -3.0 Belgium
Germany 0.0 -3.1 -4.2 -3.4 -2.8 -2.2 -1.8 Italy
Slovenia
Greece -7.7 -13.6 -8.6 -7.6 -5.5 -3.4 -2.5
Netherlands
Ireland -7.3 -14.3 -19.3 -13.6 -7.9 -7.1 -6.1
Euro area
Italy -2.7 -5.3 -5.0 -4.3 -3.7 -3.5 -3.2
Cyprus
Luxembourg 2.9 -0.7 -3.3 -3.3 - - - Slovakia
Malta -4.5 -3.8 -4.2 -3.8 - - - France
Netherlands 0.7 -5.3 -6.1 -4.6 -3.9 -3.3 -3.0 Portugal
Portugal -3.0 -9.3 -7.7 -6.0 -4.4 -3.6 -3.7 Greece
Slovakia -2.3 -6.8 -7.4 -5.6 -3.9 -2.6 -2.2 Spain
Ireland
Slovenia -1.7 -5.5 -5.9 -4.4 -3.4 -2.3 -1.9
Spain -4.1 -11.2 -9.4 -7.0 -5.7 -4.6 -3.6 -20 -15 -10 -5 0
Euro area -2.0 -6.3 -6.3 -5.2 -4.2 -3.3 -2.7
5 Notes and sources
2008 2009 2010 2011 Note: Fiscal balance as % of GDP.

Sources: National statistical institutes, finance ministries and
0 Eurostat.
-5
-10
-15
Public Debt, % of GDP Public Debt, 2010

2008 2009 2010 2011 2012 2013 2014
Greece
Austria 62.6 66.5 70.5 72.8 74.5 75.5 75.7
Italy
Belgium 89.8 96.8 99.6 100.9 102.6 102.7 102.4
Belgium
Cyprus 48.4 56.2 62.1 66.4 - - -
Euro area
Finland 34.2 44.0 49.3 51.8 51.9 53.1 53.5
Ireland
France 67.5 77.6 83.1 87.9 89.3 87.6 87.3
Portugal
Germany 66.0 73.2 78.6 79.9 77.4 79.3 79.8
France
Greece 99.2 115.1 132.4 141.5 147.0 147.6 150.7
Germany
Ireland 43.9 64.0 83.4 98.6 98.6 99.2 102.2
Malta
Italy 106.3 116.0 118.5 119.6 121.0 121.7 121.7
Austria
Luxembourg 13.7 14.5 18.7 21.1 - - -
Netherlands
Malta 63.7 69.1 70.7 71.8 - - -
Spain
Netherlands 58.2 60.9 65.2 68.3 69.3 69.6 70.6
Cyprus
Portugal 65.3 76.1 83.2 88.7 91.7 93.6 95.4
Finland
Slovakia 27.7 35.7 - - - - -
Luxembourg
Slovenia 22.6 35.7 - - - - -
Spain 39.7 53.2 64.9 72.0 76.4 79.1 80.3 0 25 50 75 100 125 150
Euro area 69.4 78.7 85.3 88.4 88.6 89.0 89.1

Note: Public debt as % of GDP.
2008 2009 2010 2011
Sources: National statistical institutes, finance ministries and
100 Eurostat.
75
50
25

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

2008 2009 2010 2011 2012 2013 2014 Greece
Austria 3.2 0.4 1.5 1.6 1.7 1.8 1.8 Cyprus
Belgium 4.5 0.0 1.9 1.8 1.9 1.8 1.9 Luxembourg
Cyprus 4.4 0.2 2.6 2.4 - - - Malta
Finland 3.9 1.6 1.3 2.0 2.0 1.7 1.7 Belgium
France 3.2 0.1 1.6 1.5 1.7 1.7 1.8 Slovenia
Germany 2.6 0.3 1.1 1.4 1.5 1.6 1.6 Spain
France
Greece 4.2 1.3 4.3 1.8 1.1 0.9 1.2
Italy
Ireland 3.1 -1.7 -0.9 0.7 1.4 1.7 1.9
Austria
Italy 3.5 0.8 1.6 1.7 1.9 1.9 2.0
Euro area
Luxembourg 4.1 0.0 2.4 1.9 - - - Finland
Malta 4.6 1.7 1.9 2.1 - - - Slovakia
Netherlands 2.2 1.0 1.0 1.3 1.7 1.5 1.6 Portugal
Portugal 2.6 -0.9 1.2 1.4 1.1 1.5 1.6 Germany
Slovakia 4.6 1.6 1.2 2.6 3.0 2.6 2.6 Netherlands
Ireland
Slovenia 5.7 0.9 1.7 2.2 2.3 2.5 2.7
Spain 4.1 -0.2 1.6 1.4 1.3 1.5 1.7 -2 0 2 4 6
Euro area 3.3 0.3 1.5 1.6 1.7 1.7 1.7
6 Notes and sources

2008 2009 2010 2011 Note: Annual average variation of consumer prices in %.
Cyprus, Germany, Portugal, Slovakia and Slovenia refer to
4 national consumer price indices (CPI). All other countries are
based on harmonised index of consumer prices (HICP).
Sources: National statistical institutes, central banks and
Eurostat.
2
-2
10-year Bond Rate, % 10-year Bond Rate, 2010

2008 2009 2010 2011 2012 2013 2014
Portugal
Austria 4.3 3.9 3.0 3.4 4.3 4.4 4.4
Greece
Belgium 4.4 3.9 3.0 3.4 3.5 3.9 4.4
Cyprus
Cyprus 4.6 4.6 4.6 4.9 - - -
Finland 3.7 3.6 3.0 3.5 3.6 3.9 4.3 Malta
France 3.4 3.6 2.8 3.2 4.0 5.2 5.2 Spain
Germany 2.9 3.3 2.6 3.2 3.2 3.7 4.2 Ireland

Greece 5.1 5.5 4.6 4.7 5.4 5.5 5.6 Italy
Ireland 4.6 4.9 4.1 4.6 5.6 6.3 6.5 Austria
Italy 4.5 4.1 3.7 4.0 4.4 5.1 5.5 Belgium
Luxembourg - - - - - - - Finland
Malta 4.8 4.5 4.2 5.1 5.0 4.9 4.9 France
Netherlands 3.6 3.4 2.6 3.3 3.4 3.8 3.9
Germany
Portugal 4.0 3.9 5.3 4.9 5.1 5.2 4.9
Netherlands
Slovakia - - - - - - -
Euro area
Slovenia - - - - - - -
Spain 3.9 3.8 4.2 4.5 4.7 4.9 4.9 2 3 4 5 6
Euro area 3.9 3.9 2.3 3.1 3.6 4.0 3.9
5
Notes and sources
Note: 10-year bond rate in %, end of period.
2008 2009 2010 2011
Sources: National central banks and European Central Bank
(ECB).
2

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

2008 2009 2010 2011 2012 2013 2014 Netherlands
Austria 3.3 2.3 2.7 3.0 2.4 2.4 2.2 Germany
Belgium -2.9 0.3 1.3 1.3 0.8 1.9 2.3 Luxembourg
Cyprus -17.7 -7.9 -7.7 -7.3 - - - Austria
Finland 2.9 2.7 1.6 1.8 1.8 1.9 1.9 Finland
France -2.3 -1.9 -2.0 -1.9 -2.2 -1.9 -1.9 Belgium
Germany 6.7 4.9 5.1 5.3 5.1 4.6 4.5 Euro area
Ireland
Greece -14.6 -11.2 -9.9 -7.9 -5.2 -3.6 -3.4
Slovenia
Ireland -5.2 -2.9 -0.5 0.1 0.6 -0.5 -0.5
France
Italy -3.6 -3.2 -3.2 -2.7 -2.6 -2.5 -2.3
Slovakia
Luxembourg 5.3 6.8 4.6 5.0 - - - Italy
Malta -5.6 -3.9 -5.7 -6.2 - - - Spain
Netherlands 4.6 5.0 6.0 5.7 5.5 5.8 5.7 Malta
Portugal -11.6 -10.0 -9.6 -8.5 -7.9 -7.6 -7.0 Cyprus
Slovakia -6.5 -3.2 -3.1 -3.2 -3.8 -3.7 -3.5 Portugal
Greece
Slovenia -6.1 -1.0 -1.0 -1.7 -1.4 -1.0 -1.0
Spain -9.7 -5.5 -4.5 -3.5 -3.7 -3.6 -3.6 -12 -8 -4 0 4 8
Euro area -1.7 -0.8 -0.4 -0.1 0.2 0.2 0.3

2008 2009 2010 2011 Note: Current account balance as % of GDP.
5
-5
-10
Exports, annual variation in % Export Growth, 2010

2008 2009 2010 2011 2012 2013 2014 Germany
Austria 2.3 -19.9 9.7 8.2 10.6 9.0 6.6 Netherlands
Belgium 2.0 -17.3 8.9 6.0 4.4 3.1 3.0 Slovakia
Cyprus 9.9 -19.1 4.6 8.4 - - - Spain
Finland -0.2 -31.3 9.8 8.2 9.3 9.6 8.1 France
France 2.8 -17.5 10.8 6.5 7.7 7.0 6.4 Euro area
Germany 0.7 -18.4 16.9 9.8 8.8 8.2 7.8 Finland
Austria
Greece 13.6 -22.7 3.9 6.2 6.9 5.1 6.3
Belgium
Ireland -3.1 -4.3 3.0 3.3 3.6 3.1 2.1
Slovenia
Italy 1.1 -20.9 8.2 6.0 7.0 6.9 5.8
Italy
Luxembourg 8.1 -23.1 6.6 7.1 - - - Luxembourg
Malta -4.0 -11.5 -0.3 6.7 - - - Cyprus
Netherlands 6.8 -17.0 12.4 6.2 7.8 6.7 5.0 Greece
Portugal 1.7 -18.7 3.0 5.0 5.5 7.4 7.6 Portugal
Malta
Slovenia 1.9 -19.6 8.4 16.0 6.3 3.9 2.9
Spain 3.7 -15.9 11.0 6.4 8.6 8.8 7.5 -5 0 5 10 15 20
Euro area 3.8 -18.3 10.4 7.7 7.4 7.5 7.0

Note: Nominal annual variation in % of merchandise exports.
10
-10
-20
2008 2009 2010 2011

-30

Imports, annual variation in % Import Growth, 2010

2008 2009 2010 2011 2012 2013 2014 Germany
Austria 4.0 -18.5 8.9 7.2 9.0 8.6 6.0 Netherlands
Belgium 5.6 -20.3 8.3 5.7 4.6 4.6 4.4 Slovakia
Cyprus 15.9 -23.2 2.6 5.5 - - - Euro area
Finland 3.8 -29.0 8.7 7.8 9.6 11.4 8.4 Slovenia
France 5.3 -17.8 8.3 6.2 8.2 7.5 6.0 Austria
Germany 3.5 -17.2 16.1 9.4 8.6 8.5 8.7 Finland
Belgium
Greece 8.3 -27.8 -2.8 -5.5 2.6 3.6 4.4
France
Ireland -10.3 -21.4 0.7 2.4 4.1 3.0 3.9
Spain
Italy 2.6 -21.9 7.3 4.7 6.3 7.7 5.7
Malta
Luxembourg 11.5 -24.6 1.5 3.1 - - - Italy
Malta -2.8 -16.5 7.6 7.1 - - - Cyprus
Netherlands 9.1 -17.7 14.1 6.3 7.4 5.3 4.5 Portugal
Portugal 7.1 -20.2 2.0 4.0 4.1 3.4 5.1 Luxembourg
Greece
Slovenia 6.1 -26.1 9.1 16.7 6.4 3.0 3.2
Spain 0.6 -26.2 8.2 3.0 6.6 5.3 6.3 -5 0 5 10 15 20
Euro area 8.4 -21.6 10.4 6.7 6.5 7.1 6.6
25
Notes and sources
Note: Nominal annual variation in % of merchandise imports.
-25
2008 2009 2010 2011
-50

FOCUSECONOMICS Euro area November 2010
Euro area
Euro area
Outlook improves
• On 29 October, leaders of the European Union member states agreed
on an amendment to the Lisbon Treaty, creating a new permanent
crisis-prevention mechanism aimed at avoiding the repetition of a
Greek-style sovereign debt crisis.
LONG-TERM TRENDS | 5-year averages • The second GDP estimate confirmed that the economy expanded 1.0%
2000-04 2005-09 2010-14 in the second quarter. The result represented the fastest pace in four
Population (million): 318 327 335 years. On the back of the positive result, Consensus Forecast
GDP (EUR bn): 7,316 8,791 9,824
GDP per capita (EUR): 23,025 26,891 29,333
panellists upgraded their growth forecast by 0.1 percentage points
GDP growth (%): 1.9 0.8 1.7 and now see the economy expanding 1.6% in 2010. For 2011, the
Fiscal Balance (% of GDP): -2.1 -2.5 -4.3 panel sees economic growth reaching 1.4%, which is unchanged from
Public Debt (% of GDP): 68.8 70.5 88.1
Inflation (%): 2.2 2.0 1.7
last month’s forecast.
Current Account (% of GDP): -0.1 -0.5 0.0
• According to a preliminary estimate, inflation inched up from 1.8% in
September to 1.9% in October. Panellists expect inflation to average
1.5% this year, which is unchanged from last month’s projection. In
2011, the panel expects inflation to inch up to 1.6%.
Armando Ciccarelli FISCAL POLICY | European Commission unveils new set of fiscal rules
Senior Economist On 29 October, the European Council agreed to amend the Lisbon Treaty and
create a new permanent crisis-prevention mechanism, aimed at maintaining
financial stability in the region.
The proposed new mechanism will entail the creation of a permanent “bail-out”
facility, providing support to countries hit by a Greek-style debt crisis in the
future. The new facility will replace the existing EUR 750 billion IMF-backed
temporary fund (the so-called European Stabilisation Mechanism), which was
Fiscal Deficit vs Public Debt | % of GDP created in May in the wake of the Greek crisis and which will expire in 2013.
8 90
Moreover, according to the new provisions, an “orderly default” process should
Fiscal Deficit Public Debt
be implemented, in a way that will also involve the private sector (i.e. bond-
6
80
holders) in sharing the burden of rescuing insolvent countries. The proposals
will require the modification of the existing Lisbon Treaty, as they go against
4 %
%
the so-called “no bail-out” clause. Details on how to implement treaty changes
70 will be discussed in the coming months and should be ready for the next meet-
2
ing of the European Council in December.
0 60
1995 1999 2003 2007 2011 2015
In addition, EU leaders agreed on a set of measures aimed at tightening bud-
get rules for EU countries. According to the new set of rules, sanctions for
Note: Annual fiscal deficit and public debt as percentage of GDP. countries exceeding the deficit (3% of GDP) and debt thresholds (60% of GDP)
Source: Eurostat and FocusEconomics Consensus Forecast.
set in the Stability and Growth Pact (SGP) will be punished at an earlier stage
in the surveillance process, compared to the existing framework. Moreover,
EU leaders stressed that stronger attention should be paid to the debt crite-
rion, in addition to the current focus on the deficit criterion.
Finally, member states will be also assessed on a “scoreboard” of internal and

external macroeconomic indicators in order to assess risks stemming from
FocusEconomics Consensus Forecast | 13

divergences among EU members. Countries with “serious imbalances” will be

put in a so-called “excessive imbalances position”, ultimately leading to sanc-
Gross Domestic Product | variation in % tions in case of persistent imbalances.
2.0
REAL SECTOR | Second estimate confirms Q2 growth
1.0
1.0 0.7 Second estimates for GDP growth published on 6 October confirmed that, in
0.4 0.3 0.4
0.2 0.3 the second quarter, the economy expanded 1.0% over the first quarter as pre-
0.0
-0.1
viously reported. The reading came in line with market expectations and marked
%
-1.0
-0.4 -0.5 the strongest quarterly reading since the second quarter of 2006. On an an-
nual basis, the Euro zone economy expanded 1.9%, the strongest annual re-
-2.0 -1.8 sult since the second quarter of 2008.
-2.5
-3.0
Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10
The second GDP release reflected a deterioration in the contribution to growth
of domestic demand, while the contribution from the external sector improved
Note: Quarter-on-quarter changes of seasonally adjusted GDP in %. from the previous estimate. Private consumption expanded 0.2% over the pre-
vious quarter, which was down from the initial 0.5% estimate, while gross fixed
investment rose 1.5%, down from the earlier 1.8% estimate. That said, a larger
contribution from inventories helped offset slower growth in consumption and
investment.
In the external sector, growth in both exports and imports was revised down
GDP by Type Q2 2010 | variation in % from the previous estimate. However, according to the revision, exports (first
estimate: +4.4% quarter-on-quarter; second estimate: +4.3% qoq) grew more
Imports 4.3 than imports (first estimate: +4.4% qoq; second estimate: +4.0% qoq). As a
Exports 4.0
consequence, the net contribution from the external sector to overall quarterly
Gross fixed
growth rose from the 0.06 percentage points initially reported to 0.17 percent-
1.5
investment
age points.
GDP 1.0
Domestic demand 0.8 Despite the persistent turmoil owing to the fiscal crisis in Europe, the economy
Government
0.5 should continue to grow, with Consensus Forecast participants expecting GDP
consumption
Private consumption 0.2

to expand 0.4% in the third quarter, which is a notch below the 0.5% expansion
expected by the European Commission. Nevertheless, strong downward risks
0.0 1.0 2.0 3.0 4.0 % 5.0
persist, as most of the countries in the Euro zone are applying severe fiscal
Note: Quarter-on-quarter changes of seasonally adjusted gross domestic
consolidation programmes after fiscal deficits reached unsustainable levels and
product in %. the strong rally of the euro might hinder exports growth in the months to come.
Source: Eurostat and FocusEconomics calculations.
Consensus Forecast panellists anticipate GDP expanding 1.6% this year, which
is 0.1 percentage points above last month’s projection. For 2011, the panel
expects the economy to expand 1.4%.
Industrial Production | variation in %

REAL SECTOR | Industrial production steps up in August
3.0
MoM s.a. (left scale)
5.0
In August, industrial production expanded 1.0% over the previous month in
Annual average YoY (right scale)
2.1 seasonally adjusted terms. The result was up from the 0.1% rise recorded in
0.0
2.0
1.6
1.8 July (previously reported: +0.0% month-on-month) and beat market expecta-
1.1 1.2 -5.0 tions, which had anticipated a 0.7% increase. On an annual basis, industrial
1.0
1.0
0.5
0.7 % production expanded 7.9%, which was up from the 7.2% increase recorded in
% -10.0
0.1
July. That said, the positive annual figure was still favoured by a low calculation
0.0
-15.0
base, as industrial production had contracted 15.0% in August 2009.
-0.1
-0.4
-0.6
-1.0 -0.8 -20.0 The main drivers behind the monthly reading were capital goods, which rose
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
+3.0% month-on-month, as well as production of durable consumer goods,
which was up 1.8% over the previous month. As a result of the positive monthly
Note: Month-on-month changes of seasonally adjusted industrial production
and annual average growth rate in %. reading, annual average growth in industrial production climbed back into posi-
Source: Eurostat.
tive territory after 21 consecutive negative readings, rising from a 0.6% drop in
July to a 1.1% increase in August.

Consensus Forecast panellists see industrial production expanding 5.2% this

year, which is down 0.8 percentage points from last month’s forecast. For 2011,
the panel anticipates industrial production to accelerate to 2.5%.
OUTLOOK | Economic sentiment rises more than expected in October

Economic Sentiment The Economic Sentiment Indicator (ESI) published by the European Commis-
sion rose 0.9 points in October, stepping up from the 103.2 points recorded in
120
September to 104.1 points. The figure overshot market expectations, which
110
had seen the ESI rising to only 103.5 points.
100
At the current level, the index remains above its long-term average of 100
Points
90
points for a fourth consecutive month, after having fallen below the threshold
80 for two straight months in May and June. Values greater than 100 indicate an
70
above-average economic sentiment, whereas values below 100 indicate a be-
low-average position.
60
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
The increase was led by a more optimistic sentiment in industry and construc-
Note: The Economic Sentiment Indicator (ESI) is based on surveys addressed tion. Improving order books, in particular for exports, fuelled economic senti-
to the manufacturing, services, retail trade and construction sectors, as well
as to consumers. Values above 100 indicate an above-average economic
ment in the industrial sector. Meanwhile, the sentiment gauge remained un-
sentiment, whereas values below 100 indicate a below-average position. changed in the other three categories composing the index (consumers, retail
Source: European Commission.
trade and services).
MONETARY SECTOR | Inflation picks up in September

Consumer prices in the Euro zone rose 0.2% over the previous month in Sep-
tember, which mirrored the result seen in the previous month. As a conse-
quence of the monthly increase, annual headline inflation stepped up from
1.6% in August to 1.8%, which confirmed a previous estimate released by
Eurostat on 30 September and marked the highest level in nearly two years.
The monthly rise was driven by higher prices for clothing, which added 6.5%
over the previous month, as well as for education, which added 0.6% over
August. On an annual basis, the increase of consumer prices reflected the
impact of higher energy prices, which rose 7.7% over the same month last
Inflation | Consumer Price Index year, with the sub-category relative to fuel for transport rising 10.9%.
1.0
monthly (left scale)
0.9 2.0 Meanwhile, the core inflation index, which does not include prices for energy
annual (right scale) and unprocessed foods, rose 0.2% over the previous month. Despite the monthly
0.5
0.3 0.3
0.5
increase, annual core inflation remained unchanged at August’s 1.0%.
0.2 1.0
0.2 0.2
% 0.1 0.1
0.0 0.0
0.0 % At the current level, inflation remains under the rate of just below 2.0% aimed
0.0
at by the European Central Bank (ECB). Accordingly, the ECB left the refinanc-
-0.3
-0.5 ing rate unchanged at 1.0% for the fifteenth consecutive time at its last meeting
on 7 October, in a decision widely expected by the market. ECB President
-0.8
-1.0 -1.0 Jean Claude Trichet maintains that the current monetary policy stance is ap-
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
propriate, as the ECB expects inflationary pressures to remain moderate over
the medium-term horizon, as recovery in the region continues at a moderate
Note: Year-on-year and monthly variation of consumer price index in %.
Source: Eurostat. and uneven pace.
More recent data point to a situation of rising inflation. According to a prelimi-

nary estimate released by Eurostat on 29 October, inflation rose 1.9% over the
same month the previous year, which if confirmed would mark an increase
compared to September’s reading.
Consensus Forecast participants see inflation averaging 1.5% this year, which
is unchanged from last month’s forecast. For 2011, the panel anticipates aver-
age inflation rising to 1.6%.

Economic Indicators | 2005 - 2014

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
Population (million) 324 325 327 329 330 331 333 335 337 338
GDP per capita (EUR) 25,181 26,303 27,521 28,195 27,258 27,767 28,470 29,260 30,127 31,040
GDP (EUR bn) 8,146 8,554 9,002 9,265 8,987 9,202 9,483 9,797 10,139 10,500
Economic Growth (GDP, annual var. in %) 1.7 3.0 2.8 0.6 -4.1 1.6 1.4 1.6 1.8 1.8
Domestic Demand (annual variation in %) 2.0 3.0 2.6 0.3 -3.4 1.3 1.2 1.8 1.8 1.9
Private Consumption (annual var. in %) 1.8 2.2 1.7 0.4 -1.1 0.7 0.9 1.3 1.7 1.8
Government Consumption (ann. var. in %) 1.6 2.1 2.2 2.4 2.4 - - - - -
Fixed Investment (annual variation in %) 3.4 5.7 4.6 -1.0 -11.3 -0.5 2.2 2.8 3.2 3.2
Industrial Production (annual variation in %) 1.4 4.2 3.7 -1.8 -14.8 5.2 2.5 2.4 2.7 2.9
Unemployment (aop, % of active population) 9.0 8.4 7.5 7.6 9.4 10.1 10.1 9.7 9.6 9.2
Fiscal Balance (% of GDP) -2.5 -1.3 -0.6 -2.0 -6.3 -6.3 -5.2 -4.2 -3.3 -2.7
Public Debt (% of GDP) 70.1 68.3 66.0 69.4 78.7 85.3 88.4 88.6 89.0 89.1
Monetary and Financial Sector
Money (annual variation of M3 in %) 7.3 9.9 11.6 7.6 -0.2 - - - - -
Inflation (HICP, eop annual variation in %) 2.2 1.9 3.1 1.6 0.9 - - - - -
Inflation (HICP, ann. average variation in %) 2.2 2.2 2.1 3.3 0.3 1.5 1.6 1.7 1.7 1.7
Producer Prices (annual variation in %) 4.4 3.8 4.7 1.2 1.0 - - - - -
ECB Refinancing Rate (%, eop) 2.25 3.50 4.00 2.50 1.00 1.00 1.17 2.10 2.80 3.08
3-Month Euribor (%, eop) 2.49 3.73 4.68 2.89 0.70 0.97 1.37 2.18 2.90 2.92
10-year Bond Yield (%, eop) 3.41 3.90 4.38 3.89 3.87 2.35 3.08 3.61 3.95 3.92
Stock Market (Eurostoxx 50, var. in %) 21.3 15.1 6.8 -44.3 21.0 - - - - -
Exchange Rate (USD per EUR, eop) 1.18 1.32 1.46 1.39 1.43 1.33 1.30 1.26 1.26 1.25
Exchange Rate (USD per EUR, average) 1.24 1.26 1.37 1.47 1.39 1.38 1.31 1.28 1.26 1.25
External Sector
Current Account Balance (% of GDP) 0.2 -0.1 0.1 -1.7 -0.8 -0.4 -0.1 0.2 0.2 0.3
Current Account Balance (EUR bn) 15.4 -8.9 8.9 -162 -67.6 -41.3 -10.3 15.1 22.2 27.8
Trade Balance (EUR bn) 43.3 10.6 47.5 -18.3 38.4 36.5 53.1 75.1 86.5 98.3
Exports (EUR bn) 1,222 1,398 1,518 1,576 1,288 1,421 1,531 1,645 1,768 1,892
Imports (EUR bn) 1,179 1,387 1,471 1,594 1,249 1,382 1,473 1,570 1,682 1,793
Exports (annual variation in %) 8.7 14.4 8.6 3.8 -18.3 10.4 7.7 7.4 7.5 7.0
Imports (annual variation in %) 14.4 17.7 6.0 8.4 -21.6 10.4 6.7 6.5 7.1 6.6
Quarterly Data Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Economic Growth (GDP, annual var. in %) -4.0 -2.0 0.8 1.9 1.8 2.0 1.9 1.2 1.1 1.2
Economic Growth (GDP, qoq variation in %) 0.4 0.2 0.3 1.0 0.4 0.3 0.3 0.4 0.5 0.5
Private Consumption (s.a. qoq var. in %) -0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.3
Fixed Investment (s.a. qoq var. in %) -1.1 -1.2 -0.3 1.5 0.3 0.3 0.3 0.4 0.5 0.6
Industrial Production (annual variation in %) -14.4 -7.4 4.7 9.0 5.3 4.2 2.4 1.4 1.4 2.9
Inflation (HICP, ann. average variation in %) -0.4 0.4 1.1 1.5 1.7 1.8 1.8 1.6 1.6 1.6
Monthly Data Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
Industrial Production (annual variation in %) 1.8 4.2 7.7 9.2 9.8 8.2 7.2 7.9 - -
Industrial Production (s.a. mom var. in %) 2.1 -0.6 1.8 0.7 1.2 -0.1 0.1 1.0 - -
Unemployment (% of active population) 9.9 9.9 10.0 10.0 10.0 10.0 10.0 10.0 10.1 -
Consumer Confidence Index -15.8 -17.4 -17.3 -15.0 -17.8 -17.3 -14.0 -11.4 -11.0 -11.0
Econ. Sent. Indicator (100-point threshold) 96.0 95.9 97.9 100.6 98.4 98.9 101.1 102.3 103.2 104.1
Inflation (HICP, mom variation in %) -0.8 0.3 0.9 0.5 0.1 0.0 -0.3 0.2 0.2 -
Inflation (HICP, eop annual variation in %) 1.0 0.9 1.4 1.5 1.6 1.4 1.7 1.6 1.8 1.9

Real Sector | Gross Domestic Product
1 | Real GDP | 1990 - 2014 | % variation 2 | Real GDP | Q1 07-Q4 11 | % variation Real GDP growth in %
6 6 Individual Forecasts 2010 2011
G7 Allianz 1.8 1.7
Euro area Barclays Capital 1.7 1.7
3 3 BBVA 1.6 1.2
BMO Capital Markets 1.6 1.5
BNP Paribas 1.7 1.1
0 0 Citigroup 1.5 1.1
Commerzbank 1.6 1.5
Credit Agricole 1.6 1.2
-3 -3
Euro area Credit Suisse 1.7 2.5
G7 DekaBank 1.6 1.4
World Deutsche Bank 1.5 1.0
-6 -6
DZ Bank 1.7 1.2
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Experian 1.5 1.5
Goldman Sachs 1.7 1.8
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts ING 1.6 1.4
3 3 Instituto Flores de Lemus 1.6 0.9
Intesa Sanpaolo 1.6 1.7
JPMorgan 1.7 1.5
2 Lloyds TSB 1.5 1.4
2 Nomura 1.7 1.6
RBS 1.6 1.0
1 Raiffeisen Research 1.7 1.2
UBS 1.7 1.9
1 Unicredit 1.6 1.3
0 Maximum Maximum
Summary
Consensus Consensus
Minimum
Minimum 1.5 0.9
Minimum
Maximum 1.8 2.5
-1 0
Median 1.6 1.4
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep
Consensus 1.6 1.4
History
5 | Consumption | % variation 6 | Investment | % variation 30 days ago 1.5 1.4
4 10 60 days ago 1.3 1.4
90 days ago 1.2 1.4
Additional Forecasts
European Commission (Sep. 2010) 1.7 -
2 0 ECB (Sep. 2010) 1.4 - 1.8 0.5 - 2.3
IMF (Oct. 2010) 1.7 1.5
0 -10
Notes and sources
General:
Long-term chart period from 1990 to 2014 unless otherwise stated. All
Euro area G7 Euro area G7 real sector data are from Eurostat. See below for details. Forecasts are
based on the FocusEconomics Consensus Forecast.
-2 -20
1996 2001 2006 2011 1996 2001 2006 2011
1 GDP, real annual variation in %. Source: Eurostat.
2 Quarterly GDP (seasonally adjusted), year-on-year variation in %.
Source: Eurostat.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts
3 GDP, evolution of 2010 forecasts during the last 18 months.
2 4 4 GDP, evolution of 2011 forecasts during the last 18 months.
2010 5 Private consumption, annual variation in %, 1996-2014. Source:
2011 Eurostat.
6 Gross fixed investment, annual variation in %, 1996-2014. Source:
2
Eurostat.
1
7 Private consumption, evolution of 2010 and 2011 forecasts since July
2009.
0 8 Gross fixed investment, evolution of 2010 and 2011 forecasts since
July 2009.
0
9 Industrial production, annual variation in %. Source: Eurostat.
10 Unemployment, % of active population, 1995-2014. Source: Eurostat.
-2 11 General government balance, % of GDP, 1995-2014. Source: Eurostat.
2010 12 Industrial production, evolution of 2010 and 2011 forecasts since July
2011 2009.
-1 -4 13 Unemployment, evolution of 2010 and 2011 forecasts since July 2009.
14 General government balance, evolution of 2010 and 2011 forecasts
Jul Oct Jan Apr Jul Oct Jul Oct Jan Apr Jul Oct
since July 2009.

Real Sector | Additional forecasts

Consumption Investment Industry Unemployment Fiscal Balance Public Debt
% variation % variation % variation % of active pop. % of GDP % of GDP
Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011
Allianz 0.6 0.8 -0.9 2.5 6.7 3.6 10.0 9.9 -6.4 -5.4 - -
Barclays Capital 0.7 1.3 -1.1 2.0 2.1 4.6 10.0 9.5 -6.3 -4.9 - -
BBVA 0.7 1.1 -1.3 1.0 - - 10.1 10.2 -6.8 -5.5 - -
BMO Capital Markets - - - - - - 10.0 9.7 - - - -
BNP Paribas 0.8 0.6 -0.6 2.0 7.0 0.8 10.0 10.3 -6.3 -5.1 - -
Citigroup 0.4 0.7 -1.2 1.6 1.4 1.8 10.0 9.7 -6.2 -4.9 86.7 89.0
Commerzbank 0.8 0.9 -0.5 3.8 - - 10.0 10.4 - - - -
Credit Agricole - - - - - - 10.0 9.9 -5.9 -4.9 84.3 87.6
Credit Suisse 0.9 1.7 -0.3 3.2 5.4 2.8 - - -6.0 -4.6 - -
DekaBank 0.7 0.8 -0.7 1.8 - - 10.1 10.6 -6.8 -5.0 - -
Deutsche Bank 0.7 0.3 -1.2 1.0 - - 10.1 10.4 -6.0 -4.7 - -
DZ Bank 0.6 1.1 -0.7 2.2 - - 10.3 10.1 -6.5 -5.3 90.1 91.8
Experian 0.3 0.8 -0.6 2.1 - - 10.3 10.1 - - - -
Goldman Sachs - - - - - - 10.3 10.3 -6.1 -4.8 - -
ING 0.8 1.1 -0.8 2.6 4.0 3.5 - - -6.5 -5.5 84.3 88.0
Instituto Flores de Lemus 0.8 0.6 4.8 1.3 2.7 -0.2 10.7 10.4 - - - -
Intesa Sanpaolo 0.7 1.0 -0.8 2.4 6.6 1.9 10.1 9.9 -6.7 -5.9 - -
JPMorgan 0.5 0.9 -0.7 3.3 6.5 1.9 10.0 9.9 -6.8 -5.5 - -
Lloyds TSB 0.5 0.7 -1.0 1.6 5.9 4.1 10.1 10.3 -6.4 -5.3 - -
Nomura 0.6 0.9 -0.8 2.2 - - 10.1 10.3 -6.1 -5.3 85.0 88.3
RBS 0.6 0.6 -0.8 1.9 6.7 1.7 10.2 10.2 -6.5 -5.2 85.0 89.0
Raiffeisen Research 0.8 1.1 0.1 2.9 7.0 2.5 10.0 9.8 -6.6 -6.1 84.7 88.5
UBS 0.9 1.0 -0.3 4.0 6.2 3.4 9.9 9.6 -5.5 -4.2 82.7 84.9
Unicredit 0.6 0.6 -1.1 1.7 - - 10.1 10.1 -6.5 -5.2 - -
Summary
Minimum 0.3 0.3 -1.3 1.0 1.4 -0.2 9.9 9.5 -6.8 -6.1 82.7 84.9
Maximum 0.9 1.7 4.8 4.0 7.0 4.6 10.7 10.6 -5.5 -4.2 90.1 91.8
Median 0.7 0.9 -0.8 2.1 6.2 2.5 10.1 10.1 -6.4 -5.2 84.9 88.4
Consensus 0.7 0.9 -0.5 2.2 5.2 2.5 10.1 10.1 -6.3 -5.2 85.3 88.4
History
30 days ago 0.6 0.8 -0.6 2.2 6.0 2.6 10.2 10.2 -6.4 -5.3 84.7 87.7
60 days ago 0.2 0.8 -1.7 2.1 6.5 2.7 10.2 10.2 -6.4 -5.3 84.1 87.4
90 days ago 0.1 0.8 -1.9 2.0 6.9 2.7 10.2 10.2 -6.5 -5.4 - -
9 | Industry | % variation 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP
10 12 4
Euro area G7
10 0
0
8 -4
-10
6 -8
Euro area G7
Euro area G7
-20 4 -12
1990 1995 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
12 | Industry | evolution of forecasts 13 | Unemployment | evolution of fcst 14 | Fiscal Balance | evolution of fcst
8 12 -4
2010
2010
2011 2011
4 11 -5
0 10 -6
2010
2011
-4 9 -7
Jul Oct Jan Apr Jul Oct Jul Oct Jan Apr Jul Oct Jul Oct Jan Apr Jul Oct

Monetary Sector | Inflation and Exchange Rate
15 | Inflation | 1995 - 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Inflation and Exchange Rate

4 6 Consumer Prices Exchange Rate
Euro area G7 Euro area
% var. USD per EUR
G7
3 Individual Forecasts 2010 2011 2010 2011
4 Allianz 1.5 1.6 1.40 1.45
Barclays Capital 1.6 1.9 - -
2
BBVA 1.6 1.7 1.40 1.30
2 BMO Capital Markets 1.5 1.8 - -
1 BNP Paribas 1.6 1.6 1.34 1.20
Citigroup 1.5 1.7 1.44 1.39
0 Commerzbank 1.5 1.7 1.35 1.28
0
Credit Agricole 1.6 1.5 1.42 1.30
Credit Suisse 1.6 1.6 - -
-1 -2 DekaBank 1.5 1.4 1.24 1.24
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Deutsche Bank 1.6 1.7 1.30 1.35
DZ Bank 1.5 1.4 1.27 1.35
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst Experian 1.4 1.5 1.12 1.15
Goldman Sachs 1.5 1.5 1.35 1.38
3 3
ING 1.5 1.7 1.40 1.40
Maximum
Consensus Instituto Flores de Lemus 1.6 1.8 - -
Minimum
Intesa Sanpaolo 1.5 1.7 1.27 1.29
JPMorgan 1.5 1.1 1.30 1.25
2 2
Lloyds TSB 1.5 1.6 1.27 1.25
Nomura 1.6 1.9 1.35 1.35
RBS 1.6 1.8 1.32 1.22
Raiffeisen Research 1.5 1.6 1.40 1.20
1 1
UBS 1.6 1.8 1.25 1.10
Maximum Unicredit 1.5 1.7 1.43 1.46
Consensus Summary
Minimum Minimum 1.4 1.1 1.12 1.10
0 0
Maximum 1.6 1.9 1.44 1.46
Median 1.5 1.7 1.35 1.30
Consensus 1.5 1.6 1.33 1.30
19 | Exchange Rate | 1990 - 2014 20 | Exchange Rate | Q1 07-Q4 11 | History
1.6 1.6 30 days ago 1.5 1.6 1.27 1.26
60 days ago 1.5 1.6 1.23 1.22
90 days ago 1.5 1.6 1.21 1.21
1.4 1.5 Additional Forecasts
Eur. Comm. (Sep. 2010) 1.4 - - -
ECB (Sep. 2010) 1.5 - 1.7 1.2 - 2.2 - -
1.2 1.4 IMF (Oct. 2010) 1.6 1.5 - -
1.0 1.3
0.8 1.2
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Notes and sources

21 | Exchange Rate 2010 | evol. of fcst 22 | Exchange Rate 2011 | evol. of fcst
General:
1.8 1.8 Long-term chart period from 1990 to 2014 unless otherwise stated. All
Maximum
monetary and external sector data are from Eurostat and European Central
Consensus Bank (ECB). Forecasts based on the FocusEconomics Consensus
Minimum 1.6 Forecast.
1.6
15 Inflation, annual average variation in harmonised index of consumer

1.4
prices (HICP) in % (aop). Source: Eurostat.
1.4 16 Quarterly inflation, year-on-year variation in harmonised index of
consumer prices (HICP) in % (aop). Source: Eurostat.
1.2
17 Inflation, evolution of 2010 forecasts during the last 18 months.
1.2 Maximum
1.0 19 Exchange rate, USD per EUR (eop). Source: ECB.
Consensus 20 Quarterly exchange rate, USD per EUR (eop). Source: ECB.
Minimum 21 Exchange rate, evolution of 2010 forecasts during the last 18
1.0 0.8 months.
22 Exchange rate, evolution of 2011 forecasts during the last 18
months.

Monetary Sector | Interest Rates
23 | Interest Rate | 2000 - 2014 | in % 24 | Interest Rate| Q1 07-Q4 11 | in % Interest Rates

6 6 Policy Rate 3-month
Euro area
Euro area Japan
in % Rate in %
G7 United States Individual Forecasts 2010 2011 2010 2011
Allianz - - 1.00 1.60
4 4 Barclays Capital 1.00 1.00 - -
BBVA 1.00 1.00 1.02 1.27
BMO Capital Markets 1.00 1.00 1.00 1.25
BNP Paribas 1.00 1.00 0.90 1.30
2 2 Citigroup 1.00 1.25 - -
Commerzbank 1.00 1.00 1.15 1.40
Credit Agricole 1.00 1.00 1.00 1.30
0 0 DekaBank 1.00 1.00 1.00 1.10
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Deutsche Bank 1.00 1.00 1.00 -
DZ Bank 1.00 1.00 0.90 1.30
25 | Int. Rate 2010 | evolution of fcst 26 | Int. Rate 2011 | evolution of fcst Experian 1.00 1.50 - -
Goldman Sachs - - 1.00 1.20
4 5
Maximum Maximum ING 1.00 1.25 0.90 1.60
Consensus Consensus
Minimum Minimum
Instituto Flores de Lemus - - - -
4 Intesa Sanpaolo 1.00 1.00 0.88 1.29
3
JPMorgan 1.00 1.00 - -
3 Lloyds TSB 1.00 1.00 0.82 0.69
Nomura 1.00 1.75 0.90 2.02
2
RBS 1.00 1.25 - -
2
1
UBS 1.00 1.75 0.90 1.85
1 Unicredit 1.00 1.25 1.00 1.55
Summary
0 0
Minimum 1.00 1.00 0.82 0.69
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep Maximum 1.00 1.75 1.15 2.02
Median 1.00 1.00 1.00 1.30
Consensus 1.00 1.17 0.97 1.37
27 | 3-month Rate | 2000 - 2014 | in % 28 | 3-month Rate| Q1 07-Q4 11 | in %
History
8 6 30 days ago 1.00 1.38 0.95 1.50
Euro area Euro area 60 days ago 1.00 1.42 1.00 1.65
United States Japan
Japan 90 days ago 1.00 1.46 1.00 1.70
United States
6
4
2
2
0 0
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Notes and sources

29 | 3-m Rate 2010 | evolution of fcst 30 | 3-m Rate 2011 | evolution of fcst
General:
3.0 6
Maximum Long-term chart period from 2000 to 2014 unless otherwise stated. All
Maximum
Consensus Consensus monetary and external sector data are from Eurostat and European Central
Minimum Bank (ECB), Fed and BoJ. Forecasts based on the FocusEconomics
Minimum
Consensus Forecast.
2.0 4
23 Interest rate, policy rate in %. Source: ECB.
24 Quarterly interest rate, policy rate in %. Source: ECB, Fed and BoJ.
25 Interest rate, evolution of 2010 ECB refinancing rate forecasts
during the last 18 months.
1.0 2 26 Interest rate, evolution of 2011 ECB refinancing rate forecasts
during the last 18 months.
27 Interest rate, 3-month rate in % (eop). Source: ECB, Fed and BoJ.
28 Interest rate, 3-month rate in % (eop). Source: ECB, Fed and BoJ.
29 Interest rate, evolution of 2010 3-month Euribor forecasts during the
0.0 0 last 18 months.
Jun Sep Dec Mar Jun Sep 30 Interest rate, evolution of 2011 3-month Euribor forecasts since
Nov Jan Mar May Jul Sep Nov
November 2009.

External Sector | Current Account and Trade Balance
31 | Current Account | % of GDP 32 | Current Account | EUR bn Current Account Balance | EUR bn
Allianz - -
Barclays Capital -46.4 -28.9
0 BBVA -46.4 -19.1
0 BMO Capital Markets - -
BNP Paribas -50.0 -20.0
-1
Citigroup -44.0 -15.1
Commerzbank -45.0 -20.0
-100
Credit Agricole -27.8 28.6
-2
Credit Suisse -102.1 -87.0
Euro area
DekaBank -79.3 -75.0
G7
-200
Deutsche Bank -36.8 0.0
-3
2000 2005 2010 2000 2005 2010 DZ Bank - -
Experian - -
33 | Current Account 2010 | evol. of fcst 34 | Current Account 2011 | evol. of fcst ING - -
200
100 Maximum Instituto Flores de Lemus - -
Consensus Intesa Sanpaolo -24.4 22.6
Minimum
JPMorgan -42.0 -17.3
0 100
Lloyds TSB -27.8 -19.1
Nomura -37.1 19.2
RBS -55.6 -28.6
-100 0
Raiffeisen Research -46.2 -19.0
UBS -23.1 36.5
Unicredit -18.5 9.5
-200 -100
Maximum Summary
Consensus
Minimum -102.1 -87.0
Minimum
-200 Maximum 9.3 47.9
-300
Jul Oct Jan Apr Jul Oct Median -43.0 -18.2
Jun Sep Dec Mar Jun Sep
Consensus -41.3 -10.3
History
35 | Current Account | EUR bn 36 | Trade Balance | EUR bn 30 days ago -39.3 -5.2
20 2,000 60 days ago -30.2 0.1
Trade Balance
Exports 90 days ago -25.1 1.9
Imports
1,500
0
1,000
-20
500
-40
0
-60 -500
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 1995 2000 2005 2010
Notes and sources

37 | Exports | variation in % 38 | Imports | variation in %
30 40
General:
20 monetary and external sector data are from Eurostat and European
20 Central Bank (ECB). Forecasts based on the FocusEconomics Con-
sensus Forecast.
10
31 Current account, balance as % of GDP, 2000-2014. Source:
0
Eurostat.
0 32 Current account, balance in EUR bn, 2000-2014. Source:
Eurostat.
-20 33 Current account, evolution of 2010 forecasts during the last 18
-10 months.
34 Current account, evolution of 2011 forecasts since July 2009.
35 Quarterly current account balance in EUR bn. Source: Eurostat.
-20 -40 36 Trade balance in EUR bn. Source: Eurostat.
1995 2000 2005 2010 1995 2000 2005 2010 37 Exports, annual variation in %. Source: Eurostat.
38 Imports, annual variation in %. Source: Eurostat.

FOCUSECONOMICS France November 2010
France
France
Outlook improves
• On 26 October, the French parliament approved a plan to reform the
pension system, which raises the retirement age by two years. The
reform triggered a wave of nationwide protests and strikes in the oil
sector that brought oil refining and distribution to a virtual standstill.
Nonetheless, Finance Minister Christine Lagarde stated that the
LONG-TERM TRENDS | 5-year averages consequences of protests will not alter the country’s economic
2000-04 2005-09 2010-14
growth forecast for this year.
Population (million): 60.1 62.1 64.0
GDP (EUR bn): 1,548 1,860 2,102
GDP per capita (EUR): 25,752 29,933 32,808 • Consensus Forecast panellists lifted their forecast by 0.1 percentage
GDP growth (%): 2.1 0.8 1.7
points and now see the economy growing 1.6% in 2010. For 2011, the
Fiscal Balance (% of GDP): -2.8 -3.7 -5.2
Public Debt (% of GDP): 60.2 67.8 87.0 panel expects economic growth to moderate to 1.5%.
Inflation (%): 2.0 1.7 1.7
Current Account (% of GDP): 1.3 -1.2 -2.0
• Inflation rose from 1.4% in August to 1.6% in September. Panellists
expect inflation to average 1.6% this year, which is down 0.1
percentage points from last month’s estimate. Next year, panellists
anticipate inflation to average 1.5%.
Joan Enric Domene OUTLOOK | French parliament approves reform despite strikes
Economist On 26 October, the French parliament approved President Nicolas Sarkozy’s
pension reform plan, which will raise the minimum retirement age from 60 to
62 and the full retirement age from 65 to 67. In response to these changes,
labour unions have announced further strikes, continuing a series of protests
since early September.
Industrial Production | variation in % In October, strikes were focused in the oil sector and brought French oil
3.0 5.0
refining and distribution to a virtual standstill. However, with the approval of
MoM s.a. (left scale) Annual average YoY (right scale)
2.3
2.0
the bill the strikes seem to have turned a corner, as workers at eight of 12
1.3
refineries voted to return to work by 29 October.
1.5 1.1 0.0
1.0
0.8
0.2 %
0.1
0.0
0.0
-5.0 Finance Minister Christine Lagarde stated that the protests and strikes cost
% -0.3 -0.2 the country between EUR 200 million and EUR 400 million (USD 280 - 560
-1.5 -1.1 -10.0
million) a day. That said, Lagarde added that the protests would not alter the
-1.6
government’s economic growth forecast for 2010.
-3.0 -15.0
The French government expects the economy to grow 1.5% this year.
Consensus Forecast panellists are slightly more optimistic and see the
Note: Month-on-month changes of seasonally adjusted industrial production and
moving annual average growth rate in %. economy growing 1.6% this year, which is 0.1 percentage points above last
Source: National Institute of Statistics and Economic Studies (INSEE) and
FocusEconomics calculations. month’s projection. For next year, the panel forecasts GDP growth at 1.5%.
REAL SECTOR | Industrial production stalls in August

In August, industrial output remained unchanged over the previous month in
seasonally adjusted terms. The monthly reading contrasted the 0.8%
expansion tallied in July and undershot market expectations of a 0.3% rise.
On an annual basis, industrial activity decelerated from a 5.6% rise in July to
a 3.2% expansion.

The flat August reading was caused by manufacturing, which remained

unchanged from July and contrasted the previous month’s expansion (July:
+1.2% month-on-month). In addition, a 0.1% drop in construction offset a
0.1% increase in mining, energy, water and waste management.
Despite the August reading, the trend continued to improve, with annual
average growth of industrial output jumping from 0.3% in July to 1.5% in
August, which represents the second positive reading since August 2008.
Consensus Forecast panellists see industrial production rising 5.2% this
year, which is up 0.6 percentage points from last month forecast. For next
Business Sentiment year, panellists expect an expansion of 2.9%.
120
OUTLOOK | Business confidence improves in September
The Central Bank’s business sentiment indicator for manufacturers rose
long-term average
100 from 101 points in August to 102 points in September after four consecutive
months without a change in business confidence. At the current level, the
Points
index is just slightly above its long-term average of 100.

80
While inventories of final goods declined slightly, order books increased

markedly and returned to a level comparable to that observed before summer
60
2008. In addition, capacity utilisation rose significantly and activity in the service
sector rose sharply, buttressed by strong growth in temporary work and
transport.
Note: Value of monthly business sentiment indicator index; long-term aver. at 100.
Source: Banque de France (BdF).
More recent data for the economic climate in the manufacturing industry
corroborate the improving outlook implied by the Central Bank’s indicator.
The business sentiment measurement elaborated by the National Statistical
Institute (INSEE) rose to 102 points in October from September’s 99 points,
which continues the upward trend in place since March 2009 that was only
briefly interrupted in June this year. The rise contrasted market expectations,
which anticipated sentiment to fall to 98 points.
The Central Bank’s monthly index of business activity (MIBA) expects the
economy to expand 0.3% in the third quarter, which is 0.1 percentage points
below the forecast elaborated by INSEE in its quarterly economic outlook
from October. Consensus Forecast panellists maintain a slightly more
optimistic view and see the economy growing 0.4% in the third quarter of
2010.
Consumer Confidence
-10
OUTLOOK | Consumer confidence improves unexpectedly in October
In October, the index of consumer sentiment from the National Statistical
long-term average
-20 Institute (INSEE) rose to minus 34 points from minus 35 points registered in
September. The unexpected rise contrasted market expectations, which had
seen sentiment deteriorating to minus 37 points. Despite the increase,
Points
-30
consumer confidence remains well below its long-term average level of minus
-40
19.
-50
In October, households’ perceptions of unemployment improved, but
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 remained above the long-term average. The sub-index regarding the general
economic situation in the next 12 months improved from minus 47 points in
Note: Value of monthly consumer confidence index; long-term average at minus 18.
Source: National Institute of Statistics and Economic Studies (INSEE).
September to minus 44 in October, while the sub-index regarding the personal
financial situation in the next 12 months improved from minus 19 points to
minus 17 points.
Consensus Forecast panellists expect private consumption to grow 1.4%

this year before decelerating moderately to 1.2% in 2011.

MONETARY SECTOR | Inflation accelerates in September

In September, consumer prices fell 0.1% over the previous month, which
contrasted the 0.2% rise seen in August. Despite the monthly drop, annual
Inflation | Consumer Price Index
inflation rose from 1.4% in August to 1.6%, which was below market
0.6 0.6
0.5
2.0 expectations of a 1.8% increase.
0.3 0.3
0.3 0.2 According to the National Statistical Institute (INSEE), the September reading
0.1 1.0
0.1 0.1
was driven by a drop in the prices for services, which fell 0.8% over the
0.0 % previous month. The drop was only partially offset by the increase in the price
% 0.0
-0.1
0.0
of manufactured products (+0.7% mom).
-0.2 -0.2
-0.3
-0.3
The core inflation index, which excludes more volatile categories such as oil,
monthly (left scale) annual (right scale)
-0.6 -1.0 fruits and vegetables, remained flat in September, taking annual core inflation
from August’s 0.8% reading to 0.6%. Finally, annual average harmonised
inflation (HICP) increased from 1.2% in August to 1.4%.
Note: Year-on-year and month-on-month var. of consumer price index in %.
Source: National Institute of Statistics and Economic Studies (INSEE).
Consensus Forecast panellists expect inflation to average 1.6% in 2010,
which is down 0.1 percentage points from last month’s forecast. Next year,
panellists expect inflation to average 1.5%.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
Population (million) 61.4 61.8 62.1 62.4 62.8 63.2 63.6 64.0 64.4 64.8
GDP (EUR bn) 1,726 1,806 1,895 1,950 1,921 1,964 2,025 2,096 2,170 2,252
Private Consumption (annual var. in %) 2.6 2.4 2.4 0.6 0.6 1.4 1.2 1.6 2.0 2.2
Fixed Investment (annual variation in %) 4.4 4.1 6.5 0.1 -7.1 -1.9 2.2 3.0 3.5 3.7
Retail Sales (annual variation in %) 3.7 2.7 3.6 3.5 -4.6 - - - - -
Car Registrations (mn) 2.1 2.0 2.1 2.1 2.3 - - - - -
Housing Starts (mn) 0.41 0.42 0.43 0.40 0.33 - - - - -
Hourly Wages (annual var. in %) 3.1 3.0 2.9 3.1 2.9 1.7 2.2 2.7 2.7 2.8
Inflation (CPI, annual variation in %) 1.5 1.5 2.6 1.0 0.9 - - - - -
Inflation (HICP, annual variation in %) 1.8 1.7 2.8 1.2 1.0 - - - - -
Inflation (HICP annual average variation in %) 1.9 1.9 1.6 3.2 0.1 1.6 1.5 1.7 1.7 1.8
Inflation (PPI, annual variation in %) 3.5 2.9 5.2 -0.2 -3.0 - - - - -
Stock Market (variation of CAC 40 in %) 23.4 17.5 1.3 -42.7 22.3 - - - - -
External Sector
Current Account Balance (% of GDP) -0.4 -0.5 -1.0 -2.3 -1.9 -2.0 -1.9 -2.2 -1.9 -1.9
Current Account Balance (EUR bn) -7.3 -9.2 -18.9 -44.0 -36.8 -38.7 -38.4 -47.1 -40.6 -42.1
Trade Balance (EUR bn) -37.7 -44.4 -58.8 -72.2 -58.2 -52.5 -56.4 -62.0 -65.7 -69.1
Exports (EUR bn) 357 391 401 413 340 377 402 433 463 493
Imports (EUR bn) 394 435 460 485 399 432 458 496 533 565
Economic Growth (GDP, qoq s.a. var. in %) 0.3 0.6 0.2 0.7 0.4 0.3 0.3 0.4 0.4 0.4
Inflation (HICP annual average variation in %) -0.5 0.4 1.5 1.8 1.6 1.6 1.4 1.4 1.6 1.7
Industrial Production (s.a. mom var. in %) 2.0 0.2 1.0 -0.2 1.3 -1.6 0.8 0.0 - -
Unemployment (% of active population) 9.9 9.9 9.9 9.9 9.9 9.9 10.0 10.0 - -
Consumer Conf. (long-term avg. -19) -31 -33 -34 -37 -38 -39 -38 -37 -35 -34
Business Sentiment (long-term avg.100) 102 102 103 101 101 101 101 101 102 -
Inflation (CPI, mom variation in %) -0.2 0.6 0.5 0.3 0.1 0.0 -0.3 0.2 -0.1 -
Inflation (CPI, annual variation in %) 1.1 1.3 1.6 1.7 1.6 1.5 1.7 1.4 1.6 -

6 1
Individual Forecasts 2010 2011
Asterès 1.7 1.5
3 0 BBVA 1.6 1.4
BNP Paribas 1.6 1.2
0 -1 Citigroup 1.6 1.2
Credit Suisse 1.7 2.5
-3 -2 DekaBank 1.7 1.8
France G7 Deutsche Bank 1.5 1.0
France G7
World DZ Bank 1.7 1.4
-6 -3 Experian 1.5 1.6
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Goldman Sachs 1.6 2.1
ING 1.4 1.5
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts Intesa Sanpaolo 1.5 1.7
4 3 JPMorgan 1.6 1.5
Lloyds TSB 1.5 1.6
Nomura 1.6 1.8
2 Raiffeisen Research 1.6 1.4
2 Société Générale 1.5 1.5
Toronto-Dominion Bank 1.5 1.4
1 UBS 1.7 1.9
Unicredit 1.5 1.4
0 Xerfi 1.3 0.9
Maximum 0 Maximum
Consensus
Summary
Consensus
Minimum Minimum Minimum 1.3 0.9
Maximum 1.7 2.5
-2 -1
Median 1.5 1.5
Consensus 1.6 1.5
History
5 | Consumption | % variation 6 | Investment | % variation 30 days ago 1.5 1.5
6 10 60 days ago 1.4 1.5
90 days ago 1.4 1.6
France G7
4 European Commission (Sep. 2010) 1.6 -
0 IMF (Oct. 2010) 1.6 1.6
OECD (May 2010) 1.7 2.1
2
-10
0 Notes and sources
France G7 General:
-2 -20
real sector data are from the National Statistical Institute (INSEE, Institut
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 national de la statistique et des études économiques) and Eurostat.
Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %.
2.0 4
2 Quarterly GDP (seasonally adjusted), quarter-on-quarter var. in %.
2010 2010 3 GDP, evolution of 2010 forecasts during the last 18 months.
2011 2011 4 GDP, evolution of 2011 forecasts since July 2009.
2 5 Private consumption, annual variation in %.
1.5 6 Gross fixed investment, annual variation in %.
7 Private consumption, change in 2010 and 2011 forecasts since July
2009.
0
8 Gross fixed investment, change in 2010 and 2011 forecasts since July
2009.
1.0 9 Industrial production, annual variation in %.
-2 10 Unemployment, % of active population. Source: Eurostat.
11 Balance of non-financial public sector, % of GDP.
12 Industrial production, evolution of 2010 and 2011 forecasts since July
2009.
0.5 -4 13 Unemployment, evolution of 2010 and 2011 forecasts since July 2009.
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep 14 Balance of non-financial public sector, evolution of 2010 and 2011
forecasts since July 2009.


Asterès 1.9 2.0 - - 7.8 6.5 9.7 9.1 -6.5 -6.0 85.0 89.0
BBVA 1.4 1.2 -2.0 2.2 - - - - - - - -
BNP Paribas 1.3 0.8 -2.1 0.7 5.4 1.6 9.9 10.2 -7.5 -6.0 84.1 88.4
Citigroup 1.3 1.0 -1.7 2.6 - - 9.5 9.4 -7.2 -6.0 83.0 87.0
Credit Agricole - - - - - - 9.8 9.7 -8.2 -6.3 83.9 88.4
Credit Suisse - - - - - - - - -7.5 -6.0 83.6 88.6
DekaBank - - - - - - - - -7.7 -5.9 - -
Deutsche Bank 1.1 0.6 -2.9 1.3 - - 10.5 10.6 -7.6 -6.2 - -
DZ Bank 1.3 1.4 -2.0 2.0 - - 10.2 10.0 -8.0 -6.6 - -
Experian 1.3 1.3 -1.0 2.5 - - 10.1 9.9 -8.0 -6.7 - -
Goldman Sachs - - - - 2.4 3.0 9.9 9.8 -7.7 -6.3 - -
ING 1.3 1.1 -1.7 1.9 - - 9.4 9.3 -8.0 -6.5 - -
Intesa Sanpaolo 1.5 1.4 -1.9 2.8 4.8 1.4 9.5 9.7 - - - -
JPMorgan - - - - - - - - - - - -
Lloyds TSB 1.4 1.1 -1.9 2.5 5.1 2.2 10.1 10.1 -8.3 -6.5 - -
Nomura 1.4 1.4 -1.7 2.3 - - 10.2 10.1 -7.6 -6.0 82.8 86.2
Raiffeisen Research - - - - - - 9.9 9.7 -8.0 -7.4 78.1 83.6
Société Générale 1.3 1.5 -1.8 2.4 - - 9.3 9.2 -7.8 -6.5 84.6 88.9
Toronto-Dominion Bank - - - - - - 10.0 9.9 - - - -
UBS 1.6 1.7 -1.4 4.2 5.9 4.2 9.8 9.6 -6.8 -5.5 82.4 85.6
Unicredit 1.5 1.0 -2.1 1.9 - - 9.8 9.7 -7.7 -6.3 82.9 93.0
Xerfi 1.0 0.4 -1.9 1.9 5.1 1.7 9.8 9.8 -8.0 -7.0 84.0 88.0
Summary
Minimum 1.0 0.4 -2.9 0.7 2.4 1.4 9.3 9.2 -8.3 -7.4 78.1 83.6
Maximum 1.6 1.7 -1.0 4.2 5.9 4.2 10.5 10.6 -6.8 -5.5 84.6 93.0
Median 1.3 1.1 -1.9 2.3 5.1 1.9 9.9 9.7 -7.7 -6.3 83.3 88.2
Consensus 1.4 1.2 -1.9 2.2 5.2 2.9 9.9 9.8 -7.7 -6.3 83.1 87.9
History
30 days ago 1.3 1.2 -2.1 2.2 4.6 2.7 9.9 9.9 -7.8 -6.5 83.6 88.8
60 days ago 1.1 1.1 -2.1 2.2 4.9 3.1 10.1 10.0 -7.9 -6.4 83.7 88.5
90 days ago 1.1 1.1 -2.2 2.4 3.9 2.9 10.1 10.0 -7.9 -6.4 83.8 88.5
10 12 0
-2
10
0
-4
8
-6
-10
6
-8
France G7
France G7
France G7
-20 4 -10
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 1990 1995 2000 2005 2010
6 11.0 -6
3 10.5 -7
0 10.0 -8
2010 2010 2010

2011 2011 2011
-3 9.5 -9
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep

Monetary Sector | Inflation and Interest Rate
15 | Inflation | 1990 - 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Inflation and Interest Rate

6 6 Consumer Prices 10-year Bond
France variation in % Rate in %
G7 Individual Forecasts 2010 2011 2010 2011
4 4 Asterès 1.7 1.5 2.90 3.40
BBVA 1.7 1.6 - -
BMO Capital Markets 1.7 1.6 - -
2 2 BNP Paribas 1.5 1.4 2.65 3.00
Citigroup 1.7 1.7 2.85 3.30
Credit Agricole 1.5 1.6 - -
0 0 Credit Suisse 1.6 0.9 - -
France DekaBank 1.6 1.2 - -
G7 Deutsche Bank 1.7 1.5 - -
-2 -2 DZ Bank 1.7 1.6 - -
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Experian 1.8 1.6 - -
Goldman Sachs 1.7 1.6 - -
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst ING 1.8 2.1 - -
3 3 Intesa Sanpaolo 1.5 1.4 2.94 2.69
Maximum Maximum
Consensus Consensus
JPMorgan - - - -
Minimum Minimum Lloyds TSB 1.6 1.7 - -
2 Nomura 1.7 1.7 - -
2 Raiffeisen Research 1.7 1.8 - -
Société Générale 1.5 1.5 2.95 3.45
1 Toronto-Dominion Bank 1.5 1.4 - -
UBS 1.7 1.5 2.50 3.34
1 Unicredit 1.5 1.6 - -
0 Xerfi 1.5 1.2 2.82 3.25
Summary
Minimum 1.5 0.9 2.50 2.69
-1 0 Maximum 1.8 2.1 2.95 3.45
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep Median 1.7 1.6 2.83 3.28
Consensus 1.6 1.5 2.80 3.20
History
19 | 10-year Bond Yield | 1990-2014 20 | 10-year Bond Yield | Q1 07-Q4 11 30 days ago 1.7 1.6 2.71 3.22
12 5 60 days ago 1.7 1.6 3.12 3.71
France 90 days ago 1.6 1.6 3.16 3.80
Germany Additional Forecasts
10
Eur. Comm. (Sep. 2010) 1.6 1.6 - -
4 IMF (Oct. 2010) 1.6 1.6 - -
8 OECD (May 2010) 1.7 1.1 - -
6
3
4 France
Germany
2 2
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Notes and sources
21 | Policy Rate | Q1 07-Q4 11 | in % 22 | 3-Month Rate | Q1 07-Q4 11 General:
6 6 monetary sector data are from the National Statistical Institute (INSEE,
Euro area Institut national de la statistique et des études économiques), Bank of
United States Euro area
France (BdF, Banque de France), Federal Reserve Board (Fed), Bank
Japan United States
of Japan (BoJ) and the European Central Bank (ECB). See below for
Japan details. Forecasts based on FocusEconomics Consensus Forecast.
4 4
15 Inflation, annual variation in harmonised index of consumer prices
(HICP) in % (eop). Source: INSEE.
16 Quarterly inflation, year-on-year variation in consumer price index
(CPI) in % (eop). Source: INSEE.
2 2 17 Inflation, evolution of 2010 forecasts during the last 18 months.
18 Inflation, evolution of 2011 forecasts since July 2009.
19 10-year benchmark bond yield (eop). Source: ECB, BdF.
20 Quarterly10-year benchmark bond yield (eop). Source: ECB, BdF.
0 0 21 Quarterly policy rate in % (eop). Source: ECB, Fed, BoJ.
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 22 Quarterly 3-month benchmark rate in % (eop). Source: ECB, Fed,
BoJ.

Asterès - -
France G7
BBVA - -
BMO Capital Markets - -
3 0 BNP Paribas -41.0 -48.0
Credit Agricole -35.6 -36.7
Credit Suisse - -
0 -50
DekaBank - -
Deutsche Bank - -
DZ Bank - -
Experian -45.6 -45.0
-3 -100
1990 1995 2000 2005 2010
Goldman Sachs -31.8 -22.6
1990 1995 2000 2005 2010
ING - -
Intesa Sanpaolo -50.3 -59.5
25 | Current Account 2010 | evol. of fcst 26 | Current Account 2011 | evol. of fcst JPMorgan - -
0 60
Maximum Lloyds TSB - -
Consensus Nomura - -
Minimum
Société Générale - -
-50 0
Toronto-Dominion Bank - -
UBS -37.9 -40.7
Unicredit -39.6 -38.7
Xerfi -34.3 -42.4
-100 -60
Summary
Maximum Minimum -50.3 -59.5
Consensus
Minimum Maximum -31.8 -9.5
-150 -120 Median -37.6 -40.6
Jun Sep Dec Mar Jun Sep Jun Sep Dec Mar Jun Sep Consensus -38.7 -38.4
History
30 days ago -41.8 -42.1
27 | Trade Balance | EUR bn 28 | Trade Balance | evolution of fcst
60 days ago -40.5 -40.0
750 -20 90 days ago -44.0 -45.1
Trade Balance
Exports 2010
Imports 2011
500
-40
250
-60
0
-250 -80
1990 1995 2000 2005 2010 Jun Sep Dec Mar Jun Sep
29 | Exports | variation in % 30 | Imports | variation in % Notes and sources

30 45 General:
external sector data are from the National Statistical Institute (INSEE,
30
15 Institut national de la statistique et des études économiques). Forecasts
based on FocusEconomics Consensus Forecast.
15
23 Current account balance as % of GDP.
0 24 Current account balance in EUR bn.
25 Current account in EUR bn, evolution of 2010 forecast during the
0
last 18 months.
26 Current account in EUR bn, evolution of 2011 forecast since July
-15 2009.
France -15
27 Trade balance, imports and exports, in EUR bn.
G7 France G7 28 Trade Balance in EUR bn, evolution of 2010 and 2011 forecasts
-30 since July 2009.
-30
29 Exports, annual variation in %.
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010
30 Imports, annual variation in %.

FOCUSECONOMICS Germany November 2010
Germany
Germany
Outlook improves
• Recent data suggest that the recovery shows no signs of cooling. In
August, industrial production grew 1.7% month-on-month, exceed-
ing even upbeat market expectations. Moreover, unemployment fell
below 3 million in October, the lowest level in 18 years, buttressing
consumer confidence and supporting household consumption. In
LONG-TERM TRENDS | 5-year averages addition, business confidence jumped to a new record high, bolster-
2000-04 2005-09 2010-14 ing the notion of accelerating domestic demand in the months ahead.
GDP (EUR bn): 2,139 2,376 2,657
• Consensus Forecast participants lifted their forecasts by 0.2 percent-
GDP growth (%): 1.1 0.6 2.3 age points over last month’s estimate and now expect the economy
Fiscal Balance (% of GDP): -3.1 -1.6 -2.9 to expand 3.3% this year. In 2011, the economy is expected to grow
Inflation (%): 1.5 1.7 1.4
2.2%.
Current Account (% of GDP): 1.4 6.2 4.9
• In October, annual inflation remained unchanged at 1.3%, according
to preliminary estimates. Consensus Forecast participants see infla-
tion averaging 1.1% this year, which is unchanged from last month’s
projection. Next year, inflation should rise to 1.4%.
Ricardo Aceves REAL SECTOR | Industrial output expands more than expected
Economist In August, industrial production expanded 1.7% in seasonal and calendar ad-
justed terms over the previous month. The monthly expansion came in well
above the 0.1% increase observed in July and overshot market expectations,
which had industrial production growing 0.5%.
The strong monthly figure mainly reflected a sharp expansion in manufactur-

ing, which grew 1.8% month-on-month, contrasting the 0.2% contraction tal-
lied in July. In addition, investment goods production jumped 2.4% over the
4.0 3.7 5.0 previous month (July: -1.0% mom), while durable goods production posted a
2.9
strong 2.4% increase (July: -0.2% mom).
3.0 0.0
2.0
1.9 1.9
1.7 -5.0
As a result of August’s reading, the trend in industrial production continued to
%
1.1
% points upwards with annual average variation in industrial production jumping
1.0 0.8 -10.0 from 1.0% in July to 3.4% in August which marked the highest level since Sep-
0.4
0.1 tember 2008.
0.0 -15.0
-0.3
-0.5
-1.0 -0.7
-0.5
-20.0 Consensus Forecast panellists see industrial production rising 9.2% this year,
which is 0.8 percentage points up from the last month’s estimate. For 2011, the
panel expects industrial production to rise to 3.6%.
and annual average growth rate in %.
Source: Federal Statistical Office and FocusEconomics calculations. Meanwhile, the Central Bank expects the economy to grow 3.0% this year, up
from the previous 1.9% estimate.
Consensus Forecast panelists are more optimistic than the Central Bank and
see the economy growing 3.3% this year, which is 0.2 percentage points above
last month’s projection. For next year, the panel forecasts GDP growth at 2.2%.

OUTLOOK | Consumer confidence remains steady in November

Consumer confidence remains stable, as the economy experiences a consid-
erable upswing, sustained by a solid labour market. The forward-looking con-
sumer confidence indicator for November, released by the GfK Institute re-
mained steady at October’s 4.9 points, confirming consumer sentiment at high-
est level since May 2008. The figure nevertheless, fell short of private sector
analysts’ expectations, which had seen consumer confidence rising further to
5.1 points.
GfK Consumer Climate
While the GfK’s overall consumer confidence indicator refers to November, the
9.0
institute also published three sub-indices (economic expectations, income ex-
pectations and propensity to buy), which refer to October. According to the
7.0
survey, economic expectations improved over the previous month, while in-
come expectations and buying propensity deteriorated.
5.0
The economic expectations index continued its positive trend and rose by 2.5
3.0
points in October, pushing the index to 56.0 points, which represents the high-
est level in more than three years. The optimistic assessment mainly reflected
1.0 a rosier view of the economic recovery, aided by the positive trend in the labour
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
market, with Consensus Forecast panellists expecting unemployment to de-
cline from an average 8.2% in 2009 to an average 7.7% in 2010.
Note: GfK Consumer Climate Index.
Source: The GfK Group.
Income expectations did not profit from improving economic prospects and fell
by 9.2 points in October to 36.0 points, after rising to a nine-year high in Sep-
tember. According to Gfk, the fall may be due to an anticipated rise in electricity
prices and the announcement of municipalities to increase fees and charges.
Finally, the propensity to buy declined by 8.2 points in October to 22.5 points,
amid less upbeat income expectations. Nevertheless, the sub-index is far above
its 0-point long-term average.
OUTLOOK | Business confidence climbs to the highest level in more than

three years
Business confidence continues to rise, suggesting that the recovery will re-
main strong. The Ifo Business Climate Index for industry and trade rose to
107.6 points in October from 106.8 points in September, defying market ex-
pectations, which had expected the index to fall to 106.4 points. The October
reading marked the sixth consecutive month of improving sentiment, driving
Ifo Business Climate the index to the highest level since May 2007.
110
Business confidence improved as both components increased over the previ-
105 ous month. The current business situation component increased from 109.8
100
points in September to 110.2 points in October, remaining on its positive trend
started in February. In addition, the business expectations indicator jumped
95
from 103.9 points in September to 105.1 points.
90
85
At the sector level, firms in the manufacturing sector reported their current
business situation to be slightly more favourable than in the previous month
80
and were even more upbeat about their prospects. Meanwhile, businesses in
the construction sector reported a somewhat less favourable current business
situation compared to September, but they evaluated their future business pros-
Note: Ifo Business Climate Index, 2000=100.
Source: Ifo Business Survey. pects as more positive.
Wholesaling businesses gave a more positive assessment of both their cur-

rent and future business situation. Only retail respondents assessed their cur-
rent business situation, as well as their future business expectations as less

favourable than in September. Nevertheless, retail firms still maintain a healthy

business sentiment.
MONETARY SECTOR | Inflation remains subdued in October

In October, consumer prices rose 0.1%, according to a preliminary flash esti-
mate released on 27 October by the Federal Statistics Office (Destatis). The
monthly increase contrasted the 0.1% drop observed in September, but was in
Inflation | Consumer Price Index line with market expectation. Annual inflation remained unchanged at
September’s 1.3%, which is the highest level since November 2008. At the
1.0 0.8 1.5 current rate, inflation is still below the European Central Bank’s definition of
price stability. Final results will be published on 9 November.
0.5
0.5 1.0
0.4 0.3
0.1 0.1 0.1 0.1

According to the flash report, the main drivers of the October increase were
0.0
0.0 0.5 higher prices for petroleum products, as well as for fruits and vegetables. More-
%
-0.1 -0.1 -0.1
% over, annual harmonised consumer price inflation (HICP) followed the devel-
-0.5 0.0 opments of the consumer price index (CPI) and remained at September’s 1.3%.
-0.6
annual (right scale)
-1.0 -0.5 The federal government estimates inflation to average 1.3% this year and 1.4%
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
in 2011, while the Bundesbank expects inflation to rise to 1.2% this year and to
1.6% in 2011.
Note: Monthly and annual consumer price index variation in %.
Source: Federal Statistical Office and FocusEconomics calculations.
Consensus Forecast panellists see average inflation rising to 1.1% in 2010,
which is unchanged from previous month’s forecast. For 2011, panellists ex-
pect inflation to reach 1.4%.
EXTERNAL SECTOR | Exports decline in August

Exports fell for a second consecutive month, amid signs of a slowdown in glo-
bal demand and a strengthening euro. In August, exports slipped 0.4% in sea-
sonally and working day adjusted terms over the previous month. However, the
monthly reading came in above the 1.6% contraction observed in July and was
virtually in line with market expectations of a 0.3% drop. Simultaneously, im-
Merchandise Trade | EUR bn ports grew 0.9% over the previous month, contrasting the 2.2% decline regis-
tered in July.
120
Trade Balance Exports Imports

100 On an annual basis, exports expanded 26.8% in August, up from the 18.6%
increase tallied in July. Imports rose 29.2% in August, also above the 24.9%
80
expansion recorded in July. As a result, the trade balance narrowed from EUR
60 9.1 billion in July to EUR 4.6 billion in August, which marked the second lowest
40
level so far this year.
20
Exports are likely to continue expanding on an annual basis, albeit at a more
0 moderate pace, as slowing global demand and a stronger euro diminish the
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
sales prospects outside the European Union.
Note: Monthly exports and imports in EUR billion.

Source: Federal Statistical Office and FocusEconomics calculations. Consensus Forecast participants estimate exports to grow 16.9% this year and
9.8% in 2011. Even as trade flows are recovering this year, exports will fall
short of the EUR 984 billion level recorded in 2008. Only in 2011, German
exports will surpass the pre-crisis level with an expected export value of EUR
1.0 trillion.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 2,242 2,327 2,432 2,481 2,397 2,476 2,565 2,653 2,744 2,845
Domestic Demand (ann. var. in %) 0.0 2.4 1.2 1.2 -1.9 2.3 1.6 1.9 1.9 2.2
Private Consumption (ann. var. in %) 0.3 1.4 -0.2 0.7 -0.2 0.1 1.2 1.2 1.6 1.7
Fixed Investment (ann. var. in %) 0.9 8.0 4.7 2.5 -10.1 5.4 3.6 2.9 3.9 4.0
Industrial Production (ann. var. in %) 2.5 5.3 5.6 0.6 -15.5 9.2 3.6 2.7 3.2 3.3
Retail Sales (ann. var. in %) 1.8 1.0 -1.6 2.3 -5.0 - - - - -
Car Sales (million) 3.3 3.5 3.1 3.1 3.8 - - - - -
Housing Starts (million) 0.24 0.25 0.18 0.17 0.18 - - - - -
Disposable Income (ann. var. in %) 1.8 2.4 1.6 3.1 0.4 - - - - -
Fiscal Balance (% of GDP) -3.3 -1.6 0.2 0.0 -3.1 -4.2 -3.4 -2.8 -2.2 -1.8
Inflation (CPI, annual variation in %) 1.4 1.4 3.1 1.1 0.9 - - - - -
Inflation (CPI, annual average variation in %) 1.6 1.6 2.3 2.6 0.3 1.1 1.4 1.5 1.6 1.6
Inflation (WPI, annual variation in %) 2.8 3.3 5.9 -4.2 0.2 - - - - -
Stock Market (DAX variation in %) 27.1 22.0 22.3 -40.4 23.8 - - - - -
External Sector
Current Account Balance (% of GDP) 5.1 6.5 7.7 6.7 4.9 5.1 5.3 5.1 4.6 4.5
Current Account Balance (EUR bn) 115 150 188 167 117 126 135 136 127 128
Trade Balance (EUR bn) 158 159 198 178 136 159 176 196 215 223
Exports (EUR bn) 786 893 977 984 803 939 1,031 1,121 1,214 1,309
Imports (EUR bn) 628 734 779 806 667 775 848 921 999 1,086
Economic Growth (GDP, s.a. qoq var. in %) 0.7 0.3 0.5 2.2 0.6 0.5 0.3 0.4 0.4 0.5
Domestic Demand (s.a. qoq var. in %) 1.1 -1.6 1.7 1.4 0.3 0.4 0.2 0.2 0.2 0.3
Private Consumption (s.a. qoq var. in %) -1.0 -0.2 -0.1 0.6 0.5 0.3 0.2 0.2 0.2 0.3
Fixed Investment (s.a. qoq var. in %) 0.8 -0.8 1.2 4.7 1.1 1.3 0.4 0.5 0.6 0.7
Industrial Production (ann. var. in %) -14.7 -6.4 6.8 13.5 4.7 3.0 3.0 3.4 3.7 4.3
Inflation (CPI, annual average variation in %) -0.2 0.4 0.8 1.1 1.2 1.4 1.4 1.4 1.5 1.5
Current Account Balance (EUR bn) 25.3 47.3 31.7 25.9 35.2 37.9 37.2 37.3 35.9 37.0
Monthly Data Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10
Industrial Production (ann. var. in %) 6.0 13.0 13.6 12.6 14.2 7.3 14.4 - - -
Industrial Production (s.a. mom var. in %) -0.3 3.7 1.1 2.9 -0.5 0.1 1.7 - - -
Retail Sales (ann. var. in %) 1.0 5.8 -3.6 0.2 5.0 2.4 3.1 0.4 - -
GfK Consumer Climate 3.3 3.2 3.4 3.7 3.5 3.6 4.0 4.3 4.9 4.9
Ifo Business Climate (2000=100) 95.4 98.3 101.7 101.6 101.9 106.2 106.7 106.8 107.6 -
Inflation (CPI, mom variation in %) 0.4 0.5 -0.1 0.1 0.1 0.3 0.0 -0.1 0.1 -
Exchange Rate (USD per EUR, eop) 1.36 1.35 1.32 1.23 1.22 1.30 1.28 1.37 1.39 -

6 4
Allianz 3.3 2.0
BBVA 3.2 1.8
3 2
BHF Bank 3.5 3.0
BNP Paribas 3.3 2.1
Citigroup 3.4 2.4
0 0
Commerzbank 3.3 2.0
-2
-3
DekaBank 3.4 1.8
Germany G7
Germany Deutsche Bank 3.4 1.7
World G7
-6 -4 DIW Berlin 3.4 2.0
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 DZ Bank 3.6 2.5
Experian 3.1 1.9
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts
HWWI 3.4 2.5
4 4
Ifo Institut 3.5 2.0
Maximum
Consensus
ING Financial Markets 3.5 2.0
3 Intesa Sanpaolo 3.2 2.2
3 Minimum
JPMorgan 3.3 2.4
2 Kiel Institute 3.4 1.7
2
M.M.Warburg & CO 3.3 1.8
Nomura 3.3 2.5
1
Raiffeisen Research 3.3 2.0
1
UBS 3.3 2.2
Maximum
0 Unicredit 3.2 1.9
Consensus
Summary
Minimum
-1 0
Minimum 3.1 1.7
Jun Sep Dec Mar Jun Sep Jul Sep Nov Jan Mar Maximum 3.6 3.2
Median 3.3 2.0
5 | Consumption | % variation 6 | Investment | % variation
Consensus 3.3 2.2
History
6 12
30 days ago 3.1 2.0
Germany
G7 60 days ago 2.4 1.9
6 90 days ago 2.0 1.8
4
0 European Comission (Sep. 2010) 3.4 1.6
IMF (Oct. 2010) 3.3 2.0
2
Central Bank (Aug. 2010) 3.0 -
-6
Notes and sources

0
-12
General:
Germany G7 Long-term chart period from 1990 to 2014 unless otherwise stated. All real
sector data are from the Federal Statistical Office (Destatis, Statistisches
-2 -18
Bundesamt Deutschland) and the German Central Bank (BBK, Deutsche
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 Bundesbank). See below for details. Forecasts based on FocusEconomics
Consensus Forecast.
1 GDP, annual variation in %. Source: Destatis.
2.0 6
2 Quarterly GDP (seasonally adjusted), quarter-on-quarter variation in %.
2010 2011
Source: Destatis.
4 4 GDP, evolution of 2011 forecasts since July 2009.
1.0
5 Private consumption, annual variation in %. Source: Destatis.
6 Gross fixed capital formation, annual variation in %. Source: Destatis.
7 Private consumption, change in 2010 and 2011 forecasts since July 2009.
2 8 Gross fixed capital formation, change in 2010 and 2011 forecasts since
July 2009.
0.0 9 Industrial production, annual variation in %. Source: Destatis.
10 Unemployment, % of active population. Source: Destatis.
0
11 Balance of non-financial public sector, % of GDP. Source: BBK.
2010 2011 2009.
-1.0 -2 13 Unemployment, evolution of 2010 and 2011 forecasts since July 2009.
Jul Oct Jan Apr Jul Oct Jul Oct Jan Apr Jul Oct
14 Balance of non-financial public sector, evolution of 2010 and 2011 fore-
casts since July 2009.


Allianz 0.2 1.3 - - 10.6 4.4 7.7 7.0 -3.9 -2.8 - -
BBVA 0.0 0.9 5.3 2.8 - - - - - - - -
BHF Bank 0.2 1.7 5.3 2.9 - - 7.7 7.2 -4.2 -3.5 - -
BNP Paribas 0.0 1.4 4.7 3.1 9.4 2.3 7.7 7.4 -4.2 -3.8 - -
Citigroup 0.0 2.2 6.3 6.4 - - - - -4.0 -2.9 88.8 89.1
Commerzbank 0.1 1.1 5.6 6.7 - - 7.7 7.2 -5.6 -4.5 - -
Credit Agricole - - - - - - 7.7 7.2 -4.2 -3.2 75.4 76.7
Credit Suisse - - - - - - - - -4.3 -3.2 78.8 81.6
DekaBank 0.0 0.9 6.0 2.3 - - 7.7 7.7 -5.5 -4.8 - -
Deutsche Bank 0.0 0.5 5.2 2.0 - - 7.8 7.6 -3.9 -3.0 - -
DIW Berlin 0.1 1.1 5.7 3.8 - - 7.7 7.5 -4.0 -3.3 - -
DZ Bank 0.2 1.7 6.4 4.3 - - 7.7 6.9 -3.7 -3.1 - -
Experian -0.2 0.7 5.5 3.0 - - 7.7 - -5.2 -4.0 - -
Goldman Sachs - - - - 6.1 3.6 - - -3.6 -2.8 - -
HWWI 0.0 1.5 5.1 2.7 10.0 4.0 7.5 7.0 -3.4 -2.1 - -
Ifo Institut 0.1 1.4 5.7 3.3 - - 7.7 7.0 -3.8 -2.7 - -
ING Financial Markets -0.1 0.8 5.2 3.0 - - 7.7 7.4 -3.3 -3.1 - -
Intesa Sanpaolo 0.0 1.0 4.5 3.3 8.8 3.0 7.8 7.7 -4.4 -4.1 - -
JPMorgan - - - - - - - - - - - -
Kiel Institute 0.6 2.2 5.2 2.9 - - 7.7 7.0 -3.9 -3.4 74.7 75.5
M.M.Warburg & CO 0.0 1.0 - - 9.7 3.4 7.8 7.3 -4.3 -3.2 73.5 74.0
Nomura 0.0 1.3 6.0 4.6 - - 7.9 7.9 -4.4 -3.7 77.1 78.6
Raiffeisen Research - - - - - - - - -5.0 -4.7 78.8 81.6
UBS -0.1 0.9 5.0 4.5 10.0 4.5 7.7 7.5 -4.8 -3.8 75.0 76.3
Unicredit 0.0 1.1 5.0 2.4 - - 7.7 7.2 -3.5 -2.6 85.0 86.0
Summary
Minimum -0.2 0.5 4.5 2.0 6.1 2.3 7.5 6.9 -5.6 -4.8 73.5 74.0
Maximum 0.6 2.2 6.4 6.7 10.6 4.5 7.9 7.9 -3.3 -2.1 88.8 89.1
Median 0.0 1.1 5.3 3.1 9.7 3.6 7.7 7.3 -4.2 -3.2 77.1 78.6
Consensus 0.1 1.2 5.4 3.6 9.2 3.6 7.7 7.3 -4.2 -3.4 78.6 79.9
History
30 days ago -0.2 1.0 4.4 3.3 8.4 3.3 7.7 7.4 -4.5 -3.6 76.7 77.7
60 days ago -0.8 0.8 2.0 3.1 7.3 3.5 7.8 7.5 -4.8 -4.0 76.9 79.0
90 days ago -0.9 0.7 1.7 3.1 6.8 3.7 7.9 7.6 -4.9 -4.1 76.5 78.8
10 12 5
10
0 0
-10 -5
6
Germany G7 Germany G7 Germany G7

-20 4 -10
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 1990 1995 2000 2005 2010
10 11 -3
10 -4
5
9 -5
0
8 -6
2010 2011 2010 2011 2010 2011

-5 7 -7

15 | Inflation | 1990 - 2014 | in % 16 | Inflation | Q1 07 - Q4 11 | in % Inflation and Interest Rate

Germany G7
variation in % Rate in %
Individual Forecasts 2010 2011 2010 2011
4 4 Allianz 1.1 1.5 2.70 3.10
BBVA 1.1 1.3 - -
BHF Bank 1.0 1.3 - -
2 2 BNP Paribas 1.1 1.4 2.30 2.70
Citigroup 1.2 1.7 2.50 3.00
Commerzbank 0.9 1.4 2.00 3.00
0 0 Credit Agricole 1.2 1.5 2.70 3.75
Germany G7 DekaBank 1.1 1.6 2.30 3.20
-2 -2 Deutsche Bank 1.2 1.5 3.60 -
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 DIW Berlin 1.1 1.5 3.30 3.60
DZ Bank 1.1 1.4 - -
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst Experian 1.0 1.2 3.40 -
3 3
Maximum Goldman Sachs 1.1 1.5 3.30 3.80
Maximum
Consensus Consensus HWWI 1.0 1.5 2.40 3.00
Minimum Minimum Ifo Institut 1.1 1.6 - -
2 ING Financial Markets 1.0 1.6 2.40 3.00
2 Intesa Sanpaolo 1.1 1.4 2.22 2.80
JPMorgan 1.1 0.7 2.30 -
1 Kiel Institute 1.1 1.6 - -
M.M.Warburg & CO 1.0 1.2 2.70 3.20
1 Nomura 1.1 1.7 - -
0 Raiffeisen Research 1.1 1.2 - -
UBS 1.2 2.0 2.40 3.20
Unicredit 1.1 1.4 2.25 3.00
-1 0 Summary
Jun Sep Dec Mar Jun Sep Jul Oct Jan Apr Jul Oct Minimum 0.9 0.7 2.00 2.70
Maximum 1.4 2.0 3.60 3.80
Median 1.1 1.5 2.40 3.05
19 | 10-year Bond Rate | 1990 - 2014 20 | 10-year Bond Rate | Q1 07 - Q4 11
Consensus 1.1 1.4 2.63 3.17
16 6
France History
Germany 30 days ago 1.1 1.4 2.67 3.34
Italy
60 days ago 1.1 1.4 2.95 3.58
12 5
90 days ago 1.1 1.4 3.06 3.68
Euro. Comm. (Sep. 2010) 1.1 1.5 - -
8 4
IMF (Oct. 2010) 1.3 1.4 - -
Central Bank (Aug. 2010) 1.2 1.6 - -
4 3
France
Germany
Italy
0 2
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Notes and sources
21 | Policy Rate | Q1 07 - Q4 11 22 | 3-month Rate | Q1 07 - Q4 11 General:

6 6 monetary sector data are from the Federal Statistical Office (Destatis,
Euro area Euro area Statistisches Bundesamt Deutschland), the German Central Bank (BBK,
United States United States Deutsche Bundesbank), Bank of France (BdF, Banque de France), Fed-
Japan Japan eral Reserve Board (Fed), Bank of Japan (BoJ), and the European Cen-
tral Bank (ECB). See below for details. Forecasts based on FocusEconomics
4 4 Consensus Forecast.
15 Inflation, annual average variation in consumer price index (CPI) in

%. Source: Destatis.
2 2 (CPI) in %. Source: Destatis.
19 10-year benchmark bond yield (eop). Source: BBK, BdF, ECB.
0 20 10-year benchmark bond yield (eop). Source: BBK, BdF, ECB.
0
21 Policy rate (eop). Source: BoJ, ECB, Fed.
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
22 3-month market rate (eop). Source: BoJ, ECB, Fed.

9 200
Germany G7
Allianz 127 144
150 BBVA - -
6
BHF Bank 125 160
100 BNP Paribas 136 141
3 Citigroup 128 125
50
Commerzbank 130 151
Credit Agricole 111 141
0 Credit Suisse 119 123
0
DekaBank 92 87
Deutsche Bank 134 128
-3 -50 DIW Berlin 123 123
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 DZ Bank 140 135
Experian 138 160
25 | Current Account 2010 | evol. of fcst 26 | Current Account 2011 | evol. of fcst Goldman Sachs 106 87
200 250 HWWI 125 140
Ifo Institut 128 142
ING Financial Markets - -
200
150 Intesa Sanpaolo 135 153
JPMorgan - -
150 Kiel Institute - -
100 M.M.Warburg & CO 130 150
100 Nomura - -
Raiffeisen Research 130 116
50 UBS 140 186
Maximum 50 Maximum Unicredit 119 113
Consensus Consensus
Minimum Minimum Summary
0 0 Minimum 92 87
Jun Sep Dec Mar Jun Sep Jul Oct Jan Apr Jul Oct Maximum 140 186
Median 128 140
27 | Current Account | EUR bn 28 | Trade Balance | EUR bn Consensus 126 135
60 1,500
History
Trade Balance 30 days ago 126 134
Exports
Imports 60 days ago 129 137
1,200
50 90 days ago 130 138
900
40
600
30
300
20 0
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 1990 1995 2000 2005 2010

30 40
Notes and sources
General:
20 Long-term chart period from 1990 to 2014 unless otherwise stated. All
20
external sector data are from the Deutsche Bundesbank. Forecasts based
on FocusEconomics Consensus Forecast.
10
0 23 Current account balance as % of GDP.
24 Current account balance in EUR bn.
0
25 Current account in EUR bn, evolution of 2010 forecast during the last
18 months.
-20 26 Current account in EUR bn, evolution of 2011 forecast since July
-10
2009.
Germany G7 27 Quarterly current account balance, in EUR bn.
Germany G7
-20 -40
29 Exports, annual variation in %.
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 30 Imports, annual variation in %.

FOCUSECONOMICS Italy November 2010
Italy
Italy
Outlook improves
• On 14 October, the government approved the draft budget for next
year. The budget paves the way for a series of spending cuts and tax
increases totalling EUR 25 billion, which were already approved by
the parliament during the summer, including a wage-freeze in the
public sector.
LONG-TERM TRENDS | 5-year averages
2000-04 2005-09 2010-14 • Amid a continued recovery in industrial production and strong read-
GDP (EUR bn): 1,292 1,510 1,638
ings in business and consumer sentiment, Consensus Forecast
GDP per capita (EUR): 22,581 25,516 27,005 panellists lifted last month’s growth estimate by 0.1 percentage points
GDP growth (%): 1.5 -0.4 1.2 and now see the economy growing 1.1% in 2010. For 2011, the panel
Public Debt (% of GDP): 106 108 121
expects the economy to grow 1.1%.
Inflation (%): 2.5 2.1 1.8
Current Account (% of GDP): -0.7 -2.7 -2.7 • Preliminary data for October show inflation inching up from
September’s 1.6% to 1.7%. Panellists see inflation averaging 1.6% in
2010, unchanged from last month’s forecast. Next year, panellists
see inflation averaging 1.7%.
Armando Ciccarelli REAL SECTOR | Industrial production rises unexpectedly

Senior Economist In August, industrial output increased 1.6% over the month before in season-
ally-adjusted terms. The figure came in above the 0.3% increase recorded in
July and contrasted market expectations of a 0.1% drop.
Industrial Production | variation in % At a sector level, the improvement compared to the previous month was led by
3.0 5
the all-important manufacturing sector, the only one to record a better perfor-
mance compared to July. Manufacturing jumped 2.0% over the previous month,
1.9 Annual average YoY (right scale)
1.5 1.1
1.6 0 up from the 0.2% month-on-month increase recorded in July. Mining and quar-
1.0 1.0 1.0
0.5 0.6
rying dropped 4.0% mom, contrasting the 4.8% mom increase recorded in July
0.3 0.2 0.3 -5
and, finally electricity, gas and water supply fell 2.8% mom (July: +5.4% mom).
0.0 %
%
-10
-0.7
On an annual basis, industrial output rose a calendar adjusted 9.5%, which
-1.5
-15 was up from the previous month’s 5.6% increase. The result marked the sharpest
-1.9
increase since December 1997, but was favoured by a low calculation base,
-3.0 -20
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug as industrial output had plunged 18.0% in August 2009. As a consequence of
the positive monthly reading, the trend continued to improve, as the annual
average growth in industrial production stepped up from minus 1.9% in July to
and annual average growth rate in %. minus 0.5%.
Source: National Statistical Institute (ISTAT) and FocusEconomics
calculations.
Consensus Forecast panellists see industrial production growing 5.7% this year,
which is 0.7 points above last month’s projection. For 2011, panellists see in-
dustrial production growing 2.4%.
OUTLOOK | Consumer confidence surprises to the upside

The index of consumer sentiment from the Institute for Studies and Economic
Analyses (ISAE, Istituto di Studi e Analisi Economica) jumped from 107.2 points
in September to 107.7 points in October, a result that surprised market ana-
lysts, which had seen confidence dropping to 106.5 points. The monthly figure

marked the strongest confidence result since the beginning of the year, but
nonetheless confirmed that confidence remains below its long-term average
Consumer Confidence
value of 113.
120
The consumer sentiment gauge rose, as households maintained a more up-
long-term average beat assessment of the country’s economic situation. In particular, the general
110 index relative to the opinion on the country’s situation inched up compared to
the previous month, while short-term expectations and expectations relative to
Points
the developments in the labour market were unchanged compared to the pre-
100 vious month. On the other hand, respondents to the survey expressed a less
upbeat assessment of their personal finances, as more households expected
their personal financial situation to deteriorate in the months to come, leading
90
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 to deteriorating prospects on purchases of durable goods.
Note: Monthly consumer confidence index; long-term average at 113. OUTLOOK | Business confidence unexpectedly rises in October
Source: Institute for Studies and Economic Analyses (ISAE).
In October, the manufacturing sentiment index published by the Institute for
Studies and Economic Analyses (ISAE, Istituto di Studi e Analisi Economica)
rose to 99.8 points. The figure came up from the revised 98.6 points recorded
in August (previously reported: 98.4 points) and confirmed the upward trend in
business sentiment in place since March 2009. The result contrasted market
Business Confidence expectations, which had seen business sentiment inching down to 98.5, and
marked the strongest result since May 2008, thus confirming the notion that
120 business confidence is now back to pre-crisis levels.
According to ISAE, the improvement in business sentiment was led by a more

100
optimistic assessment of demand, in particular from the external sector. In ad-
Points
dition, the evaluation of current production improved compared to the previous

80 month. Meanwhile, businesses’ expectations relative to future production con-
tinued to rise, as manufacturers expect orders to increase going forward. Fi-
nally, contrasting the positive outlook on production expectations, respondents
60
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 to the survey maintain less optimistic opinions relative to the developments of
the general economy in the months to come.
Note: Value of monthly business confidence index.
Source: Institute for Studies and Economic Analyses (ISAE).
The Ministry of the Economy sees the economy growing 1.2% this year and
1.3% in 2011, while the Central Bank is less optimistic and sees the economy
expanding 1.0% both in 2010 and 2011. Consensus Forecast panellists see
the economy expanding 1.1% in 2010, which is up 0.1 percentage points from
last month’s forecast. The panel expects a 1.1% increase also in 2011, which is
unchanged from last month’s forecast.

MONETARY SECTOR | Inflation inches up in October
0.4 0.4 0.4 2.0 According to a preliminary report released on 29 October, consumer prices
0.3
0.2 (including tobacco) rose 0.2% over the previous month in October, which con-
0.2 0.2
0.2 0.1 1.5 trasted the 0.2% price drop recorded in September. As a result of the monthly
0.1 0.1 0.1 increase, annual inflation inched up from September’s 1.6% to 1.7%, slightly
0.0 0.0
0.0 1.0 above market expectations which saw inflation remaining unchanged.
% %
-0.2 0.5 Higher prices for alcoholic beverages as well as for education were the main
-0.2
annual (right scale) drivers behind the monthly price increase. Meanwhile, annual average
-0.4 0.0 harmonised inflation (HICP) increased from 1.3% in September to 1.5%, which
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
is the highest level since August 2009.
Note: Year-on-year and month-on-month var. of consumer price index in %.

Source: National Statistical Institute (ISTAT). Consensus Forecast panellists expect inflation to average 1.6% this year, which
is unchanged from last month’s forecast. Next year, panellists see inflation
averaging 1.7%, which also unchanged from last month’s forecast.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 1,429 1,485 1,546 1,568 1,521 1,540 1,584 1,633 1,688 1,745
Economic Growth (GDP, annual var. in %) 0.8 2.1 1.4 -1.3 -5.1 1.1 1.1 1.2 1.4 1.4
Domestic Demand (annual variation in %) 1.3 1.5 1.1 -1.2 -3.5 0.7 0.7 0.9 1.5 1.3
Private Consumption (annual var. in %) 1.1 1.2 1.1 -0.8 -1.8 0.5 0.7 1.1 1.5 1.6
Fixed Investment (annual variation in %) 1.4 3.1 1.3 -4.0 -12.2 1.5 1.3 2.0 2.6 2.9
Industrial Production (annual variation in %) -0.7 3.5 1.8 -3.5 -17.5 5.7 2.4 2.1 1.7 1.7
Retail Sales (annual variation in %) 1.0 2.0 1.1 -2.3 -0.2 - - - - -
Car Registrations (mn) 2.2 2.3 2.5 2.2 2.2 - - - - -
Disposable Income (annual var. in %) 2.5 3.7 3.4 0.0 -2.5 -1.1 0.2 0.8 1.0 1.0
Hourly Wages (annual % var.) 2.5 3.1 2.2 3.7 3.0 1.8 2.1 2.6 2.8 2.8
Public Debt (% of GDP) 106 107 104 106 116 119 120 121 122 122
Inflation (CPI, annual average var. in %) 2.0 2.1 1.8 3.3 0.8 - - - - -
Inflation (HICP, annual average var. in %) 2.2 2.2 2.0 3.5 0.8 1.6 1.7 1.9 1.9 2.0
Inflation (PPI, annual variation in %) 3.5 3.6 5.3 -0.5 -1.5 - - - - -
Benchmark BTP 10-year Yield (%, eop) 3.50 4.21 4.67 4.49 4.12 3.75 3.99 4.37 5.09 5.51
Stock Market (var. of FTSE MIB in %) 15.5 16.0 -7.0 -49.5 19.5 - - - - -
External Sector
Trade Balance (EUR bn) 0.5 -10.2 3.2 -2.1 1.7 2.1 7.2 11.8 10.1 11.0
Exports (EUR bn) 299 333 366 370 292 316 335 359 383 406
Imports (EUR bn) 299 343 362 372 291 312 327 347 374 395
Economic Growth (GDP, s.a. qoq var. in %) 0.4 -0.1 0.4 0.5 0.3 0.3 0.3 0.3 0.4 0.5
Inflation (HICP, annual average var. in %) 0.1 0.7 1.3 1.6 1.7 1.7 1.6 1.5 1.6 1.7
Benchmark BTP 10-year Yield (%, eop) 4.10 4.12 3.98 4.10 3.88 3.75 3.81 3.90 3.98 3.99
Industrial Production (annual variation in %) -0.5 3.3 7.3 7.9 7.6 8.3 5.6 9.5 - -
Industrial Production (s.a. mom var. in %) 1.9 0.3 0.2 1.0 1.0 0.6 0.3 1.6 - -
Retail Sales (annual variation in %) -0.9 -0.3 0.2 -0.2 -0.8 0.5 0.7 0.6 - -
Cons. Confidence Index (long-term avg. 113) 111.6 107.6 106.3 107.8 105.4 104.5 105.6 104.1 107.2 107.7
Business Confidence Index 93.2 94.7 95.3 95.9 96.2 96.3 98.1 99.4 98.6 99.8
Inflation (CPI, mom variation in %) 0.1 0.1 0.3 0.4 0.1 0.0 0.4 0.2 -0.2 0.2
Inflation (CPI, annual variation in %) 1.3 1.2 1.4 1.5 1.4 1.3 1.7 1.6 1.6 1.7

BBVA 1.1 0.8
3 0
BNP Paribas 1.1 0.5
Citigroup 1.1 1.0
Commerzbank 1.1 1.3
0 -1
Confindustria 1.2 1.3
-3 -2
DekaBank 1.2 1.3
Italy
Italy G7 World Deutsche Bank 1.1 0.9
G7
DZ Bank 1.0 0.8
-6 -3
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Experian 1.0 1.0
Gruppo MPS 0.9 1.0
ING 1.0 0.8
3 3
Maximum Intesa Sanpaolo 1.0 1.2
Consensus ISAE 1.0 1.4
Minimum
JPMorgan 1.2 1.3
2 2
Lloyds TSB 0.8 0.9
Nomura 1.1 1.0
1 1
ref. 1.1 0.7
UBS 1.1 1.6
0 0 Unicredit 1.0 1.1
Maximum
Consensus Summary
Minimum Minimum 0.8 0.5
-1 -1 Maximum 1.2 2.0
Jun Sep Dec Mar Jun Sep Jul Oct Jan Apr Jul Oct Median 1.1 1.0
Consensus 1.1 1.1
History
30 days ago 1.0 1.1
4 10
60 days ago 0.9 1.1
90 days ago 0.9 1.1
2
European Commission (Sep. 2010) 1.1 -
0
IMF (Oct. 2010) 1.0 1.0
Central Bank (July 2010) 1.0 1.0
0
-10 Notes and sources

-2
General:
Italy
Italy Long-term chart period from 1990 to 2014 unless otherwise stated. All real
G7 G7 sector data are from the National Statistical Institute (ISTAT, Istituto
-4 -20 Nazionale di Statistica) and the Bank of Italy (BdI, Banca d’Italia). See
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010
below for details. Forecasts based on FocusEconomics Consensus Fore-
cast.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 1 GDP, annual variation in %. Source: ISTAT.
2 Quarterly GDP (seasonally adjusted), quarter-on-quarter variation in %.
2 4
Source: ISTAT.
2010 3 GDP, evolution of 2010 forecasts during the last 18 months.
2011 4 GDP, evolution of 2011 forecasts since July 2009.
5 Private consumption, annual variation in %. Source: ISTAT.
1 2 6 Gross fixed investment, annual variation in %. Source: ISTAT.
7 Private consumption, change in 2010 and 2011 forecasts since July
2009.
8 Gross fixed investment, change in 2010 and 2011 forecasts since July
2009.
0 0 9 Industrial production, annual variation in %. Source: ISTAT.
2010 10 Unemployment, % of active population. Source: ISTAT.
11 Balance of non-financial public sector, % of GDP. Source: BdI.
2011
2009.
-1 -2 13 Unemployment, evolution of 2010 and 2011 forecasts since July 2009
Jul Oct Jan Apr Jul Oct Jul Oct Jan Apr Jul Oct 14 Balance of non-financial public sector, evolution of 2010 and 2011
forecasts since July 2009.


BBVA 0.6 0.7 1.4 1.6 - - - - - - - -
BNP Paribas 0.4 0.2 2.3 -1.0 5.4 1.3 8.7 9.5 -5.0 -4.3 - -
Citigroup 0.4 0.5 1.0 0.7 - - 8.7 8.9 -4.8 -4.8 118 120
Commerzbank - - - - - - - - - - - -
Confindustria 0.4 0.7 2.7 3.4 - - 8.6 9.1 -5.1 -4.1 119 119
Credit Agricole - - - - - - 8.5 8.5 -4.6 -3.9 119 121
Credit Suisse - - - - - - - - -4.6 -3.6 - -
DekaBank - - - - - - - - -5.1 -4.0 - -
Deutsche Bank - - - - - - 8.6 8.7 -4.9 -3.3 - -
DZ Bank 0.5 1.0 1.4 1.1 - - 8.5 8.3 -5.0 -4.7 119 119
Experian 0.5 0.7 0.3 1.4 - - 8.5 8.7 -5.2 -4.5 - -
Goldman Sachs - - - - - - - - -4.9 -3.8 - -
Gruppo MPS 0.5 0.6 1.4 -0.4 - - 8.2 8.0 -5.4 -5.1 - -
ING 0.4 0.5 2.1 1.1 - - 8.5 8.4 -5.1 -4.5 - -
Intesa Sanpaolo 0.4 1.1 1.8 1.0 6.7 3.1 8.5 8.4 -5.0 -4.2 - -
ISAE 0.8 1.1 0.9 2.8 - - 8.8 8.8 - - - -
JPMorgan - - - - - - - - - - - -
Lloyds TSB 0.3 0.6 0.3 0.3 5.5 3.2 - - -5.2 -5.3 - -
Nomura 0.5 0.7 2.4 2.0 - - 8.6 8.5 -5.3 -4.7 118 119
Raiffeisen Research - - - - - - 8.4 8.3 -5.1 -3.9 118 119
ref. 0.1 0.3 1.5 1.3 - - - - -5.3 -4.8 119 121
UBS 0.8 1.1 1.4 4.0 5.2 1.9 8.5 8.5 -4.7 -3.2 118 120
Unicredit 0.4 0.7 1.1 0.8 - - 8.4 8.5 -5.0 -4.3 119 119
Summary
Minimum 0.1 0.2 0.3 -1.0 5.2 1.3 8.2 8.0 -5.4 -5.3 118 119
Maximum 0.8 1.1 2.7 4.0 6.7 3.2 8.8 9.5 -4.6 -3.2 119 121
Median 0.4 0.7 1.4 1.1 5.5 2.5 8.5 8.5 -5.0 -4.3 119 119
Consensus 0.5 0.7 1.5 1.3 5.7 2.4 8.5 8.6 -5.0 -4.3 119 120
History
30 days ago 0.5 0.8 1.1 1.7 5.0 1.8 8.6 8.7 -5.0 -4.2 119 120
60 days ago 0.5 0.9 0.5 1.6 3.7 1.8 8.7 8.8 -5.1 -4.3 119 120
90 days ago 0.4 0.9 0.5 1.5 3.7 1.8 8.7 8.8 -5.1 -4.3 - -

10 12 0
10 -3
0
8 -6
-10
6 -9
Italy
Italy Italy
G7
G7 G7
-20 4 -12
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 1990 1995 2000 2005 2010
6 10.0 -4.0
2010
2010 2011
2011
9.5 -4.5
4
9.0 -5.0
2
8.5 -5.5
2010
2011
0 8.0 -6.0

15 | Inflation | 1990 - 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Inflation and Interest Rate

Italy Italy
% var. Rate in %
G7
G7 Individual Forecasts 2010 2011 2010 2011
6
4 BBVA 1.6 1.8 - -
BMO Capital Markets 1.5 1.7 - -
4
BNP Paribas 1.6 1.8 3.85 4.10
2 Citigroup 1.7 1.6 4.10 4.10
2 Commerzbank 1.4 1.5 - -
Confindustria 1.5 1.9 - -
0 Credit Agricole 1.6 1.4 - -
0
DekaBank 1.5 1.4 - -
-2 -2 Deutsche Bank 1.6 1.9 - -
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
DZ Bank 1.5 1.2 - -
Experian 1.5 1.7 - -
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst Goldman Sachs 1.6 1.8 - -
3 4 Gruppo MPS 1.6 1.9 4.25 4.65
ING 1.6 1.9 - -
Intesa Sanpaolo 1.5 1.6 3.47 3.47
3 ISAE 1.6 2.0 - -
2 JPMorgan 1.7 1.5 - -
Lloyds TSB 1.6 1.8 - -
2 Nomura 1.6 2.1 - -
Raiffeisen Research 1.5 1.7 - -
1 ref. 1.5 1.6 - -
1 UBS 1.5 1.9 3.00 3.84
Maximum
Consensus Maximum Unicredit 1.5 1.9 3.80 3.80
Minimum Consensus
Minimum Summary
0 0 Minimum 1.4 1.2 3.00 3.47
Jun Sep Dec Mar Jun Sep Jul Oct Jan Apr Jul Oct Maximum 1.9 2.1 4.25 4.65
Median 1.6 1.8 3.83 3.97
Consensus 1.6 1.7 3.75 3.99
19 | 10-year Bond Yield | 1990-2014 20 | 10-year Bond Yield | Q1 07-Q4 11
History
15 6 30 days ago 1.6 1.7 3.88 4.09
Italy
60 days ago 1.6 1.7 4.12 4.43
Germany
12 90 days ago 1.5 1.7 4.19 4.49
5 Additional Forecasts
Eur. Comm. (Sep. 2010) 1.6 - - -
9
IMF (Oct. 2010) 1.6 1.7 - -
4 Central Bank (July 2010) 1.5 1.9 - -
6
3
3
Italy
Germany
0 2
1990 1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Notes and sources
21 | Policy Rate | Q1 07-Q4 11 | in % 22 | Benchmark Rate | Q1 07-Q4 11 General:

6 6 monetary sector data are from the National Statistical Institute (ISTAT,
Euro area Euro area Istituto Nazionale di Statistica), Bank of Italy (BdI, Banca d’Italia), Federal
United States United States Reserve Board (Fed), Bank of Japan (BoJ) and the European Central
Japan
Japan Bank (ECB). See below for details. Forecasts based on FocusEconomics
Consensus Forecast.
4 4
15 Inflation, annual average variation in harmonized index of
consumer prices (HICP) in % (aop). Source: ISTAT.
16 Quarterly inflation, year-on-year variation in harmonized index of
consumer prices (HICP) in % (aop). Source: ISTAT.
2 2 17 Inflation, evolution of 2010 forecasts during the last 18 months.
19 10-year benchmark bond yield (eop). Source: ECB, BdI.
20 Quarterly 10-year benchmark bond yield (eop). Source: ECB, BdI.
0 0
21 Quarterly policy rate in % (eop). Source: ECB, Fed, BoJ.
22 Quarterly 3-month benchmark rate in % (eop). Source: ECB, Fed,
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
BoJ.

6 40
Italy
BBVA - -
G7
20 BMO Capital Markets - -
3
0
Commerzbank - -
0
Confindustria -56.0 -55.5
-20 Credit Agricole -49.9 -44.7
-3
-40 DekaBank -50.0 -46.5
Deutsche Bank -56.2 -51.4
DZ Bank - -
-6 -60
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 Experian -43.7 -38.5
Gruppo MPS -49.1 -47.6
25 | Current Account 2010 | evol. of fcst 26 | Current Account 2011 | evol. of fcst
ING - -
-15 Maximum 0
Consensus Intesa Sanpaolo -51.4 -31.9
Maximum
Minimum Consensus ISAE - -
Minimum JPMorgan - -
-30
-25
Lloyds TSB -48.3 -46.4
Nomura - -
-45 Raiffeisen Research -53.0 -48.0
ref. -53.1 -46.3
-50 UBS - -
-60 Unicredit -48.3 -48.2
Summary
Minimum -56.2 -55.5
-75 -75 Maximum -43.7 -29.1
Jun Sep Dec Mar Jun Sep Jul Oct Jan Apr Jul Oct Median -49.9 -46.4
Consensus -49.6 -43.5
History
27 | Current Account | EUR bn 28 | Trade Balance | EUR bn
30 days ago -47.3 -42.1
0 600 60 days ago -44.7 -39.0
Trade Balance 90 days ago -43.9 -38.8
Exports
Imports
-5 400
-10 200
-15 0
-20 -200
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 1990 1995 2000 2005 2010

60
30
Notes and sources
Italy G7
General:
15
external sector data are from the Bank of Italy (BdI, Banca d’Italia).
30
0 23 Current account balance as % of GDP.

25 Current account in EUR bn, evolution of 2010 forecast during the
0
last 18 months.
-15 26 Current account in EUR bn, evolution of 2011 forecast since July
2009.
Italy G7 27 Quarterly current account balance, in EUR bn.
-30
-30 29 Exports, annual variation in %.
1990 1995 2000 2005 2010
1990 1995 2000 2005 2010 30 Imports, annual variation in %.

FOCUSECONOMICS Spain November 2010
Spain
Spain
Outlook stable
• The economic recovery remains fragile, even though the
government’s commitment to cut the fiscal deficit to 6.0% of GDP in
2011 should restore some confidence in the country’s public finances.
Meanwhile, labour market figures improved for the first time since
the third quarter of 2007, as the unemployment rate fell from 20.1% in
LONG-TERM TRENDS | 5-year averages the second quarter to 19.8% in the third.
2000-04 2005-09 2010-14
• Consensus Forecast panellists expect GDP to contract 0.4% this year,
GDP (EUR bn): 733 1,017 1,120
GDP per capita (EUR): 17,469 22,396 23,349 which is unchanged from last month’s forecast. For 2011, the panel
GDP growth (%): 3.6 1.7 1.0 expects the economy to grow 0.4%.
Inflation (%): 3.2 2.7 1.5 • Preliminary figures show that inflation rose from 2.0% in September
Current Account (% of GDP): -4.0 -8.3 -3.8 to 2.2% in October. Panellists expect inflation to average 1.6% this
year, which is unchanged from last month’s forecast. In 2011, the
panel sees inflation inching down to 1.4%.
REAL SECTOR | Industrial production rebounds in August

Joan Enric Domene
Economist In August, industrial production expanded 3.2% over the same month last
year, which contrasted the 1.6% drop registered in July. On a working-day
adjusted basis, industrial output expanded 1.4% year-on-year, bouncing back
from the 0.1% fall recorded in July (previously reported: +0.5% year-on-year)
Industrial Production | variation in % and beating market expectations, which had anticipated industrial output
adding 0.2%.
10.0
6.8
Year-on-year Annual average 5.1
3.0 3.2 3.2
The August expansion was driven by a rebound in the manufacturing sector,
0.0 which expanded 3.4% in annual terms (July: -2.7% yoy). Mining expanded a
-1.5
%
-1.9 -1.6 strong 14.1% (July: +3.0% yoy) and, finally, production of electricity, gas, steam
-4.0
-5.0
and air conditioning increased 1.0% (July: +2.1% yoy).
-10.0
-10.6
-12.7 -12.8
On a use-based classification, intermediate and none-durable consumer
-20.0 goods were the main drivers behind the August expansion. Capital goods
production, in contrast, contracted over the same month last year.
Note: Year-on-year and annual average variation of industrial production index.

Source: National Statistical Institute (INE) and FocusEconomics calculations. Due to the robust monthly reading, the trend continues to improve, with the
annual average variation in industrial production stepping up from minus
2.9% in July to minus 2.0% in August. Consensus Forecast participants
expect industrial output to expand 0.5% this year. For 2011, the panel sees
industrial production expanding 0.9%.
The Spanish Central Bank anticipates that the economy will contract 0.4%
this year and will return to growth in 2011 with a 0.8% expansion. Consensus
Forecast panellists share this assessment and anticipate GDP contracting
0.4% this year, which is unchanged from last month’s forecast. In 2011, the
panel expects the economy to grow 0.4%.

Business Confidence OUTLOOK | Business confidence drops in the third quarter

In October, the quarterly business confidence index (ICE, Indicador de
20
Confianza Empresarial) published by the Association of Chambers of
10
Commerce (Consejo Superior de Cámaras de Comercio) reached minus
17.3 points, which was down from the minus 14.8 points recorded in July. At
0 the current level, the index remains well below the 0-point threshold that
Points
separates optimistic from pessimistic territory. Nonetheless, business

-10
sentiment is still higher than the trough reached in April 2009, when the index
-20 fell to minus 27.6 points.
-30
Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- The deterioration in business confidence was the result of a decline in the
06 06 07 07 08 08 09 09 10 10
current situation sub-index, which dropped from minus 17.1 points in July to
minus 21.5 points in October, amid worse perceptions regarding investment
Note: Quarterly business confidence index. Values above 0 indicate a positive
assesment regarding economic activity while values below 0 indicate a and unemployment. In addition, the expectations sub-index for the next three
negative assesment.
Source: Association of Chambers of Commerce. months also fell, from minus 11.8 points in July to minus 12.6 points in
October, amid deteriorating perceptions regarding the future price levels.
MONETARY SECTOR | Inflation accelerates in September

In September, consumer prices increased 0.1% over the previous month,
which came in below the 0.3% price rise recorded in August. In spite of the
small price increase, annual inflation rose from 1.8% in August to 2.1%,
which was a notch above the 2.0% preliminary estimate released by the
Statistical Institute on 29 September.
1.5 4.0 The monthly price rise was mainly driven by higher prices for clothing and
1.1 footwear (+3.7% month-on-month). However, the rise was partially offset by a
1.0
0.7
0.5
0.7
decline of prices for leisure and recreation (-2.8% mom) as well as a drop in
0.5
0.2 0.2
0.3
2.0
prices in hotels and restaurants (-1.0% mom).
%
0.1
0.0 %
0.0
-0.2 -0.2 Meanwhile, the core inflation index, which does not include prices for
-0.5 0.0
-0.4
unprocessed food and energy, remained flat over the previous month, lifting
-1.0
-1.0
annual core inflation from 1.0% in August to 1.1% in September.
annual (right scale)
-1.5 -2.0
More recent data point to a rise in inflationary pressures. According to a
preliminary estimate released by INE on 29 October, annual inflation
Note: Year-on-year and month-on-month var. of consumer price index in %. increased to 2.2% in October, which is the highest level in nearly two years.
Source: National Statistical Institute (INE).
Consensus Forecast panellists expect harmonised inflation to average 1.6%

this year, which is unchanged from last month’s forecast. For 2011, panellists
expect inflation to average 1.4%.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 909 984 1,053 1,089 1,051 1,064 1,084 1,113 1,149 1,190
Economic Growth (GDP, annual var. in %) 3.6 4.0 3.6 0.9 -3.7 -0.4 0.4 1.3 1.7 1.9
Private Consumption (annual var. in %) 4.2 3.8 3.6 -0.6 -4.3 0.8 0.1 1.1 1.4 1.7
Fixed Investment (annual variation in %) 7.0 7.2 4.5 -4.8 -16.0 -7.2 -1.5 2.0 2.8 3.1
Car Sales (mn) 1.5 1.6 1.6 1.2 1.0 - - - - -
Housing Starts (mn) 0.72 0.76 0.62 0.35 0.16 - - - - -
Fiscal Balance (% of GDP) 1.0 2.0 1.9 -4.1 -11.2 -9.4 -7.0 -5.7 -4.6 -3.6
Inflation (Core, annual variation in %) 2.9 2.5 3.3 2.4 0.3 - - - - -
Inflation (HICP, annual avg. variation in %) 3.4 3.6 2.8 4.1 -0.2 1.6 1.4 1.3 1.5 1.7
Inflation (IPRI, annual variation in %) 5.2 3.8 5.7 0.4 0.4 - - - - -
3-Month Euribor Rate (%, eop) 2.49 3.73 4.68 2.89 0.70 0.97 1.37 2.18 2.90 2.92
Stock Market (variation of IBEX 35 in %) 18.2 31.8 7.3 -39.4 29.8 - - - - -
External Sector
Current Account Balance (EUR bn) -66.9 -88.3 -105 -106 -58.3 -47.5 -37.9 -41.6 -41.9 -43.2
Exports (EUR bn) 154 170 181 188 158 176 188 204 222 238
Imports (EUR bn) 231 260 280 282 208 225 231 247 260 276
Economic Growth (GDP, annual var. in %) -3.9 -3.0 -1.3 -0.1 -0.1 0.1 0.1 0.1 0.6 1.0
Economic Growth (GDP, qoq variation in %) -0.3 -0.2 0.1 0.2 -0.3 0.0 0.1 0.2 0.2 0.4
Inflation (HICP, annual avg. variation in %) -1.0 0.2 1.2 1.6 1.9 2.0 1.9 1.6 1.2 1.3
3-Month Euribor Rate (%, eop) 0.75 0.70 0.63 0.77 0.89 0.97 1.10 1.25 1.39 1.37
Industrial Production (annual variation in %) -5.0 -1.9 6.8 3.0 5.1 3.2 -1.6 3.2 - -
Cons. Confid. Index (100-point threshold) 78.7 71.1 72.7 78.2 65.1 65.9 73.6 74.9 72.8 -
Inflation (CPI, mom variation in %) -1.0 -0.2 0.7 1.1 0.2 0.2 -0.4 0.3 0.1 -
Inflation (CPI, annual eop variation in %) 1.0 0.8 1.4 1.5 1.8 1.5 1.9 1.8 2.1 -

Spain
Spain Euro area Banesto -0.5 0.5
Euro area World
World BBVA -0.6 0.7
3 BNP Paribas -0.3 -0.3
5 Caja Madrid -0.4 0.4
CEPREDE -0.6 0.5
0
Citigroup -0.3 -0.1
Credit Agricole -0.5 0.1
0
Credit Suisse -0.3 1.1
-3
DekaBank -0.5 0.1
-5 -6
DZ Bank -0.5 0.0
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Experian -0.5 0.7
FUNCAS -0.4 0.4
Goldman Sachs -0.4 1.1
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts ING -0.2 0.7
0.5 2 Instituto Flores de Lemus -0.3 0.3
Maximum
La Caixa -0.3 0.7
Consensus
Minimum
Nomura -0.3 0.2
1 Raiffeisen Research -0.5 0.4
0.0 UBS 0.1 1.0
Unicredit -0.3 0.4
0 Summary
Minimum -0.6 -0.3
-0.5 Maximum Maximum 0.1 1.1
-1 Consensus
Median -0.4 0.4
Minimum
Consensus -0.4 0.4
History
-1.0 -2
Jan Mar May Jul Sep Nov
30 days ago -0.4 0.4
60 days ago -0.4 0.6
90 days ago -0.4 0.6
5 | Consumption | variation in % 6 | Investment | variation in % Additional Forecasts
10 20 IMF (Oct. 2010) -0.3 0.7
Spain Euro area European Commission (Sep. 2010) -0.3 0.8
OECD (May 2010) -0.2 0.9
5 10
0 0
Notes and sources

-5 -10
General:
Spain Euro area Long-term chart period from 1995 to 2014 unless otherwise stated. All real
sector data are from the National Statistical Institute (INE, Instituto Nacional
-10 -20 de Estadística) and Eurostat. See below for details. Forecasts based on
1995 2000 2005 2010 1995 2000 2005 2010 FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: INE.

7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %. Source:
INE.
1.0 0 3 GDP, evolution of 2010 forecasts since January 2010.
4 GDP, evolution of 2011 forecasts since January 2010.
5 Private consumption, annual variation in %. Source: INE.
-2 6 Gross fixed investment, annual variation in %. Source: INE.
0.5
7 Private consumption, change in 2010 and 2011 forecasts since January
2010.
8 Gross fixed investment, change in 2010 and 2011 forecasts since January
-4 2010.
9 Industrial production, annual variation in %. Source: INE.
0.0 10 Unemployment, % of active population. Source: INE.
-6 11 Balance of non-financial public sector, % of GDP. Source: Eurostat.
12 Industrial production, evolution of 2010 and 2011 forecasts since January
2010 2010 2010.
2011 2011 13 Unemployment, evolution of 2010 and 2011 forecasts since January
-0.5 -8 2010.
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 14 Balance of non-financial public sector, evolution of 2010 and 2011
forecasts since January 2010.


Banesto 0.4 -0.1 -6.6 -2.0 2.0 2.5 20.4 20.9 -9.3 -6.0 65.9 71.9
BBVA -0.3 0.3 -9.5 -3.2 - - 19.4 19.2 -9.6 -6.6 63.7 69.8
BNP Paribas 0.8 -1.6 -9.0 -6.5 -0.2 -3.3 20.2 22.0 -9.6 -7.8 - -
Caja Madrid 0.7 0.0 -7.6 -2.2 1.2 1.7 20.2 20.5 -9.9 -6.9 66.2 73.1
CEPREDE 0.3 0.3 -7.5 -1.1 -0.9 2.0 19.9 20.1 -10.6 -8.9 65.8 73.4
Citigroup 1.3 -0.7 -7.8 -2.3 - - 20.4 20.8 -9.3 -7.2 64.7 72.4
Credit Agricole - - - - - - - - -9.3 -6.2 65.2 72.3
Credit Suisse - - - - - - - - -9.3 -6.8 64.9 72.5
DekaBank - - - - - - - - -9.1 -6.4 - -
Deutsche Bank 0.2 -0.2 -7.4 -1.6 -0.5 1.4 20.5 21.3 -9.0 -7.1 - -
DZ Bank 1.1 0.4 -6.1 0.9 - - 20.0 19.9 -9.2 -7.5 66.0 71.0
Experian -0.3 0.5 -6.7 0.9 - - 20.5 19.1 -9.3 -7.4 - -
FUNCAS 1.2 0.5 -7.3 -3.1 0.7 0.9 20.0 20.3 -9.7 -6.8 65.0 73.6
Goldman Sachs - - - - - - - - -9.6 -7.3 - -
ING 1.2 0.5 -6.4 1.0 - - 20.2 20.3 -9.7 -7.0 - -
Instituto Flores de Lemus 1.3 0.3 -7.1 -3.2 0.7 0.1 19.9 20.4 - - - -
La Caixa 0.4 0.7 -6.6 -0.7 0.5 1.6 19.8 20.0 -9.5 -6.4 65.2 72.1
Nomura 1.4 0.3 -6.4 -0.3 - - 19.9 20.1 -9.3 -8.0 64.3 71.5
UBS 1.6 0.0 -6.0 0.9 1.0 1.3 20.0 19.0 -8.0 -6.0 64.7 71.9
Unicredit 1.3 0.3 -6.8 -2.0 - - 20.1 20.5 -9.3 -7.3 63.5 73.0
Summary
Minimum -0.3 -1.6 -9.5 -6.5 -0.9 -3.3 19.4 19.0 -10.6 -8.9 63.5 69.8
Maximum 1.6 0.7 -6.0 1.0 2.0 2.5 20.5 22.0 -8.0 -6.0 66.2 73.6
Median 1.0 0.3 -6.9 -1.8 0.7 1.4 20.0 20.3 -9.3 -7.0 65.0 72.2
Consensus 0.8 0.1 -7.2 -1.5 0.5 0.9 20.1 20.3 -9.4 -7.0 64.9 72.0
History
30 days ago 0.7 0.4 -7.2 -1.7 0.5 0.9 20.0 20.2 -9.4 -7.0 65.2 72.5
60 days ago 0.2 0.4 -7.0 -1.2 0.6 1.2 20.0 20.2 -9.5 -7.1 65.8 72.9
90 days ago 0.1 0.4 -6.9 -1.2 0.6 1.2 20.0 20.1 -9.5 -7.1 65.7 73.1
9 | Industry | variation in % 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP

10 25 5
Spain Euro area
20 0
0
15 -5
-10
10 -10
Spain
Spain Euro area Euro area
World
-20 5 -15
1995 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
2.0 21 -6
2010 2010
2011 2010 2011
2011
1.5
20 -8
1.0
19 -10
0.5
0.0 18 -12
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

Monetary Sector | Inflation, Interest Rate and Stock Market
15 | Inflation | 1995 - 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Inflation | annual average variation in %

Spain Euro area Banesto 1.5 0.9
BBVA 1.6 1.4
4 4 BNP Paribas 1.7 1.2
Caja Madrid 1.7 1.4
CEPREDE - -
2 2
Citigroup 1.7 1.1
0 0
DekaBank 1.6 1.3
Spain Deutsche Bank 1.6 1.4
Euro area DZ Bank 1.6 1.1
-2 -2
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Experian 1.5 1.3
FUNCAS 1.7 1.5
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst ING 1.6 1.3
2.0 3
Maximum
Instituto Flores de Lemus 1.7 1.3
Consensus La Caixa 1.7 1.4
Minimum
Nomura 1.7 2.0
2
1.5
UBS 1.5 1.6
Unicredit 1.8 2.2
1
Summary
Minimum 1.5 0.9
1.0
0
Maximum 1.8 2.2
Maximum Median 1.6 1.4
Consensus Consensus 1.6 1.4
Minimum
0.5 -1 History
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 30 days ago 1.6 1.4
60 days ago 1.6 1.4
90 days ago 1.5 1.4
19 | 10-year Bond Yield | 1995-2014 20 | Stock Market | IBEX 35
12 14,000 IMF (Oct. 2010) 1.5 1.1
Spain
European Commission (Sep. 2010) 1.6 1.6
Germany
10 OECD (May 2010) 1.4 0.6
12,000
8
10,000
8,000
4
2 6,000 Notes and sources

1995 2000 2005 2010 Jan Jul Jan Jul Jan Jul
General:
monetary sector data are from the National Statistical Institute (INE,
21 | Policy Rate | Q1 07-Q4 11 | in % 22 | 3-Month Rate | Q1 07-Q4 11 | in %
Instituto Nacional de Estadística), Bank of Spain (BdE, Banco de
5 8 España), Federal Reserve Board (Fed), Bank of Japan (BoJ), German
United States United States
Euro area Euro area Central Bank (BBK, Deutsche Bundesbank) and the European Central
Japan Japan Bank (ECB). See below for details. Forecasts based on FocusEconomics
4 Consensus Forecast.
6
15 Inflation, annual average variation in harmonised index of
3
consumer prices (HICP) in % (aop). Source: INE.
4 16 Quarterly inflation, year-on-year variation in harmonised index of
consumer prices (HICP) in % (aop). Source: INE.
2
17 Inflation, evolution of 2010 forecasts since January 2010.
2 19 10-year benchmark bond yield (eop). Source: BdE, BBK.
1
20 Monthly index levels, IBEX 35. Jan. 2008 until end of previous
month. Source: Bolsa de Madrid.
0 0 21 Quarterly policy rate in % (eop). Source: ECB, Fed, BoJ.
Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 22 Quarterly 3-month benchmark rate in % (eop). Source: ECB, Fed,
BoJ.

Banesto -48.0 -43.0
0 BBVA -31.9 -11.9
0 BNP Paribas -50.6 -28.1
Caja Madrid -41.9 -16.2
-3
CEPREDE -61.6 -55.1
-50 Citigroup -47.7 -36.3
-6 Credit Agricole -50.0 -47.7
-100
-9 DekaBank -49.0 -48.8
Deutsche Bank -53.2 -48.8
Spain Euro area
-12
DZ Bank - -
-150
1995 2000 2005 2010 Experian -40.4 -36.0
1990 1995 2000 2005 2010
FUNCAS -52.8 -44.6
25 | Current Account 2010 | evol. of fcst 26 | Current Account 2011 | evol. of fcst ING - -
0 0 Instituto Flores de Lemus -43.1 -39.2
Maximum La Caixa -53.3 -45.5
Consensus
Minimum Nomura - -
-25 -25 UBS -46.1 -30.7
Unicredit -51.1 -41.2
Summary
Minimum -61.6 -55.1
-50 -50
Maximum -31.9 -11.9
Median -48.5 -40.2
Maximum Consensus -47.5 -37.9
Consensus
Minimum History
-75 -75
30 days ago -47.1 -37.4
60 days ago -46.3 -34.7
90 days ago -46.6 -34.9
27 | Current Account | EUR bn 28 | Trade Balance | EUR bn
0 600
Trade Balance
Exports
Imports
-10 400
-20 200
-30 0
-40 -200
Q1 07 Q1 08 Q1 09 Q1 10 1990 1995 2000 2005 2010

60 40
Notes and sources
General:
40 20 Long-term chart period from 1990 to 2014 unless otherwise stated. All
external sector data are from the Bank of Spain (BdE, Banco de España).
20 0 23 Current account balance as % of GDP. 1995-2014.

25 Current account in EUR bn, evolution of 2010 forecast since
January 2010.
0 -20
26 Current account in EUR bn, evolution of 2011 forecast since
January 2010.
27 Quarterly current account balance, in EUR bn. Q1 07-Q2 10.
-20 -40 28 Trade balance, imports and exports, in EUR bn.
1990 1995 2000 2005 2010 1990 1995 2000 2005 2010 29 Exports, annual variation in %.
30 Imports, annual variation in %.

FOCUSECONOMICS Austria November 2010
Austria
Austria
Outlook improves
• Industrial production rebounded in August, expanding 8.2% over the
same month last year. Additional economic indicators point to a re-
silient recovery, suggesting that the economy is back on track,
favoured by a strong external sector, which benefits from healthy
growth in the country’s main trade partner, Germany.
2000-04 2005-09 2010-14 • Consensus Forecast panellists expect the economy to expand 1.7%
this year, which is up 0.2 percentage points from last month’s pro-
GDP (EUR bn): 219 266 304
GDP per capita (EUR): 27,081 32,044 35,861 jection. For 2011, the panel sees the economy expanding 1.7% as
GDP growth (%): 1.8 1.6 1.9 well.
Inflation (%): 1.8 1.9 1.7 • Inflation rose from 1.7% in August to 1.9% in September. Panellists
Current Account (% of GDP): 1.0 2.8 2.6 expect inflation to average 1.5% this year, which is unchanged from
last month’s projection. Next year, the panel sees inflation averaging
1.6%.
Ricardo Aceves REAL SECTOR | Industrial production expands at resilient pace in Au-
Economist gust
In August, industrial production expanded a working day adjusted 8.2% over
the same month last year, which came in above the revised 5.9% increase
registered in the previous month (previously reported: 6.8% year-on-year). The
monthly improvement marked the fastest growth in industrial output since March
2007.
The main drivers behind the August acceleration were a sharp rebound in min-
ing and quarrying output, which increased 4.0% in annual terms, contrasting
10.0 5.0
the 7.3% contraction observed in July. In addition, the manufacturing sector
7.9 8.2
Year-on-year (left scale)

6.4 5.9 accelerated to 12.3%, up from the previous 9.3% increase tallied in July. Fi-
4.4
5.0 Annual average (right scale) nally, water supply grew 11.4% (July: +7.5% yoy).
1.1 0.0
0.0
0.0
A month-on-month analysis confirms the acceleration suggested by annual
%
%
-5.0
-2.7
-3.5 -2.8 figures, as industrial output rose 1.3% in August in seasonally adjusted terms
-6.5
-5.0
(July: +0.3% month-on-month). As a result of the robust August reading, the
-10.0
-9.8 trend continues to show a strong recovery, with annual average growth in in-
-11.6
dustrial production turning from minus 1.3% in July to plus 0.3% in August,
-15.0 -10.0
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug which constituted the first positive reading since January 2009. Consensus
Forecast panellists anticipate industrial production to rise 4.8% this year and
Note: Year-on-year variation and annual average variation of industrial 3.8% in 2011.
production index in %.
Source: Statistics Austria and FocusEconomics calculations.
In its bi-annual economic outlook report, the Central Bank expects economic
activity to rise 1.6% this year. For 2011, monetary authorities see the economy
expanding 1.8%. Consensus Forecast panellists expect GDP to grow 1.7%
this year, which is up 0.2 percentage points from last month’s forecast. For
2011, the panel expects the economy expanding 1.7% as well.

MONETARY SECTOR | Inflation rises in September

In September, consumer prices rose 0.4% over the previous month, which
doubled the 0.2% increase recorded in August. The monthly price rise was
mainly the result of higher prices for clothing and footwear (August: +4.3%
1.5 2.0
Monthly (left scale)
month-on-month; September: +11.3% mom), owing to the seasonal change in
Annual (right scale) 1.1
clothing stocks for autumn and winter.
1.0 1.5
On an annual basis, inflation rose from 1.7% in August to 1.9% in September,

0.5 1.0
0.3
0.4
which reflected increasing prices for mineral oil products (August: +10.0% year-
0.2 0.2 0.2 0.2 %
%
0.1 0.0
0.1
0.0
on-year; September: +12.7% yoy). Furthermore, annual harmonised inflation
0.0 0.5
(HICP) rose from 1.6% in August to 1.8% in September.
-0.3
-0.5 -0.4 0.0
In its biannual economic outlook report, the Central Bank raised its inflation
forecasts and now expects harmonised inflation to average to 1.7% for both
Note: Monthly and annual consumer price index variation in %. this year and next, up from its previous forecast of 1.5% for this year and 1.6%
Source: Statistics Austria and FocusEconomics calculations.
for 2011. Consensus Forecast panellists see harmonised inflation rising from
0.3% in 2009 to 1.5 % in 2010, which is unchanged from the previous month’s
forecast. For 2011, the panel expects inflation to reach 1.6%.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 244 257 272 283 274 283 292 303 314 327
Economic Growth (GDP, real ann. var. in %) 2.5 3.6 3.7 2.2 -3.9 1.7 1.7 2.0 2.0 2.0
Total Consumption (annual variation in %) 2.0 2.0 1.0 1.4 0.6 - - - - -
Private Consumption (ann. var. in %) 5.4 1.8 0.7 0.7 0.4 0.9 1.0 1.5 1.7 1.7
Industrial Production (annual variation in %) 4.4 7.2 5.3 1.3 -9.3 4.8 3.8 3.7 3.4 3.5
Inflation (HICP annual variation in %) 1.6 1.6 3.5 1.5 1.1 - - - - -
Stock Market (variation of ATX in %) 50.8 21.7 1.1 -61.2 42.5 - - - - -
External Sector
Current Account Balance (USD bn) 5.3 7.3 9.6 9.2 6.3 7.7 8.9 7.2 7.6 7.2
Trade Balance (USD bn) -1.0 0.3 1.3 -0.6 -2.1 -1.5 -0.4 1.2 2.4 4.0
Exports (USD bn) 96 107 119 122 97 107 116 128 139 149
Imports (USD bn) 97 106 117 122 99 108 116 126 137 146
Economic Growth (GDP, real ann. var. in %) -3.6 -0.9 0.0 2.4 2.3 2.3 2.6 1.7 1.3 1.3
Inflation (HICP annual average variation in %) -0.1 0.6 1.3 1.8 1.7 1.8 1.8 1.6 1.8 1.7
Industrial Production (annual variation in %) -2.8 1.1 0.0 4.4 7.9 6.4 5.9 8.2 - -
Unemployment (eop, % of active population) 4.6 4.5 4.5 4.6 4.6 4.5 4.3 4.3 4.5 -
Inflation (CPI, mom variation in %) -0.3 0.2 1.1 0.3 0.1 0.0 -0.4 0.2 0.4 -
Inflation (CPI, annual eop variation in %) 1.2 1.0 2.0 2.0 1.9 2.0 1.9 1.7 1.9 -

6 6
Austria
Euro area Credit Suisse 2.0 3.0
World DekaBank 1.7 1.4
3 3
Deutsche Bank 1.6 1.3
DZ Bank 1.5 1.3
0 0
Experian 1.4 1.6
IHS 1.8 2.0
Nomura 1.8 1.7
-3 -3 Raiffeisen Research 1.9 1.5
Austria UBS 0.6 1.1
Euro area Unicredit 1.9 1.7
World
-6 -6 WIFO 2.0 1.9
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Summary
Minimum 0.6 1.1
Maximum 2.0 3.0
Median 1.8 1.6
4 4
Maximum Maximum Consensus 1.7 1.7
Consensus Consensus
History
Minimum Minimum
3 3
30 days ago 1.5 1.7
60 days ago 1.3 1.7
90 days ago 1.3 1.7
2 2 Additional Forecasts
Central Bank (June 2010) 1.6 1.8
IMF (Oct. 2010) 1.6 1.6
1 1 European Commission (May 2010) 1.3 1.6
0 0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

6 10
5
4
0
2
-5
0
-10
Austria Notes and sources
Austria Euro area
Euro area
-2 -15 General:
1995 2000 2005 2010 1995 2000 2005 2010
Long-term chart period from 1995 to 2014 unless otherwise stated. All real
sector data are from Statistics Austria (STAT) and the Austrian National Bank
(OeNB, Oesterreichische Nationalbank). See below for details. Forecasts
based on FocusEconomics Consensus Forecast.
1.5 4 1 GDP, annual variation in %. Source: STAT.
2010 2011 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %.
5 Private consumption, annual variation in %. STAT.
1.0 2
6 Gross fixed capital formation, annual variation in %. STAT.
2010.
8 Gross fixed capital formation, change in 2010 and 2011 forecasts since
0.5 0 January 2010.
9 Public debt, % of GDP. Source: OeNB.
2010 10 Unemployment, % of active population. Source: OeNB.
2011 11 General government balance, % of GDP. Source: STAT.
12 Public debt, evolution of 2010 and 2011 forecasts since January 2010.
0.0 -2 13 Unemployment, evolution of 2010 and 2011 forecasts since January 2010.
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 14 General government balance, evolution of 2010 and 2011 forecasts since
January 2010.

Consumption Investment Unemployment Fiscal Balance Public Debt

% variation % variation % of active pop. % of GDP % of GDP
Individual Forecasts 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011
Credit Suis s e - - - - - - -4.5 -3.5 70.2 72.9
DekaBank - - - - - - -4.7 -3.8 - -
Deuts che Bank - - - - - - -4.4 -3.7 - -
DZ Bank 0.9 0.8 -2.7 1.9 - - -4.4 -4.0 70.0 -
Experian 0.9 1.0 -2.0 2.1 4.5 3.9 -4.7 -4.5 - -
IHS 1.0 1.2 -1.9 1.7 4.4 4.2 -4.3 -3.4 - -
Nom ura 1.0 1.2 -0.5 0.8 4.6 4.5 -4.8 -4.3 70.4 72.7
Raiffeisen Research 0.9 1.0 -2.7 2.0 - - -3.3 -4.0 70.2 72.9
UBS 0.7 1.3 1.0 2.0 - - -5.5 -5.3 73.9 77.0
Unicredit 1.0 0.8 -3.2 2.1 4.5 4.4 -4.3 -3.8 68.6 69.9
WIFO 1.1 0.8 -2.5 2.4 4.4 4.3 -4.1 -3.5 70.2 71.6
Summary
Minim um 0.7 0.8 -3.2 0.8 4.4 3.9 -5.5 -5.3 68.6 69.9
Maxim um 1.1 1.3 1.0 2.4 4.6 4.5 -3.3 -3.4 73.9 77.0
Median 1.0 1.0 -2.3 2.0 4.5 4.3 -4.4 -3.8 70.2 72.8
Consensus 0.9 1.0 -1.8 1.9 4.5 4.3 -4.5 -4.0 70.5 72.8
History
30 days ago 0.9 1.0 -1.8 2.1 4.5 4.3 -4.6 -4.2 70.5 72.9
60 days ago 0.9 0.9 -1.7 2.2 5.4 5.2 -4.9 -4.2 71.0 73.5
90 days ago 0.9 1.0 -1.3 2.1 5.6 5.3 -4.8 -4.2 71.2 73.9
9 | Public Debt | % of GDP 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP
90 12 2
0
80
8
-2
70
-4
4
60
Austria -6
Austria
Austria Euro area Euro area Euro area
World
50 0 -8
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
12 | Public Debt | evolution of fcst 13 | Unemployment | evolution of fcst 14 | Fiscal Balance | evolution of fcst
80 8 -3.5
2010 2011 2010 2011
7 -4.0
75
6 -4.5
70
5 -5.0
2010 2011
65 4 -5.5

Monetary and External Sector | Inflation, Interest Rate and Current Account Balance
15 | Inflation | 1995 - 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Consumer Prices and Current Account Balance
4 6
Austria
Consumer Prices Current Account
Austria var. in % EUR bn
Euro area
Euro area Individual Forecasts 2010 2011 2010 2011
3 4 Credit Suisse 1.4 1.4 8.8 12.1
DekaBank 1.5 1.3 8.8 11.9
Deutsche Bank 1.6 1.7 9.9 8.7
2 2 DZ Bank 1.6 1.4 - -
Experian 1.5 1.7 7.1 7.1
IHS 1.7 1.8 - -
1 0 Nomura 1.6 1.5 - -
UBS 1.0 1.5 3.4 5.6
0 -2 Unicredit 1.8 2.0 7.4 8.6
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 WIFO 1.8 2.1 7.6 9.6
Summary
Minimum 1.0 1.0 3.4 5.6
17 | Inflation 2010 | evolution of fcst 18 | Inflation 2011 | evolution of fcst
Maximum 1.8 2.1 9.9 12.1
2.5 2.5
Maximum Median 1.6 1.5 8.1 8.7
Maximum
Consensus Consensus 1.5 1.6 7.7 8.9
Consensus
Minimum History
Minimum
2.0 2.0
30 days ago 1.5 1.6 7.6 8.8
60 days ago 1.4 1.6 7.7 9.6
90 days ago 1.3 1.5 7.1 9.4
1.5 1.5
Central Bank (June 2010) 1.7 1.7 - -
IMF (Oct. 2010) 1.5 1.7 - -
1.0 1.0
Euro. Comm. (May 2010) 1.3 1.5 - -
0.5 0.5
19 | 10-year Rate | 1995 - 2014 | in % 20 | Current Account | EUR bn

8 5
Austria
Germany
3
6
4
-3
2 -5
1995 2000 2005 2010 1995 2000 2005 2010
Notes and sources
21 | Stock Market | ATX 22 | Current Account | evolution of fcst
General:
5,000 10 Long-term chart period from 1995 to 2014 unless otherwise stated. All
monetary sector data are from Statistics Austria (STAT) and the Austrian
National Bank (OeNB, Oesterreichische Nationalbank). See below for
details. Forecasts based on FocusEconomics Consensus Forecast.
4,000 8
15 Inflation, annual average variation in the harmonised index of
consumer prices (HICP) in %. Source: OeNB.
3,000 6 16 Quarterly inflation, year-on-year variation in the harmonised index
of consumer prices (HICP) in %. Source: OeNB.
2,000 4 19 10-year benchmark bond yield (eop). Source: OeNB.
20 Current account balance in EUR bn. Source: OeNB.
2010 2011 21 Daily index levels, ATX Index. January 2008 until the end of
2 previous month. Source: Vienna Stock Exchange.
1,000
Jan Mar May Jul Sep Nov 22 Current account balance in EUR bn, evolution of 2010 and 2011
Jan Jul Jan Jul Jan Jul

FOCUSECONOMICS Belgium November 2010
Belgium
Belgium
Outlook improves
• Preliminary estimates confirm that the recovery is gaining steam, as
gross domestic product rose 0.5% in the third quarter. In particular,
the industrial sector is picking up, with output rising 7.1% annually in
August, which marked the sixth consecutive month of growth.

• Consensus Forecast participants expect the economy to expand 1.8%
2000-04 2005-09 2010-14
this year, which is up 0.1 percentage points from last month’s esti-
GDP (EUR bn): 269 328 378 mate. In 2011, economic growth is expected to slow to 1.6%.
GDP growth (%): 2.0 1.1 1.9
• Inflation rose from 2.9% in September to 3.0% in October, which
Fiscal Balance (% of GDP): 0.0 -2.0 -3.9
Public Debt (% of GDP): 102 90 102 marked the highest level since November 2008. Consensus Fore-
Inflation (%): 2.0 2.2 1.9 cast panellists expect inflation to average 1.9% this year, which is up
0.1 percentage points from last month’s projection. Next year, infla-
tion should average 1.8 %.
Ricardo Aceves REAL SECTOR | Economy grows faster than estimated in the third quarter
Economist In the third quarter, gross domestic product (GDP) increased 0.5% over the
previous quarter in seasonally adjusted terms, according to preliminary data
released by the National Bank of Belgium on 28 October. The quarterly ex-
pansion halved the 1.0% increase tallied in the second quarter (previously
reported: +0.9% quarter-on-quarter) and overshot last month’s Consensus
Forecast, which had the economy rising 0.2%. Final results will be published
on 8 December.
Gross Domestic Product | variation in %
On an annual basis, the economy grew 2.1% in the third quarter, slower than
1.5
the 2.6% expansion observed in the second quarter. The economy marked
the third consecutive annual expansion after having contracted for five con-
1.0 1.0
1.0 secutive quarters since the fourth quarter of 2008.
%
The Central Bank expects economic activity to grow 1.3% this year. For 2011,
0.5
0.5 0.4
monetary authorities see the economy expanding 1.7%. Consensus Fore-
cast panellists are more optimistic than the Central Bank and anticipate GDP
0.1
expanding 1.8% this year, which is up 0.1 percentage points from last month’s
0.0
3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 projection. For 2011, the panel expects the economy to expand 1.6%.
Note: Quarter-on-quarter changes of seasonally adjusted GDP in %. REAL SECTOR | Industrial output accelerates in August
Source: National Bank of Belgium and FocusEconomics Consensus Forecast.
In August, industrial production expanded 7.1% over the same month last
year, which came in above the 4.4% annual increase registered in July. The
reading marked the sixth consecutive month of positive growth in the indus-
trial sector.
The acceleration observed in August was mainly the result of faster growth in
the manufacturing sector (July: +6.2% year-on-year; August: +10.3% yoy), as
well as in electricity, gas and water supply (July: +1.9% yoy; August: +3.8%

Industrial Production | variation in % yoy). A month-on-month analysis confirms the strong expansion suggested
by the annual figures, as industrial output rose a seasonally adjusted 0.1%
6.0 0.0
5.0 in August (July: -0.8% mom).
4.0 3.5
The trend continues to improve, with annual average variation in industrial
-5.0
1.9
2.0 production rising from minus 1.5% in July to a flat reading in August, which is
0.6 0.8
% 0.4
0.1
% finally scratching positive territory after 21 consecutive months mired in re-
0.0
-0.2 -10.0 cession.
-0.8
-1.1
-2.0 -1.4
-2.2
-2.8
Month-on-month (right scale) Consensus Forecast panellists expect industrial production to expand 3.0%
Annual average (left scale)
-4.0 -15.0 this year. For next year, the panel anticipates industrial output to grow a more
moderate 2.0%.
Note: Month-on-month changes of seasonally adjusted industrial production and
annual average growth rate in %. MONETARY SECTOR | Inflation rises to the highest level in over two years
Source: National Bank of Belgium and FocusEconomics calculations.
In October, consumer prices added 0.1% over the previous month, which
came in below the 0.3% increase observed in September. The main drivers
behind the October reading were higher prices for meat, as well as for elec-
0.6 4.0 tricity, which were only partially offset by lower prices for vegetables.
0.5
0.4
0.4 0.4 0.4 In spite of the small price increase, annual inflation rose from 2.9% in Sep-
0.3
0.3
0.3
2.0 tember to 3.0%, which marked the highest level since November 2008. In
0.2 0.2 %
addition, annual average harmonised inflation (HICP) jumped from 1.2% in
0.1
% 0.1
August to 1.5% in September (the last month for which data are available).
0.0 0.0 0.0
0.0
September’s figure marked the highest level since August 2009.
0.0
-0.2
monthly (left scale) annual (right scale)
-2.0
The Central Bank expects harmonised inflation to average to 2.0% this year
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct and 1.9% in 2011. Consensus Forecast panellists broadly share monetary
authorities’ view and see inflation averaging 1.9% in 2010, which is up 0.1%
Note: Monthly and annual consumer price index variation in %. from previous month’s forecast. For 2011, the panel expects inflation to reach
Source: Statistics Belgium and FocusEconomics calculations.
1.8%.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 303 318 335 345 339 352 364 377 392 407
Fiscal Balance (% of GDP) -2.7 0.3 -0.2 -1.2 -6.0 -5.0 -4.5 -3.8 -3.3 -3.1
Stock Market (BEL20, annual var. in %) 21.3 23.3 -5.8 -53.8 32.3 - - - - -
External Sector
Current Account Balance (% of GDP) 2.0 1.9 1.6 -2.9 0.3 1.3 1.3 0.8 1.9 2.3
Current Account Balance (EUR bn) 6.0 5.9 5.3 -10.1 1.0 4.7 4.8 2.9 7.6 9.2
Trade Balance (EUR bn) 12.7 12.0 14.2 3.8 12.6 14.5 16.6 20.5 25.2 30.6
Exports (EUR bn) 270 292 314 321 265 289 306 320 330 340
Imports (EUR bn) 257 280 300 317 253 274 289 303 316 330
Economic Growth (GDP, s.a. qoq var. in %) 1.0 0.4 0.1 1.0 0.5 0.4 0.3 0.2 0.4 0.4
Inflation (HICP annual average variation in %) -1.2 -0.2 1.2 2.4 2.6 2.4 2.1 1.8 2.0 2.1
Industrial Production (annual variation in %) -5.2 -1.5 8.1 6.0 6.2 8.8 4.4 7.1 - -
Inflation (CPI, mom variation in %) 0.5 0.4 0.4 0.3 0.4 0.0 0.0 0.1 0.3 0.1

1 | Real GDP |1995 - 2014 | % variation 2 | Real GDP | Q1 07-Q4 11 | % variation Real GDP growth in %
BNP Paribas Fortis 1.8 1.3
Commerzbank 1.6 1.6
3 3 Credit Agricole 1.0 1.8
DekaBank 1.8 1.2
0 0
Dexia 2.0 1.8
DZ Bank 2.1 1.3
-3 -3
Experian 1.7 1.9
Belgium Belgium
Euro area Euro area ING 1.7 1.6
World World KBC 1.8 1.5
-6 -6
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Raiffesien Research 1.8 1.5
UBS 2.1 2.0
Summary
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts Minimum 1.0 1.2
4 3 Maximum 2.1 2.3
Maximum
Consensus Median 1.8 1.6
Minimum Consensus 1.8 1.6
3
History
2
30 days ago 1.7 1.7
60 days ago 1.5 1.7
2
90 days ago 1.4 1.8
1
1
Central Bank (Oct. 2010) 1.3 1.7
Maximum IMF (Oct. 2010) 1.6 1.7
Consensus European Commission (May 2010) 1.3 1.6
Minimum
0 0

4 10
2
0
-5
0
Notes and sources
-10
Belgium
Euro area Belgium Euro area General:
-2 -15 Long-term chart period from 1995 to 2014 unless otherwise stated. All real
1995 2000 2005 2010 1995 2000 2005 2010 sector data are from the National Bank of Belgium (NBB, Nationale Bank
van België). See below for details. Forecasts based on FocusEconomics
Consensus Forecast.
2.0 6 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %.
2010 3 GDP, evolution of 2010 forecasts since January 2010.
2011 2010 2011 4 GDP, evolution of 2011 forecasts since January 2010.
1.5 5 Private consumption, annual variation in %.
3 6 Gross fixed capital formation, annual variation in %.
2010.
1.0 8 Gross fixed capital formation, change in 2010 and 2011 forecasts since
January 2010.
0 9 Public debt, % of GDP.
0.5 10 Unemployment, % of active population.
11 General government balance, % of GDP.
13 Unemployment, evolution of 2010 and 2011 forecasts since January
0.0 -3 2010.
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 14 General government balance, evolution of 2010 and 2011 forecasts since
January 2010.


BNP Paribas Fortis 1.4 0.7 -1.1 1.7 8.8 9.1 -4.9 -4.4 98 100
Commerzbank - - - - - - - - - -
Credit Agricole - - - - - - -5.0 -4.2 99 100
Credit Suisse - - - - - - -4.8 -4.4 99 101
DekaBank - - - - - - -4.4 -3.7 - -
Deutsche Bank - - - - - - -4.7 -3.9 - -
Dexia 1.2 1.2 - - 8.6 9.0 -4.7 -4.3 98 100
DZ Bank - - - - - - -5.6 -5.6 101 -
Experian 1.3 1.3 -0.9 3.4 8.6 8.7 -5.1 -4.6 - -
ING 1.4 1.4 -1.6 2.3 8.5 8.3 -4.8 -4.1 100 101
KBC 1.3 1.1 -1.1 2.0 - - -4.6 -4.4 100 101
Raiffesien Research - - - - 8.7 8.5 -5.0 -5.0 99 101
UBS 1.3 1.2 - - 8.7 8.7 -5.8 -5.8 101 104
Summary
Minimum 1.2 1.1 -1.6 2.0 8.5 8.3 -5.8 -5.8 98 100
Maximum 1.4 1.4 -0.9 3.4 8.7 9.0 -4.4 -3.7 101 104
Median 1.3 1.2 -1.1 2.3 8.6 8.7 -4.8 -4.4 100 101
Consensus 1.3 1.1 -1.2 2.4 8.7 8.7 -5.0 -4.5 100 101
History
30 days ago 1.3 1.1 -1.2 2.4 8.7 8.7 -5.1 -4.7 100 101
60 days ago 0.8 1.3 -1.0 2.8 8.6 8.7 -5.2 -4.7 100 101
90 days ago 0.9 1.4 -1.0 2.8 8.6 8.6 -5.3 -4.6 100 102

120 11 3
Belgium Belgium
Euro area Euro area
10
0
100
9
-3
8
80
-6
7 Belgium
Euro area
World
60 6 -9
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
105 9.5 -4.0
2010 2011 2010 2011 2010 2011
103 -4.5
9.0
101 -5.0
8.5
99 -5.5
97 8.0 -6.0

6 6
var. in % EUR bn
4 4 BNP Paribas Fortis 2.2 2.1 - -
Commerzbank 1.7 1.8 - -
Credit Agricole 1.3 1.7 - -
2 2 Credit Suisse 1.7 1.5 10.2 11.3
DekaBank 2.2 1.7 10.6 12.0
Deutsche Bank 2.1 1.7 8.8 7.3
0 0 Dexia 1.8 1.8 - -
Belgium Belgium
DZ Bank 2.2 1.8 - -
Euro area Euro area Experian 1.8 1.7 -0.7 0.7
-2 -2 ING 1.9 1.9 - -
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 KBC 1.9 1.8 - -
Raiffesien Research 2.0 1.7 -5.3 -7.3
UBS 2.1 1.9 - -
Summary
3 2.0
Maximum Minimum 1.3 1.5 -5.3 -7.3
Consensus Maximum 2.2 1.9 10.6 12.0
Minimum Median 1.9 1.7 8.8 7.3
Consensus 1.9 1.8 4.7 4.8
2 1.5
History
30 days ago 1.8 1.7 4.8 4.8
60 days ago 1.6 1.5 7.8 8.9
90 days ago 1.6 1.5 6.1 6.8
1 1.0
Maximum Central Bank (Oct. 2010) 2.0 1.9 - -
Consensus IMF (Oct. 2010) 2.0 1.9 - -
Minimum
Euro. Comm. (May 2010) 1.6 1.6 - -
0 0.5

8 20
Belgium
Germany
10
6
4
-10
2 -20
1995 2000 2005 2010 2000 2005 2010 Notes and sources
General:
21 | Stock Market | BEL 20 22 | Current Account | evolution of fcst Long-term chart period from 1995 to 2014 unless otherwise stated. All
5,000 monetary sector data are from the National Bank of Belgium (NBB,
12
Nationale Bank van België), Statistics Belgium (SB) and the European
2010 2011 Central Bank (ECB). See below for details. Forecasts based on
9 FocusEconomics Consensus Forecast.
4,000
6 consumer prices (HICP) in %. 2000-2014. Source: SB.
16 Quarterly inflation, year-on-year variation in harmonised index of
3,000
consumer price (HICP) in %. Source: SB.
3 17 Inflation, evolution of 2010 forecasts since January 2010.
2,000 19 10-year benchmark bond yield (eop). Source: Belgostat, ECB.
0
20 Current account balance in EUR bn. 2000-2014. Source: NBB.
21 Daily index levels, BEL 20 Index. January 2008 until the end of
-3 previous month. Source: Brussels Stock Exchange.
1,000
Jan Jul Jan Jul Jan Jul
forecasts since January 2010

FOCUSECONOMICS Finland November 2010
Finland
Finland
Outlook improves
• Indicators across the board point towards sustained growth in the
coming quarters, as the recovery in the external sector is filtering to
the domestic economy. That said, growth is expected to decelerate
compared to the strong 1.9% quarter-on-quarter expansion tallied in
the second quarter.
2000-04 2005-09 2010-14 • Considering the better-than-expected performance of the Finish
economy, Consensus Forecast panellists revised their growth
GDP (EUR bn): 142 172 194
GDP per capita (EUR): 27,391 32,452 35,719 forecasts up by 0.3 percentage points over last month to 2.4%. Next
GDP growth (%): 3.1 1.1 2.5 year, the panel sees the economy growing 2.5%.
Fiscal Balance (% of GDP): 4.1 2.8 -2.0
Inflation (%): 1.8 1.8 1.7 • In September, harmonised consumer price inflation increased a notch
Current Account (% of GDP): 7.1 3.5 1.8 to 1.4%. The panel anticipates inflation will remain broadly stable
throughout the rest of the year and average 1.3%, which is unchanged
over the previous month’s forecast. In 2011, the panel anticipates
inflation will accelerate to 2.0%.
Gerardo Morán REAL SECTOR | Growth moderates in July

Senior Economist In July, the economy grew 4.6% over the same month last year in working-day
adjusted terms. The reading represented a moderation compared to the strong
5.5% expansion recorded in June (previously reported: +5.1% year-on-year).
A month-on-month comparison corroborates the deterioration suggested by
the annual figures, as the economy contracted 0.2% over June in seasonally
adjusted terms.
Monthly GDP | variation in % The monthly slowdown was the result of a deceleration in manufacturing and
2.0 10.0
construction, which grew 7.3% (June: +11.3% yoy). In contrast, agriculture,
1.4 1.5 hunting, forestry and fishery accelerated to a 10.1% expansion (June: +2.3%
1.1 1.2
5.0 yoy). Finally, growth in the services sector remained unchanged at June’s 3.2%.
1.0
0.5 0.5
% 0.3
0.1 0.0
In its latest Economic Outlook Bulletin, the Central Bank raised its growth
0.0 %
-0.2
forecast for this year from 1.6% to 2.6%. Consensus Forecast panellists broadly
-0.2 -0.3 -0.2 -5.0
share the Bank’s assessment and see the economy growing 2.4% this year,
-1.0
-1.0 -10.0 which is up 0.3 percentage points over the previous month’s projection. Next
MoM s.a. (left scale) YoY (right scale)
year, the panel expects the economy to grow 2.5%.
-2.0 -15.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
MONETARY SECTOR | Inflation continues to climb

Note: Month-on-month seasonally adjusted and annual variation of the trend In September, consumer prices rose 0.4% over the previous month, which
indicator of output.
Source: Statistics Finland and FocusEconomics calculations. mirrored the reading recorded in August. The monthly price increase was mostly
driven by higher food prices (+1.3% month-on-month), in particular for
vegetables. Moreover, a rise in prices for clothing and footwear (+5.1% mom)
owing to the end of the summer sales, also contributed to the monthly price
increase.
As a result of the relatively high monthly figure, annual inflation continued to

trend upwards, rising from 1.2% in August to 1.4% in September. In the same

Inflation | Consumer Price Index vein, annual inflation as measured by the harmonised index of consumer prices
(HICP), stepped up from 1.3% in August to 1.4% in September, which drove up
0.8 2.0
Monthly (left scale) Annual (right scale) the annual average harmonised inflation rate a notch to 1.4%.
0.5
0.4 0.4 0.4
0.4 1.0
0.3
0.2 In its most recent Economic Outlook Bulletin published in September, the Central
0.2 0.1
% 0.1 0.1 % Bank projects inflation to average 1.6% this year and to accelerate further to
0.0 0.0
an average of 1.9% next year. Consensus Forecast panellists anticipate inflation
-0.1
to average 1.3% this year, which is unchanged over last month’s forecast. For
-0.4 -1.0
2011, the panel expects inflation to reach 2.0%.
-0.5 -0.5
-0.8 -2.0
Note: Monthly and annual consumer price index variations in %.

Source: Statistics Finland and FocusEconomics calculations.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 157 166 180 185 171 178 186 194 202 211
Fixed Investment (annual var. in %) 3.6 1.9 10.7 -0.4 -14.7 0.6 4.6 4.8 4.3 4.2
Fiscal Balance (% of GDP) 2.7 4.0 5.2 4.2 -2.2 -3.4 -2.4 -1.4 -1.4 -1.6
Inflation (CPI, annual average in %) 0.9 1.6 2.5 4.1 0.0 - - - - -
HICP (annual average variation in %) 0.8 1.3 1.6 3.9 1.6 1.3 2.0 2.0 1.7 1.7
Producer prices (PPI, annual variation in %) 3.8 3.0 2.9 -0.8 -2.6 - - - - -
Stock Market (OMXH25, annual var. in %) 25.7 26.5 3.4 -49.6 34.1 - - - - -
External Sector
Exports (EUR bn) 52.6 61.4 65.7 65.6 45.1 49.5 53.6 58.6 64.2 69.4
Imports (EUR bn) 45.2 52.8 56.6 58.8 41.7 45.3 48.9 53.6 59.7 64.7
Exports (annual variation in %) 7.2 16.8 7.0 -0.2 -31.3 9.8 8.2 9.3 9.6 8.1
Trend Indicator of Output (annual var. in %) -0.3 -1.0 -0.3 1.5 4.4 5.5 4.6 - - -
Trend Indicator of Output (s.a. mom var. in %) -0.3 -0.2 1.4 0.1 1.2 1.5 -0.2 - - -
Cons. Confidence Index (long-term avg. 13.2) 14.5 15.9 15.4 17.9 15.8 18.7 19.1 21.9 22.9 20.5
Inflation (CPI, mom variation in %) 0.1 0.4 0.5 0.3 -0.1 0.2 -0.5 0.4 0.4 -
Inflation (CPI, annual variation in %) -0.2 0.1 0.6 0.9 1.0 0.9 1.1 1.2 1.4 -
HICP (annual variation in %) 1.6 1.3 1.5 1.6 1.4 1.3 1.3 1.3 1.4 -

10 12
Finland Individual Forecasts 2010 2011
Euro area Aktia Bank 3.0 3.0
World
5 6
DekaBank 0.6 2.2
0 0
DZ Bank 0.9 1.4
ETLA Research Institute 3.5 4.0
Experian 1.9 2.0
-5 -6 Handelsbanken 3.4 2.7
Finland Nordea 3.5 3.0
Euro area Raiffeisen Research 2.4 1.8
World
-10 -12 Sampo Bank 3.1 2.5
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Swedbank 2.2 2.4
UBS 1.6 2.1
Summary
Minimum 0.6 1.4
4 5
Maximum Maximum Maximum 3.5 4.0
Consensus Consensus Median 2.4 2.4
Minimum Minimum Consensus 2.4 2.5
3 4
History
30 days ago 2.1 2.5
2 3 60 days ago 1.5 2.4
90 days ago 1.3 2.3
1 2 Central Bank (Sep. 2010) 2.6 3.0
IMF (Oct. 2010) 2.4 2.0
European Commission (May 2010) 1.4 2.1
0 1
5 | Consumption | variation in % 6 | Investment | variation in %

6 20
Finland Euro area
4 10
2 0
0 -10
Notes and sources
Finland General:
Euro area Long-term chart period from 1995 to 2014 unless otherwise stated. All
-2 -20 real sector data are from Statistics Finland (SF) and Eurostat. See below
1995 2000 2005 2010 1995 2000 2005 2010 for details. Forecasts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: SF.

7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %.
3 6 Source: SF.
5 Private consumption, annual variation in %. Source: SF.
3 6 Gross fixed capital formation, annual variation in %. Source: SF.
2 7 Private consumption, change in 2010 and 2011 forecasts since January
2010.
8 Gross fixed capital formation, change in 2010 and 2011 forecasts
0
since January 2010.
9 Industrial production, annual variation in %. Source: SF.
1 10 Unemployment, % of active population. Source: SF.
-3 11 General government balance, % of GDP. Source: Eurostat.
12 Industrial production, evolution of 2010 and 2011 forecasts since
2010 2011 January 2010.
2010 2011
13 Unemployment, evolution of 2010 and 2011 forecasts since January
0 -6 2010.
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 14 General government balance, evolution of 2010 and 2011 forecasts
since January 2010.


Aktia Bank 2.5 2.0 1.0 6.0 - - 8.5 7.9 -3.0 -2.0 49.0 50.0
Credit Suisse - - - - - - - - -3.6 -3.0 50.5 54.9
DekaBank - - - - - - - - -3.4 -3.1 - -
Deutsche Bank - - - - - - - - -3.2 -2.5 - -
DZ Bank - - - - - - - - -4.0 -3.0 51.0 -
ETLA Research Institute 2.5 2.0 2.5 8.0 6.8 8.2 8.4 7.7 -2.7 -1.8 - -
Experian 1.6 1.6 -1.2 3.1 - - 8.3 8.0 -3.5 -2.8 - -
Handelsbanken 2.6 2.4 0.9 5.3 11.0 5.0 8.2 8.0 -2.4 -0.5 48.4 49.6
Nordea 2.4 2.6 0.7 4.1 10.0 5.0 8.5 8.1 -2.5 -0.5 47.5 48.3
Sampo Bank 2.3 1.5 -1.0 5.0 - - 8.5 7.8 -3.1 -1.5 49.0 51.0
Swedbank 2.3 2.5 1.2 3.0 5.0 6.0 8.5 8.2 -4.2 -2.8 50.5 53.0
UBS 0.5 1.0 1.0 2.0 1.3 3.0 8.8 8.2 -4.5 -4.3 47.4 52.7
Summary
Minimum 0.5 1.0 -1.2 2.0 1.3 3.0 8.2 7.7 -4.5 -4.3 47.4 48.3
Maximum 2.6 2.6 2.5 8.0 11.0 8.2 8.8 8.2 -2.4 -0.5 51.0 54.9
Median 2.4 2.0 1.0 4.6 6.8 5.0 8.5 8.0 -3.4 -2.8 49.0 51.9
Consensus 2.1 1.9 0.6 4.6 6.8 5.4 8.5 8.0 -3.4 -2.4 49.3 51.8
History
30 days ago 2.1 1.9 0.6 4.6 6.8 5.4 8.5 8.1 -3.4 -2.4 49.3 51.8
60 days ago 1.6 1.9 -0.8 4.2 6.1 5.1 9.0 8.6 -3.7 -2.9 49.2 52.5
90 days ago 1.4 1.7 -0.6 3.4 2.7 4.0 9.1 8.7 -3.7 -3.2 48.5 52.5
9 | Industry | variation in % 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP

16 18 8
Finland
Euro area
8
15 4
0
12 0
-8
9 -4
-16
Finland
Finland Euro area
Euro area World
-24 6 -8
1995 2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
8 10.0 -2
9.5
6 -3
9.0
8.5
4 -4
8.0
2010 2011 2010 2011

2010 2011
2 7.5 -5

5 6
Finland
var. in % EUR bn
Euro area
4 Aktia Bank 1.1 2.1 - -
Credit Suisse 1.8 1.8 2.0 2.4
3 DekaBank 1.5 1.9 1.9 2.4
2 Deutsche Bank 1.6 1.9 4.5 3.7
2 DZ Bank 1.5 1.9 - -
ETLA Research Institute 1.2 2.4 2.0 3.0
0 Experian 1.4 1.7 2.8 2.6
1 Handelsbanken 1.0 2.2 3.0 2.8
Finland
Nordea 0.8 2.0 2.8 3.8
Euro area
0 -2 Raiffeisen Research 1.5 1.8 3.7 2.8
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Sampo Bank 1.3 2.3 2.5 3.5
Swedbank 1.5 2.5 3.0 3.4
UBS 1.0 1.4 3.5 5.5
Summary
3 3 Minimum 0.8 1.4 1.9 2.4
Maximum
Consensus
Maximum 1.8 2.5 4.5 5.5
Minimum Median 1.4 1.9 2.8 3.0
Consensus 1.3 2.0 2.9 3.3
2 2 History
30 days ago 1.3 2.0 2.9 3.4
60 days ago 1.3 1.8 3.1 3.8
90 days ago 1.4 1.6 3.1 3.6
Maximum Central Bank (Sep. 2010) 1.6 1.9 - -
Consensus IMF (Oct. 2010) 1.4 1.8 - -
Minimum
Euro. Comm. (May 2010) 1.7 1.9 - -
0 0

8 15
12
6
9
6
4
3
Finland
Germany
2 0
1995 2000 2005 2010 1995 2000 2005 2010
Notes and sources

21 | Stock Market | OMXH25 22 | Current Account | evolution of fcst
3,500 General:
4.0 Long-term chart period from 1995 to 2014 unless otherwise stated. All
2010 2011 real sector data are from Statistics Finland (SF), the European Central
3,000 Bank (ECB), and the Bank of Finland (BoF). See below for details.
3.5
2,500 15 Inflation, annual average variation in harmonised index of consumer
prices (HICP) in % (aop). 2000-2014. Source: SF.
2,000 consumer prices (HICP) in % (aop). Source: SF.
3.0 17 Inflation, evolution of 2010 forecasts since January 2010.
1,500 19 10-year benchmark bond yield (eop). Source: BoF, ECB.
20 Current account balance in EUR bn. Source: BoF.
21 Daily index levels. OMXH25 (Helsinki Stock Exchange). Jan. 2008
1,000 2.5 until end of previous month. Source: NASDAQ OMX Group.
Jan Jul Jan Jul Jan Jul Jan Mar May Jul Sep Nov 22 Current account balance in EUR bn, evolution of 2010 and 2011

FOCUSECONOMICS Greece November 2010
Greece
Greece
Outlook stable
• On 4 October, the government presented the budget draft for 2011,
which aims at reducing the fiscal deficit to 7.0% of GDP next year,
following on an estimated 7.8% of GDP deficit this year. Final numbers
for the 2009 deficit will be published by 15 November. The final deficit
number is expected to be corrected from the current 13.6% of GDP to
15.5% of GDP.
2000-04 2005-09 2010-14
• Consensus Forecast panellists expect the economy to contract 3.8%
GDP (EUR bn): 160 222 245
GDP per capita (EUR): 14,510 19,817 21,499 this year, which is unchanged over last month’s estimate. In 2011, the
GDP growth (%): 4.5 2.3 -0.2 economy is unlikely to escape recession, with the panel seeing GDP
to contract 2.2%.
Public Debt (% of GDP): 101 102 144
Inflation (%): 3.4 3.1 1.9
Current Account (% of GDP): -6.8 -11.8 -6.0 • Inflation rose from 5.5% in August to 5.6% in September. Consensus
Forecast panellists expect consumer prices to increase an average
of 4.3% in 2010. In 2011, inflation is expected to moderate to an average
1.8%, amid weak economic activity.
Joan Enric Domene FISCAL SECTOR | Government presents 2011 budget draft
Economist On 4 October, the government presented the draft 2011 budget, which projects
a fiscal deficit of 7.0% of GDP for next year. The projection is well below the
7.6% target set in the Economic Policy Programme, which aims at bringing the
Fiscal Balance | % of GDP budget deficit to under 3.0% of GDP by 2014. In 2010, the deficit is estimated to
reach 7.8% of GDP, lower than the 8.1% of GDP projected in the programme.
0
The budget reflects a 5.9% decline in overall expenditure and a 6.9% increase
-3
in revenues. The fiscal adjustments include reductions in public investment,
-6 as well as savings from wage cuts in the public sector. That said, additional
% revenues are expected to come from the VAT increase, which was implemented
-9
in July this year, as well as from taxes on property and a special levy on profitable
-12 enterprises.
-15
1990 1995 2000 2005 2010
Meanwhile, Eurostat, in cooperation with the Greek Statistical Office and the
Greek Court of Auditors, is assessing the quality of public accounts data, thus
delaying the revision of Greek budget deficit figures for 2006-2009 until 15
Note: Annual fiscal balance as % of GDP; red line represents the 3.0% of GDP
threshold stipulated by the Maastricht Treaty. November. According to market analysts, the budget deficit figure could be
revised to 15.5% of GDP, up from the 13.6% initially reported.
Consensus Forecast panellists are more pessimistic than the government

and see the fiscal deficit narrowing to 7.6% of GDP in 2011.
REAL SECTOR | Industrial production moderates rate of contraction in August

In August, industrial production fell 2.1% over the same month last year, which
represented an improvement compared to the 9.1% drop registered in July.
However, the industrial sector remains mired in recession despite the favorable
base effect.

Industrial Production | variation in % The improvement in August was driven by a rebound in mining and quarrying,
which expanded 3.1% year-on-year contrasting the 15.8% contraction in July,
0.0 -6.0
as well as a better performance of water supply (July: -5.9% yoy; August: +2.3%
-2.1
yoy) and electricity supply (July: -6.0% yoy; August: +0.2% yoy). Nonetheless,
-5.0 -4.3 -4.2
-4.7
-4.3 -8.0 the all-important manufacturing sector remains in negative territory, decreasing
-5.2
% -6.7 -6.7 3.9% yoy, which represents a slower rate of contraction compared to the 9.7%
%
-9.1 -9.1
drop in the previous month.
-10.0 -9.5 -10.0
-9.7 -10.0
YoY (left scale)

Despite the monthly reading, the trend continues to improve, as the annual
Annual Average (right scale)
-15.0 -12.0 average variation in industrial production stepped up from minus 7.0% in July
to minus 6.4% in August. Consensus Forecast panellists see industrial
production contracting 4.1% this year, which is unchanged from last month’s
Note: Month-on-month changes of seasonally adjusted industrial production and forecast.
moving annual average growth rate in %.
Source: National Statistical Service of Greece (EL.STAT) and FocusEconomics
calculations.
Meanwhile, Consensus Forecast panellists see the overall economy
contracting 3.8% this year, which is unchanged from last month’s forecast. For
2011, the panel anticipates GDP to contract 2.2%.
MONETARY SECTOR | Inflation inches up in September

In September, consumer prices rose 1.9% over the previous month, which
contrasted the 0.7% drop recorded in August. The monthly price increase mainly
reflected higher prices for clothing and footwear (+17.6% month-on-month),
Inflation | Consumer Price Index owing to the end of seasonal sales. The increase was also fanned by higher
prices for food and non-alcoholic beverages (+0.7% mom) and household
4.0 6.0 equipment (+5.4% mom), which helped offsetting lower prices for alcoholic
3.1 beverages and tobacco (-1.4% mom).
Annual (right scale)
3.0
2.0
1.9 1.9
4.0
Due to the monthly reading, annual inflation inched up from 5.5% in August to
1.2 5.6% in September, which represents the highest level since 1997. Meanwhile,
1.0
0.5 0.5
0.8
the harmonised index of consumer prices (HICP) also inched up in September,
2.0
% 0.2
%
thus driving annual average harmonised inflation up to 3.9% (August: +3.5%).
0.0
-0.3
-0.5 -0.5
-1.0 -0.7 -0.7 0.0 The European Commission, the European Central Bank (ECB) and the
International Monetary Fund (IMF) expect 2010 inflation to end the year at 4.8%.
In 2011, inflation is likely to moderate sharply to 1.5% - 2.0% amid subdued
Source: National Statistical Service of Greece (EL.STAT) and FocusEconomics economic activity and high unemployment.
calculations.

2011, panellists expect inflation to average 1.8%.


Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 195 210 226 239 237 239 238 243 249 257
Economic Growth (GDP, annual var. in %) 2.2 4.5 4.5 2.0 -2.0 -3.8 -2.2 1.0 1.8 2.0
Total Consumption (annual variation in %) 3.9 4.3 4.2 2.0 0.4 - - - - -
Private Consumption (annual var. in %) 4.7 5.2 3.3 2.3 -1.8 -3.5 -3.6 0.0 0.6 1.6
Government Consumption (ann. var. in %) 1.1 -0.1 8.4 0.6 9.6 - - - - -
Fixed Investment (annual variation in %) -4.5 9.8 4.6 -7.4 -13.9 -10.8 -5.5 1.9 3.5 3.8
Industrial Production (annual variation in %) -1.6 0.8 2.3 -4.0 -9.2 -4.1 -0.1 2.6 3.6 3.0
External Sector
Exports (EUR bn) 14.2 16.2 17.4 19.8 15.3 15.9 16.9 18.1 19.0 20.2
Imports (EUR bn) 41.7 51.4 58.9 63.9 46.1 44.8 42.3 43.4 45.0 47.0
Imports (annual variation in %) 9.6 23.2 14.6 8.3 -27.8 -2.8 -5.5 2.6 3.6 4.4
Economic Growth (GDP, annual var. in %) -2.5 -2.5 -2.3 -3.7 -4.5 -4.5 -4.1 -2.6 -1.5 -0.4
Economic Growth (GDP, qoq variation in %) -0.5 -0.8 -0.8 -1.8 -1.6 -0.6 -0.2 -0.1 0.0 0.3
Unemployment (eop, % of active population) 9.7 10.2 11.1 12.2 12.2 12.4 12.7 13.2 13.7 14.1
Industrial Production (annual variation in %) -4.3 -10.0 -4.2 -6.7 -4.7 -4.3 -9.1 -2.1 - -
Inflation (CPI, mom variation in %) -0.7 -0.5 3.1 1.2 0.8 -0.3 -0.5 -0.7 1.9 -

1 | Real GDP | 1995-2014 | % variation 2 | Real GDP | Q1 07-Q4 11 | % variation Real GDP growth in %
10 10
Alpha Bank -3.5 -1.5
5
Citi Group -3.5 -2.3
5
Credit Agricole -4.0 -2.2
0
DekaBank -3.9 -2.5
0 Deutsche Bank -4.3 -2.7
-5 DZ Bank -4.2 -2.9
Greece
Euro area
Greece
Experian -3.4 -1.7
World
Euro area ING -4.0 -2.0
World
-5 -10 National Bank of Greece -3.8 -2.2
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Nomura -4.0 -2.9
Piraeus Bank -3.3 -1.5
Summary
3 2
Minimum -4.3 -3.2
Maximum -3.3 -0.8
Median -4.0 -2.3
0 0 Consensus -3.8 -2.2
History
30 days ago -3.8 -2.1
60 days ago -3.7 -2.0
-3 -2 90 days ago -3.4 -1.7
Maximum Maximum IMF (Oct. 2010) -4.0 -2.6
Consensus Consensus
European Commission (May 2010) -3.0 -0.5
Minimum Minimum
-6 -4 OECD (May 2010) -3.7 -2.5

6 20
3 10
0 0
-3 -10
Notes and sources
Greece General:
Greece
Euro area Long-term chart period from 1995 to 2014 unless otherwise stated. All real
Euro area sector data are from the National Statistical Service of Greece (EL.STAT.),
-6 -20
the Eurostat and the Bank of Greece (BoG). See below for details. Fore-
1995 2000 2005 2010 1995 2000 2005 2010 casts based on FocusEconomics Consensus Forecast.
1 GDP, annual variation in %. Source: Eurostat.

7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %. Source:
2 6 Eurostat.
2010 2011 3 GDP, evolution of 2010 forecasts since January 2010.
5 Private consumption, annual variation in %. Source: Eurostat.
0
6 Gross fixed capital formation, annual variation in %. Source: Eurostat.
0
2010.
-6 8 Gross fixed capital formation, change in 2010 and 2011 forecasts since
January 2010.
-2
9 Public debt,% of GDP. Source: EL.STAT.
10 Unemployment, % of active population. Source: EL.STAT.
-12
11 General government balance, % of GDP. Source: BoG.
2010 12 Public debt, evolution of 2010 and 2011 forecasts since January 2010.
2011 13 Unemployment, evolution of 2010 and 2011 forecasts since January
-4 -18 2010.
14 General government balance, evolution of 2010 and 2011 forecasts since
January 2010.


Alpha Bank - - -6.8 2.6 11.8 14.6 -7.8 -6.0 - -
BNP Paribas -0.7 -4.0 -16.4 -13.2 12.7 14.5 -8.2 -7.9 134 147
Citi Group -4.0 -4.2 -6.5 -6.8 12.7 14.3 -8.2 -7.3 130 142
Credit Agricole -3.3 -1.7 -18.2 -2.8 12.1 13.6 -7.9 -7.3 130 140
Credit Suisse - - - - - - -8.0 -7.5 125 134
DekaBank - - - - - - -10.6 -8.7 - -
Deutsche Bank - - - - - - -8.0 -7.0 - -
DZ Bank -4.6 -4.4 -17.7 -6.0 - - -9.5 -8.5 133 140
Experian -3.1 -3.1 -5.3 -0.7 12.1 14.3 -9.3 -9.9 - -
ING - - - - - - - - - -
National Bank of Greece -3.8 -3.6 -9.3 -6.5 11.5 13.5 -8.5 -7.1 130 138
Nomura -4.8 -4.0 -6.6 -10.4 12.0 14.7 -8.6 -7.1 145 155
Piraeus Bank - - - - 12.5 14.0 -8.0 -6.9 131 133
Raiffeisen Research - - - - 12.2 13.8 -8.8 -7.6 133 145
Summary
Minimum -4.8 -4.4 -18.2 -13.2 11.5 13.5 -10.6 -9.9 125 133
Maximum -0.7 -1.7 -5.3 2.6 12.7 14.7 -7.8 -6.0 145 155
Median -3.8 -4.0 -8.1 -6.2 12.1 14.3 -8.2 -7.3 131 140
Consensus -3.5 -3.6 -10.8 -5.5 12.2 14.1 -8.6 -7.6 132 141
History
30 days ago -3.3 -3.3 -11.5 -4.4 12.1 14.1 -8.5 -7.7 131 140
60 days ago -2.1 -2.5 -9.1 -2.1 12.1 14.0 -8.5 -7.5 129 138
90 days ago -2.2 -2.0 -7.7 -1.4 12.1 13.7 -8.7 -7.9 130 139

170 16 5
Greece
Greece
Euro area
150 Euro area
0
130 12
110 -5
90 8
-10
70 Greece
Euro area
World
50 4 -15
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
150 15 -7
2010 2011
2010 2011 2010 2011
14
140
-8
13
130
12
-9
120
11
110 10 -10

6 6
Greece
var. in % EUR bn
Euro area
4 Alpha Bank 3.8 1.2 - -
4 BNP Paribas 3.0 1.6 -23.7 -20.0
Citi Group 5.0 3.2 -21.9 -15.9
2 Credit Agricole 4.5 -0.2 -23.9 -21.0
Credit Suisse 3.2 2.0 -24.3 -20.2
2 DekaBank 4.8 1.7 - -
0 Deutsche Bank 4.7 1.7 -19.1 -17.9
Greece DZ Bank 4.6 1.3 - -
Euro area
Experian - - -24.3 -20.0
0 -2 ING 4.7 2.4 - -
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 National Bank of Greece 4.7 2.5 -22.0 -16.8
Nomura - - - -
Piraeus Bank 4.5 4.0 -29.0 -
Raiffeisen Research 4.3 0.5 -23.9 -17.8
6 6
Summary
Maximum
Consensus
Minimum 3.0 -0.2 -29.0 -21.0
Minimum Maximum 5.0 4.0 -19.1 -15.9
4
Median 4.5 1.7 -23.9 -19.0
4 Consensus 4.3 1.8 -23.6 -18.7
History
2 30 days ago 4.1 1.6 -23.6 -18.6
60 days ago 4.2 1.8 -23.4 -18.0
2 90 days ago 3.6 1.4 -23.4 -18.0
0 Maximum Additional Forecasts
Consensus IMF (Oct. 2010) 4.6 2.2 -33.1 -22.6
Minimum
Euro. Comm. (May 2010) 3.1 2.1 -24.1 -19.9
0 -2 OECD (May 2010) 3.0 0.3 -20.8 -15.5

16 0
Greece
Germany
12 -10
8 -20
4 -30
0 -40
1995 2000 2005 2010 1995 2000 2005 2010
Notes and sources

21 | Current Account | % of GDP 22 | Current Account | evolution of fcst
6 -10 General:
2010 2011
monetary sector data are from the National Statistical Service of Greece
(EL.STAT.) and the Bank of Greece (BoG). See below for details. Forecasts
0 based on FocusEconomics Consensus Forecast.
-15
-6
consumer prices (HICP) in %. Source: EL.STAT.
16 Quarterly inflation, year-on-year variation in harmonised index
consumer prices (HICP) in %. Source: EL.STAT.
-20 17 Inflation, evolution of 2010 forecasts since January 2010.
19 10-year benchmark bond yield (eop). Source: BoG.
Greece 20 Current account balance in EUR bn. Source: BoG.
Euro area
-18 -25 21 Current account balance as % of GDP. Source: BoG
1995 2000 2005 2010
forecasts since January 2010

FOCUSECONOMICS Ireland November 2010
Ireland
Ireland
Outlook improves
• On 6 October, international credit rating agency Fitch downgraded
Ireland’s rating from A+ to AA-, as the cost of the Irish banking sec-
tor bailout is expected to weigh heavily on the country’s finances
going forward.
LONG-TERM TRENDS | 5-year averages • Despite the downgrade, the outlook for the country improved slightly,
2000-04 2005-09 2010-14 as Consensus Forecast participants revised up their forecast by 0.1
GDP (EUR bn): 128 175 173
percentage points and now see the economy to contracting 0.3% in
GDP per capita (EUR): 32,657 36,906 32,645 2010. In 2011, the economy is expected to rebound with a 1.4% ex-
GDP growth (%): 6.2 1.2 1.8 pansion.
Fiscal Balance (% of GDP): 1.4 -3.4 -10.8
Inflation (%): 4.1 1.8 1.0 • Inflation stepped up from 0.2% in August to 0.5% in September.
Current Account (% of GDP): -0.5 -4.1 -0.2 Panellists expect consumer prices to decline an average 0.9% this
year, which is up 0.3 percentage points from last month’s forecast.
Next year, the country should exit deflation with an average inflation
rate of 0.7%.
Armando Ciccarelli REAL SECTOR | Industrial production growth slows in August but trend
Senior Economist continues to improve
In August, industrial production dropped a seasonally adjusted 13.6% over the
previous month, which contrasted the 3.8% expansion registered in July (pre-
viously reported: +3.2% month-on-month). The slowdown over the previous
month was mainly the result of weaker manufacturing output, which plunged
16.4%, contrasting the 4.3% increase recorded in July. Within manufacturing,
30.0 2.0
MoM s.a. (left scale) production of pharmaceuticals and electrical equipment slowed markedly over
20.0
19.1
the previous month.
0.0
9.2
10.0 7.8
On an annual basis, industrial production expanded 9.6% in August, which
3.3 3.7 3.8
% -2.0
was down from the 12.8% expansion registered in July (previously reported:
0.0 %
-2.2
-0.7 -1.3 +12.1% year-on-year). As a result of the August reading, the trend continues to
-4.0
-10.0 -6.7
-9.2
point upwards, as annual average variation in industrial production turned from
-11.3
-13.6 minus 1.4% in July to plus 0.6% in August, marking the first positive reading in
-20.0 -6.0
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug annual average industrial production since November 2008.
The Central Bank sees the economy growing 0.2% this year. Next year, mon-
and annual average growth rate in %. etary authorities see growth picking up to 2.4%. Consensus Forecast panellists
Source: Central Statistics Office Ireland (CSO) and FocusEconomics calcu-
lations. disagree with the Central Bank and anticipate the economy to contract 0.3% in
2010, which is nonetheless up 0.1 percentage points from last month’s fore-
cast. In 2011, panellists anticipate economic growth to inch up to 1.4%, which
is down 0.2 percentage points from last month’s forecast.
MONETARY SECTOR | Inflation remains in positive territory for a second

consecutive month
In September, consumer prices dropped 0.1% over the previous month, which
contrasted the 0.7% increase recorded in August. The main drivers behind the

monthly price decrease were lower prices for transport, which, according to the
Inflation | Consumer Price Index Central Statistical Office (CSO), were due to a reduction in airfares.
1.0
3.0
Despite the monthly price fall, annual inflation stepped up from 0.2% in August
0.7
annual (right scale) 0.6 to 0.5% in September, marking the second consecutive month with inflation in
0.5 0.4 0.0 positive territory since December 2008. Meanwhile, annual harmonised infla-
0.2
% 0.1 tion (based on the harmonised index of consumer prices - HICP) stepped up
0.0 0.0
0.0 -3.0 from minus 1.2% in August to 1.0%.
-0.1 -0.1
-0.2 %
-0.5 -0.4
-0.5
-6.0 In the October Quarterly Bulletin, the Central Bank stated that it expects infla-
-0.6
tion to average minus 1.4% this year and to rebound to 1.1% next year. Con-
-1.0 -9.0 sensus Forecast panellists see the country reverting to deflation this year and
anticipate consumer prices to decrease an average 0.9%, which is up 0.3 per-
centage points over last month’s forecast. For 2011, the panel expects the
Source: Central Statistics OfficeIreland (CSO) and FocusEconomics country to leave deflation, with prices increasing an average 0.7%, unchanged
calculations.
from last month forecast.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 162 177 190 182 164 162 165 171 179 188
Economic Growth (GDP, annual var. in %) 6.0 5.3 5.6 -3.5 -7.6 -0.3 1.4 2.4 2.8 3.0
Private Consumption (annual var. in %) 6.9 6.7 6.4 -1.5 -7.0 -0.9 1.1 2.1 2.4 2.8
Fixed Investment (annual variation in %) 14.9 4.6 2.8 -14.3 -31.0 -17.0 0.5 2.8 4.0 3.4
Industrial Production (annual variation in %) 4.0 3.1 5.2 -2.2 -4.5 -2.1 0.8 4.2 4.6 4.9
Unemployment (aop% of active population) 4.4 4.4 4.6 6.3 11.8 13.7 13.6 12.1 11.3 10.7
Fiscal Balance (% of GDP) 1.6 3.0 0.1 -7.3 -14.3 -19.3 -13.6 -7.9 -7.1 -6.1
Inflation (HICP, annual variation in %) 1.9 3.0 3.2 1.3 -2.6 - - - - -
Inflation (HICP, ann. avg. var in %) 2.2 2.7 2.9 3.1 -1.7 -0.9 0.7 1.4 1.7 1.9
Stock Market (var. of ISEQ in %) 18.8 27.8 -26.3 -66.2 27.0 - - - - -
External Sector
Current Account Balance (% of GDP) -3.5 -3.6 -5.3 -5.2 -2.9 -0.5 0.1 0.6 -0.5 -0.5
Current Account Balance (EUR bn) -5.7 -6.3 -10.1 -9.4 -4.8 -0.9 0.2 0.9 -1.0 -0.9
Exports (EUR bn) 82.7 83.2 84.1 81.5 78.0 80.3 82.9 85.9 88.6 90.4
Imports (EUR bn) 54.5 58.2 64.3 57.7 45.3 45.6 46.7 48.7 50.1 52.1
Exports (annual variation in %) 2.7 0.7 1.0 -3.1 -4.3 3.0 3.3 3.6 3.1 2.1
Imports (annual variation in %) 10.9 6.9 10.4 -10.3 -21.4 0.7 2.4 4.1 3.0 3.9
Economic Growth (GDP, annual var. in %) -7.4 -5.8 -0.8 -1.8 0.9 0.5 1.1 1.5 2.0 1.0
Economic Growth (GDP, qoq variation in %) -0.3 -2.5 2.2 -1.2 0.5 -0.2 0.2 0.3 0.3 0.3
Inflation (HICP, ann. avg. var in %) -2.6 -2.8 -2.4 -2.1 -1.2 -0.8 -0.1 0.4 0.6 0.9
Industrial Production (annual variation in %) 1.2 2.7 4.0 -4.1 6.6 8.4 12.8 9.6 - -
Inflation (CPI, mom variation in %) -0.6 0.4 0.1 0.2 0.6 -0.1 0.0 0.7 -0.1 -
Inflation (CPI, annual variation in %) -3.9 -3.2 -3.1 -2.1 -1.1 -0.9 -0.1 0.2 0.5 -

15 10
Ireland Ireland Individual Forecasts 2010 2011
Euro area Euro area Credit Suisse 0.5 1.5
World World
10 DekaBank -0.5 1.2
5
5 DZ Bank -1.6 -0.9
0
Experian 0.6 2.7
ING -1.0 1.2
0
Nomura -0.4 2.1
-5 Raiffeisen Research -0.3 0.5
-5 UBS 0.4 3.0
Summary
-10 -10 Minimum -1.6 -0.9
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Maximum 0.6 3.0
Median -0.4 1.2
Consensus -0.3 1.4
History
2 4
30 days ago -0.4 1.6
60 days ago -0.4 1.8
0
90 days ago -0.3 1.9
IMF (Oct. 2010) -0.3 2.3
-2 European Commission (May 2010) -0.9 3.0
Central Bank (Oct. 2010) 0.2 2.4
0
Maximum
-4
Maximum Consensus
Consensus Minimum
Minimum
-6 -2

15 20
10
0
5
0
-20
-5 Notes and sources

Ireland Ireland Euro area General:
Euro area Long-term chart period from 1995 to 2014 unless otherwise stated. All real
-10 -40
sector data are from the Central Statistics Office Ireland (CSO) and Eurostat.
1995 2000 2005 2010 1995 2000 2005 2010 See below for details. Forecasts based on FocusEconomics Consensus
Forecast.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 1 GDP, annual variation in %. Source: CSO.
2 10 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %. Source:
CSO.
2010 2011
5 Private consumption, annual variation in %. Source: CSO.
0 0 6 Gross fixed capital formation, annual variation in %. Source: CSO.
2010.
January 2010.
-2 -10
9 Public debt, % of GDP. 2000-2014 Source: CSO.
10 Unemployment, % of active population. Source: CSO.
2010 11 General government balance, % of GDP. Source: Eurostat.
2011 12 Public debt, evolution of 2010 and 2011 forecasts since January 2010.
-4 -20 13 Unemployment, evolution of 2010 and 2011 forecasts since January 2010.
January 2010.


Credit Suisse - - - - - - -11.8 -10.0 77.3 87.3
DekaBank - - - - - - -14.3 -13.5 - -
Deutsche Bank - - - - - - -29.2 -9.8 - -
DZ Bank - - - - - - -32.0 -14.0 65.5 98.5
Experian -1.1 0.7 -19.1 -3.4 13.5 13.2 -11.5 -9.7 - -
ING - - - - - - - - - -
Nomura 0.0 1.6 -19.9 2.0 13.7 13.0 -11.9 -10.4 98.0 108.0
Raiffeisen Research - - - - 13.6 14.7 -32.0 -31.3 98.0 111.0
UBS -1.5 1.0 -12.0 3.0 14.0 - -12.0 -10.0 78.0 88.0
Summary
Minimum -1.5 0.7 -19.9 -3.4 13.5 13.0 -32.0 -31.3 65.5 87.3
Maximum 0.0 1.6 -12.0 3.0 14.0 14.7 -11.5 -9.7 98.0 111.0
Median -1.1 1.0 -19.1 2.0 13.6 13.2 -13.2 -10.2 78.0 98.5
Consensus -0.9 1.1 -17.0 0.5 13.7 13.6 -19.3 -13.6 83.4 98.6
History
30 days ago -1.2 0.9 -18.3 0.7 13.7 13.5 -13.0 -10.8 79.3 88.8
60 days ago -1.8 1.8 -14.1 1.0 13.7 13.8 -12.7 -10.0 78.7 86.7
90 days ago -1.8 1.8 -14.1 1.0 13.7 13.8 -12.0 -9.4 77.6 85.1
9 | Public Debt | % variation 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP

120 16 5
Ireland
Ireland
Euro area
100 Euro area 0
12
80 -5
8
60 -10
4
40 -15
Ireland
Euro area
World
20 0 -20
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
100 16 -5
2010 2011 2010 2011
2010 2011
14
90 -10
12
80 -15
10
70 8 -20

15 | Inflation | 2000- 2014 | in % 16 | Inflation | Q1 07-Q4 11 | in % Consumer Prices and Current Account Balance
6 4
var. in % EUR bn
2 Credit Suisse 1.4 0.7 -1.5 -1.0
DekaBank -1.6 0.4 -1.4 -1.0
2
Deutsche Bank -1.5 0.5 -1.6 0.0
0 DZ Bank -1.6 0.7 - -
0 Experian -1.3 0.7 0.2 3.2
ING -1.0 0.8 - -
-2 Nomura - - - -
-2
Ireland
Raiffeisen Research -1.5 1.5 -1.6 0.0
Ireland
Euro area Euro area UBS 0.0 0.4 0.8 0.2
-4 -4 Summary
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Minimum -1.6 0.4 -1.6 -1.0
Maximum 1.4 1.5 0.8 3.2
Median -1.4 0.7 -1.5 0.0
Consensus -0.9 0.7 -0.9 0.2
2 2
History
Maximum Maximum
Consensus Consensus 30 days ago -1.2 0.7 -1.0 0.1
Minimum Minimum 60 days ago -1.2 0.6 -0.9 -0.3
90 days ago -1.2 0.5 -0.9 -0.3
IMF (Oct. 2010) -1.6 -0.5 - -
Euro. Comm. (May 2010) -1.3 0.8 - -
Central Bank (July 2010) -1.2 1.2 - -
-2 0
-4 -1

8 5
Ireland
Germany
0
6
-5
4
-10
2 -15
1995 2000 2005 2010 1995 2000 2005 2010
Notes and sources
21 | Stock Market | ISEQ 22 | Current Account | evolution of fcst
General:
8,000 1 Long-term chart period from 1995 to 2014 unless otherwise stated. All
2010 2011 real sector data are from the Central Statistics Office Ireland (CSO) and
European Central Bank (ECB). See below for details. Forecasts based
0
6,000 15 Inflation, annual average variation in harmonised index of
consumer prices (HICP) in % 2000-2014. Source: CSO.
-1 16 Quarterly inflation, year-on-year variation in harmonised index of
consumer prices (HICP) in %. Source: CSO.
4,000
-2
19 10-year benchmark bond yield (eop). Source: CSO, ECB.
20 Current account balance in EUR bn. Source: CSO.
21 Monthly index levels, ISEQ Index. Jan. 2008 until end of previous
2,000 -3 month. Source: Irish Stock Exchange.
Jan Jul Jan Jul Jan Jul Jan Apr Jul Oct 22 Current account balance in EUR bn, evolution of 2010 and 2011

FOCUSECONOMICS Netherlands November 2010
Netherlands
Netherlands
Outlook improves
• In August, the country continued to benefit from strong growth in
the industrial sector, with output expanding 7.3% annually. Moreover,
additional data confirm the healthy state of the economy, with unem-
ployment at the lowest level in over a year.
LONG-TERM TRENDS | 5-year averages • Consensus Forecast participants lifted their 2010 growth forecast
2000-04 2005-09 2010-14 by 0.1 percentage points over last month and expect the economy to
expand 1.9% this year. In 2011, economic growth is likely to remain
GDP (EUR bn): 460 559 629
GDP per capita (EUR): 28,427 34,036 37,813 moderate, with projections at 1.7%.
GDP growth (%): 1.7 1.5 1.9
• Inflation rose a notch from 1.5% in August to 1.6% in September.
Inflation (%): 3.0 1.6 1.4 Panellists expect inflation to average 1.0% this year, which is un-
Current Account (% of GDP): 4.0 6.8 5.8 changed over last month’s projection. Next year, inflation should rise
to 1.3%.
Ricardo Aceves REAL SECTOR | Industrial output rebounds in August

Economist In August, industrial production expanded 0.3% over the previous month in
seasonally adjusted terms, contrasting the revised 0.2% drop observed in July
(previously reported: -0.4% month-on-month).
August’s expansion was mainly driven by a stronger dynamism in all the main
categories of industrial production. Manufacturing, which accounts for the bulk
Industrial Production | variation in % of industrial production, grew 0.7% over the previous month (July: +0.1% month-
on-month). In addition, mining and quarrying accelerated over July and in-
4.0 5.0
MoM s.a. creased 3.4% (July: +0.5% mom). Finally, utilities bounced back and expanded
2.7
Annual average YoY
2.1
3.0%, contrasting the 6.6% contraction recorded in July.
1.9 1.9
2.0
0.8 0.0
0.5 0.6
0.4 0.3 On an annual basis, industrial production expanded 7.3%, which was up from
0.0
-0.1
% the 2.8% increase registered in July. As a result of the August reading, the
-0.2
%
-5.0
trend resumed its upward course, with the annual average growth in industrial
-2.0 production jumping from 2.4% in July to 4.0%. Consensus Forecast panellists
-2.5
-2.7 see industrial production rising 6.8% this year.
-4.0 -10.0
Meanwhile, the Central Bank expects the economy to grow 1.2% this year.
Next year, monetary authorities see growth picking up to 1.9%. Consensus
and annual average growth rate in %. Forecast panellists expect the economy to grow 1.9% in 2010, which is up 0.1
Source: Statistics Netherlands and FocusEconomics calculations.
percentage points from last month’s forecast. In 2011, panellists anticipate
economic growth to slow to 1.7%.
MONETARY SECTOR | Inflation rises in September

In September, consumer prices added 0.6% over the previous month. The
reading came in above the 0.2% increase registered in August, but was virtu-
ally in line with market expectations. The monthly increase mainly reflected

Inflation | Consumer Price Index higher prices for clothing and footwear (+11.9% month-on-month), as well as
for communications (+1.4% mom).
1.5 2.0
monthly (left scale) 1.2
1.0
annual (right scale) As a result of the monthly increase, annual inflation stepped up from 1.5% in
1.5
0.7
0.6 August to 1.6% in September, driving annual average inflation up from 1.0% in
0.5
0.5 0.3 August to 1.1%. Moreover, annual average harmonised inflation (based on the
% 0.2
0.1 1.0
harmonised index of consumer prices – HICP) rose from 0.6% in August to
0.0
-0.1
0.0 0.0
%
0.7% in September.
-0.3 0.5
-0.5
-0.5
-0.6 According to the June Economic Outlook report, the Central Bank expects
-1.0 0.0 harmonised inflation to average 1.0% this year and to accelerate to 1.6% next
year. Consensus Forecast panellists anticipate inflation to average 1.0% this
year, which is unchanged over last month’s forecast. For 2011, the panel ex-
Source: Statistics Netherlands and FocusEconomics calculations. pects inflation to reach 1.3%.

Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 513 540 572 596 572 589 606 628 650 673
Private Consumption (annual var. in %) 1.0 -0.3 1.8 1.1 -2.5 0.5 1.0 1.3 1.6 1.7
Government Consumption (ann. var. in %) 0.5 9.5 3.5 2.5 - - - - - -
Unemployment (aop% of active population) 6.5 5.5 4.5 3.9 4.9 5.5 5.3 4.9 4.7 4.6
Fiscal Balance (% of GDP) -0.3 0.5 0.2 0.7 -5.3 -6.1 -4.6 -3.9 -3.3 -3.0
Inflation (Core, annual average variation in %) 6.6 2.9 8.6 -6.4 0.9 - - - - -
HICP (annual variation in %) 2.0 1.7 1.6 1.7 0.7 - - - - -
Inflation (PPI, annual variation in %) 6.6 2.9 8.6 -6.4 0.9 - - - - -
Stock Market (var. of AEX in %) 29.6 18.3 8.0 -51.5 32.8 - - - - -
External Sector
Exports (EUR bn) 280 314 341 364 302 340 361 389 415 436
Imports (EUR bn) 240 274 297 324 267 305 324 348 366 383
Unemployment (eop % of active population) 5.7 5.8 5.7 5.6 5.6 5.5 5.5 5.3 5.3 -
Consumer Confidence Index -10.0 -13.0 -12.0 -15.0 -16.0 -18.0 -14.0 -11.0 -14.0 -10.0
Inflation (CPI, mom variation in %) 0.0 0.7 1.2 0.3 0.0 -0.5 -0.3 0.2 0.6 -

6 10
Netherlands
Euro area ABN AMRO Bank 1.9 1.3
World Barclays 1.9 2.1
3 5
Citigroup 2.4 1.9
DekaBank 1.9 1.3
0 0
DZ Bank 2.1 1.5
-5 Experian 1.9 2.0
-3
Netherlands Goldman Sachs 2.0 2.0
Euro area ING 1.7 1.4
World
-6 -10 NIBC Bank 1.7 1.1
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Nomura 1.9 1.8
Rabobank 1.8 1.5
UBS 1.9 1.7
3 4
Maximum Summary
Maximum
Consensus
Consensus Minimum 1.7 1.1
Minimum
Minimum Maximum 2.1 2.0
3
2
Median 1.8 1.5
Consensus 1.9 1.7
2 History
30 days ago 1.8 1.7
1 60 days ago 1.7 1.7
1 90 days ago 1.6 1.9
IMF (Oct. 2010) 1.8 1.7
0 0 European Commission (Sep. 2010) 1.3 1.9
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Central Bank (June 2010) 1.2 1.9

10 10
Netherlands
Euro area
5 0
0 -10
Notes and sources
Netherlands General:
Euro area
Long-term chart period from 1995 to 2014 unless otherwise stated. All real
sector data are from Statistics Netherlands (CBS, Centraal Bureau voor de
-5 -20
Statistiek), the Central Bank (DNB, De Nederlandsche Bank) and Eurostat.
1995 2000 2005 2010 1995 2000 2005 2010 See below for details. Forecasts based on FocusEconomics Consensus
Forecast.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 1 GDP, annual variation in %. Source: CBS.
3 5 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %. Source:
2010 CBS.
2
5 Private consumption, annual variation in %. Source: CBS.
0 6 Gross fixed capital formation, annual variation in %. Source: CBS.
1 2010.
January 2010.
-5
9 Public debt, % of GDP. 2000-2014 Source: Eurostat.
0 10 Unemployment, % of active population. Source: DNB.
11 General government balance, % of GDP. Source: Eurostat.
2010 2011 12 Public debt, evolution of 2010 and 2011 forecasts since January 2010.
-1 -10 13 Unemployment, evolution of 2010 and 2011 forecasts since January 2010.
January 2010.


ABN AMRO Bank 0.3 0.8 -3.2 3.8 5.5 5.1 -5.8 -3.8 64.7 66.8
Barclays - - - - - - - - - -
Citigroup - - - - - - -5.3 -3.2 - -
Credit Suisse - - - - - - -6.3 -4.0 66.3 69.6
DekaBank - - - - - - -6.8 -5.7 - -
Deutsche Bank - - - - - - -5.8 -4.8 - -
DZ Bank 0.4 1.5 -3.2 2.6 - - -5.9 -5.1 60.8 63.5
Experian 0.8 1.3 -3.6 2.3 - - -6.0 -5.0 - -
Goldman Sachs - - - - - - -5.6 -4.1 - -
ING 0.3 0.9 -3.5 2.6 5.5 5.3 -6.7 -5.2 - -
NIBC Bank 0.3 1.0 -2.6 4.5 5.5 5.0 - - - -
Nomura 0.2 0.8 -2.2 3.8 5.5 5.3 -5.9 -4.2 66.2 69.7
Rabobank 0.5 0.5 -5.0 2.8 5.5 5.5 -6.0 -4.5 66.0 69.0
Raiffeisen Research - - - - - - -6.3 -5.1 66.3 69.6
UBS 0.9 1.5 -2.0 7.3 5.7 5.3 -6.3 -5.1 66.3 69.6
Summary
Minimum 0.2 0.5 -5.0 2.3 5.5 5.0 -6.7 -5.2 60.8 63.5
Maximum 0.9 1.5 -2.0 7.3 5.7 5.5 -5.6 -4.1 66.3 69.7
Median 0.4 1.0 -3.2 2.8 5.5 5.3 -6.0 -5.0 66.2 69.6
Consensus 0.5 1.0 -3.2 3.7 5.5 5.3 -6.1 -4.6 65.2 68.3
History
30 days ago 0.6 1.1 -3.3 3.9 5.6 5.5 -6.1 -4.7 65.7 68.8
60 days ago 0.9 1.3 -4.5 3.6 5.6 5.5 -6.2 -4.8 65.9 68.8
90 days ago 0.9 1.1 -5.7 3.3 5.6 5.5 -6.0 -4.6 65.2 68.0
9 | Public Debt | variation in % 10 | Unemployment | % of active pop. 11 | Fiscal Balance | % of GDP

100 12 5
Netherlands
Euro area
80 8 0
60 4 -5
Netherlands Netherlands
Euro area
Euro area World
40 0 -10
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
72 5.8 -4
2010 2011
69
5.6 -5
66
5.4 -6
63
2010 2011
2010 2011
60 5.2 -7

6 4
Netherlands
var. in % EUR bn
Euro area
ABN AMRO Bank - - 29.5 32.5
4 Barclays - - - -
2
Citigroup - - 41.8 41.2
Credit Suisse 1.4 1.4 34.7 38.8
1 DekaBank 0.8 1.6 34.6 38.6
2 Deutsche Bank 0.9 1.5 26.4 27.1
DZ Bank 0.9 1.3 - -
0
Netherlands Experian 1.0 1.3 39.4 36.4
Euro area Goldman Sachs 0.9 1.2 32.4 34.0
0 -1 ING - - - -
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 NIBC Bank 0.9 1.0 39.0 34.0
Nomura 0.9 1.8 - -
Rabobank 1.3 1.0 - -
2.0 3
Maximum UBS 0.9 1.0 39.5 33.2
Consensus Summary
Maximum
Minimum Consensus Minimum 0.8 1.0 26.4 27.1
1.5 Minimum Maximum 1.3 1.8 39.5 36.4
2 Median 0.9 1.3 38.6 33.6
Consensus 1.0 1.3 35.6 34.6
1.0 History
30 days ago 1.0 1.4 34.9 34.4
1 60 days ago 1.1 1.5 37.8 38.1
0.5 90 days ago 1.1 1.4 37.4 38.2
IMF(Oct. 2010) 1.3 1.1 - -
0.0 0 Euro. Comm. (Sep. 2010) 1.3 1.1 - -
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Central Bank (June 2010) 1.0 1.6 - -

8 50
Netherlands
Germany
40
6
30
20
4
10
2 0
Notes and sources
1995 2000 2005 2010 1995 2000 2005 2010
General:
21 | Stock Market | AEX 22 | Current Account | evolution of fcst
real sector data are from Statistics Netherlands (CBS, Centraal Bureau
500 40 voor de Statistiek), the Central Bank (DNB, De Nederlandsche Bank)
and the German Central Bank (BBK, Deutsche Bundesbank). See be-
2010
low for details. Forecasts based on FocusEconomics Consensus Fore-
2011 cast.
400 35 15 Inflation, annual average variation in harmonised index of

consumer prices (HICP) in % 2000-2014. Source: CBS.
consumer prices (HICP) in %. Source: CBS.
300 30 18 Inflation, evolution of 2011 forecasts since January 2010.
19 10-year benchmark bond yield (eop). Source: DNB, BBK.
20 Current account balance in EUR bn. Source: CBS.
21 Monthly index levels, AEX Index. Jan. 2008 until end of previous
200 25 month. Source: Amsterdam Stock Exchange.
Jan Jul Jan Jul Jan Jul 22 Current account balance in EUR bn, evolution of 2010 and 2011

FOCUSECONOMICS Portugal November 2010
Portugal
Portugal
Outlook improves
• Government and opposition reached an agreement on the draft bud-
get for 2011 after bond markets reacted nervously to the political
stalemate, pushing borrowing costs to a temporary high on 29 Octo-
ber. Meanwhile, industrial production continued to recover in August,
exiting negative territory for the first time in two years.
2000-04 2005-09 2010-14
• Consensus Forecast panellists expect the economy to expand 1.3%
GDP (EUR bn): 139 164 179 this year, which is up 0.3 percentage points from last month’s esti-
GDP per capita (EUR): 13,360 15,520 16,652 mate. In 2011, GDP is likely to contract 0.1%.
GDP growth (%): 1.4 0.4 1.1
Public Debt (% of GDP): 54.8 66.3 90.5 • In September, inflation remained unchanged at August’s 2.0%, which
Inflation (%): 3.3 1.9 1.4 represents the highest level since October 2008. Consensus Fore-
Current Account (% of GDP): -8.0 -9.9 -8.1
cast panellists expect inflation to average 1.2% this year, which is
unchanged from last month’s forecast. For 2011, panellists expect
inflation to average 1.4%.
Marcos Felipe Casarin FISCAL SECTOR | Government and opposition reach agreement on 2011
Economist budget
On 29 October, only days after the main opposition Social Democratic Party
(PSD) had walked away from budget talks, government and opposition reached
an agreement in order to allow the 2011 budget to pass through parliament. The
government needs the support of the PSD to pass the budget, as it lacks a
majority in Congress.
10-year bond yields | in %
Finance Minister Fernando Teixeira dos Santos proposed a budget with a mix of
7.0 spending cuts and tax increases, including an unpopular two percentage point
Germany
Portugal hike in the VAT to 23% next year, whereas the opposition PSD insists on more
6.0
drastic spending cuts in order to avoid tax increases. The current budget draft
5.0 aims at cutting the fiscal deficit to 4.6% of GDP in 2011, down from an estimated
%
7.3% of GDP this year. In 2009, the fiscal deficit reached 9.3% of GDP. The
4.0
government plans to further cut the public sector deficit to 2.8% of GDP in 2013.
3.0
The full details of the compromise have not yet been published. Previously,
2.0 Teixeira dos Santos had said that he would not agree on a compromise with the
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
PSD that fails to meet the government’s deficit goal, as any overshooting of the
target “would only make an already delicate situation in financial markets signifi-
Note: Harmonised long-term interest rates for convergence assessment
purposes. Percentages per annum, period averages, secondary market yields cantly worse”. The agreement now reached excluded some items from a hike in
of government bonds with maturities of close to ten years.
Source: Eurostat. the VAT, reducing the tax take. Teixeira dos Santos said those lower revenues
would still have to be compensated by income from other sources before the
budget is signed into law. Markets had reacted nervously to the stalemate be-
tween the government and PSD and pushed the yield spread between Portu-
guese and German 10-year benchmark bonds to the highest level since 15 Oc-
tober. Following the agreement the yield spread narrowed 6 basis points to 337
basis points.

Consensus Forecast panellists are more pessimistic than the government and
see the fiscal deficit narrowing only to 6.0% of GDP in 2011.
REAL SECTOR | Industrial production grows moderately despite monthly

surge
Industrial Production | variation in % In August, industrial production surged a seasonally and calendar-day adjusted
3.91% over the previous month, which contrasted the 1.01% drop recorded in
8.0
0.0 July. The monthly expansion was driven by a jump in durable consumer goods
5.20 Annual Average (right scale) 4.99 production (August: +23.42% month-on-month), which was partially offset by a
3.91
4.0 drop in energy production (August: -1.16% mom).
-3.0
1.40 1.47
% 0.89
0.0
-0.08 % On an annual basis, however, industrial output decelerated for the third con-
-0.74 -1.01
-1.82 -2.03 -6.0 secutive month in August moderating to 0.2% growth, down from a 1.5% ex-
-2.47
-4.0
-3.92 pansion seen in July. Nevertheless, the trend continues to point upwards, with
annual average variation improving from minus 0.4% in July to 0.0% in August.
-8.0 -9.0 Consensus Forecast panellists see industrial production expanding 1.4% this
year, which is unchanged from last month’s forecast. For 2011, the panel an-
ticipates industrial output to expand 1.1%.
Note: Month-on-month (seasonally adjusted) and annual average var. in %.
Source: Statistics Portugal (INE) and FocusEconomics calculations.
Moreover, Consensus Forecast panellists see the overall economy adding 1.3%
2011, the panel anticipates GDP to decline 0.1%.
MONETARY SECTOR | Inflation remains unchanged in September

In September, consumer prices rose 0.2% over the previous month, which con-
trasted the 0.2% drop recorded in August. The monthly price increase mainly
1.5 3.0
reflected higher prices for clothing and footwear (+11.5% month-on-month),
1.1 owing to the end of seasonal sales. That said, the jump in clothing prices was
1.0 2.0 partially offset by moderate price decreases across five of the 12 remaining
0.4
categories.
0.5 1.0
% 0.2 0.2 0.2 0.2 0.2
0.1 0.1 0.1 0.1 %
0.0 0.0 Despite the price rise recorded in September, annual inflation remained un-
-0.2 changed at August’s 2.0% rate, the highest level since October 2008. Mean-
-0.5 -1.0
-0.5 while, annual core inflation, which does not include prices for unprocessed
-1.0 -2.0 food and energy, fell to 0.6% in September, down from 0.8% in August. Finally,
annual average harmonised inflation (HICP) increased for the seventh con-
secutive month, rising from 0.3% in August to 0.6% in September.
Source: Statistics Portugal (INE) and FocusEconomics calculations.
this year, which is unchanged from last month’s forecast. For 2011, panellists
expect inflation to average 1.4%.


Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP (EUR bn) 154 160 169 172 168 172 174 178 183 189
Economic Growth (GDP, annual var. in %) 0.8 1.4 2.4 0.0 -2.6 1.3 -0.1 1.0 1.5 1.6
Domestic Demand (annual var. in %) 1.4 0.8 2.0 1.2 -3.0 0.7 -1.4 0.7 1.8 2.0
Total Consumption (annual var. in %) 2.1 1.2 2.1 1.6 -0.1 - - - - -
Private Consumption (annual var. in %) 1.6 1.8 2.4 1.8 -1.0 1.5 -0.4 0.5 1.3 1.5
Government Consumption (ann. var. in %) 3.3 -0.7 0.5 0.8 2.9 - - - - -
Fixed Investment (annual var. in %) -0.5 -1.3 2.6 -1.8 -11.9 -3.9 -2.6 2.1 2.9 3.0
Inflation (CPI, annual variation in %) 2.6 2.5 2.7 0.8 -0.1 - - - - -
Inflation (CPI, annual average in %) 2.3 3.1 2.5 2.6 -0.9 1.2 1.4 1.1 1.5 1.6
HICP (annual average variation in %) 2.1 3.0 2.4 2.7 -0.9 - - - - -
External Sector
Trade Balance (EUR bn) -19.8 -20.7 -21.6 -25.2 -19.6 -16.3 -14.2 -3.5 7.9 9.7
Exports (EUR bn) 31.6 35.6 38.3 39.0 31.6 32.6 34.2 36.1 38.8 41.7
Imports (EUR bn) 51.4 56.3 59.9 64.2 51.2 52.2 54.3 56.5 58.5 61.4
Economic Growth (GDP, annual var. in %) -2.3 -1.0 1.8 1.5 1.1 1.3 0.2 0.0 0.0 -0.7
Inflation (CPI, annual average in %) -1.6 -0.7 0.3 1.0 0.6 2.9 1.4 1.4 1.3 1.4
Inflation (CPI, mom variation in %) -0.5 0.1 1.1 0.4 0.2 0.2 0.1 -0.2 0.2 -

6 6
Banco BPI 1.3 -1.1
BBVA 1.1 0.5
3 3
BNP Paribas 1.4 -0.5
0 0
Deka Bank 1.3 -0.9
DZ Bank 0.8 -0.6
-3 -3 Experian 1.0 1.1
Portugal Portugal Nomura 1.2 -1.1
Euro area Euro area Raiffeisen Research 1.5 0.4
World World
-6 -6 UBS 1.3 1.5
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Univ. Católica Portuguesa 1.5 -0.7
Summary
Minimum 0.8 -1.1
Maximum 1.6 1.5
3 2
Maximum Median 1.3 -0.3
Consensus
Consensus 1.3 -0.1
Minimum
2 1
History
30 days ago 1.0 0.4
60 days ago 1.0 0.3
1 0 90 days ago 0.9 0.4
European Commission (May 2010) 0.5 0.7
0 -1 IMF (Oct. 2010) 1.1 -0.1
Maximum
Consensus OECD (May 2010) 1.0 0.8
Minimum
-1 -2

6 20
4 10
2 0
0 -10
Notes and sources
Portugal
Portugal General:
Euro area Euro area Long-term chart period from 1995 to 2014 unless otherwise stated. All real
-2 -20
sector data are from Statistics Portugal (INE, Instituto Nacional de Estatística)
1995 2000 2005 2010 1995 2000 2005 2010 and the Central Bank of Portugal (BP, Banco de Portugal). See below for
details. Forecasts based on FocusEconomics Consensus Forecast.
7 | Consumption | evolution of fcst 8 | Investment | evolution of forecasts 1 GDP, annual variation in %. Source: INE.
2.0 3 2 Quarterly GDP (seasonally adjusted), year-on-year variation in %. Source:
2010 INE.
1.5 4 GDP, evolution of 2011 forecasts since January 2010.
5 Private consumption, annual variation in %. Source: INE.
0 6 Gross fixed capital formation, annual variation in %. Source: INE.
1.0
2010.
0.5
January 2010.
-3
9 Public debt,% of GDP. Source: BP.
0.0
10 Unemployment, % of active population. Source: INE.
11 General government balance, % of GDP. Source: BP.
2010
2011
-0.5 -6 13 Unemployment, evolution of 2010 and 2011 forecasts since January 2010.
January 2010.


Banco BPI 1.8 -1.0 -4.7 -7.5 10.8 11.2 -7.3 -4.9 83.5 85.9
BBVA 1.4 -0.1 -3.5 -1.5 - - - - - -
BNP Paribas 1.4 -1.5 -6.7 -7.9 11.3 12.7 -7.7 -5.9 82.8 88.1
Credit Suisse - - - - - - -7.5 -5.0 85.8 91.1
Deka Bank - - - - - - -7.4 -5.1 - -
Deutsche Bank - - - - - - -7.5 -6.0 - -
DZ Bank 1.4 -0.7 -4.3 -0.8 - - -7.5 -7.0 76.1 86.0
Experian 1.5 0.3 -5.1 1.0 10.6 10.4 -8.6 -7.8 - -
Nomura 1.9 -1.4 -3.1 -2.7 10.8 10.3 -7.6 -5.3 85.0 90.0
Raiffeisen Research - - - - 10.8 11.4 -8.3 -4.6 85.6 89.4
UBS 1.2 1.7 0.0 1.3 11.0 11.0 -8.0 -8.7 84.6 91.1
Univ. Católica Portuguesa - - - - 10.7 11.4 -7.3 -5.9 82.1 87.8
Summary
Minimum 1.2 -1.5 -6.7 -7.9 10.6 10.3 -8.6 -8.7 76.1 85.9
Maximum 1.9 1.7 0.0 1.3 11.3 12.7 -7.3 -4.6 85.8 91.1
Median 1.4 -0.7 -4.3 -1.5 10.8 11.2 -7.5 -5.9 84.1 88.8
Consensus 1.5 -0.4 -3.9 -2.6 10.9 11.2 -7.7 -6.0 83.2 88.7
History
30 days ago 1.4 0.1 -3.5 -0.9 10.9 11.1 -7.8 -6.3 85.2 90.2
60 days ago 1.3 0.0 -3.6 -1.5 10.8 11.1 -5.8 -5.0 85.0 90.1
90 days ago 1.2 0.1 -3.4 -1.7 10.8 11.1 -7.7 -5.9 84.8 89.9

110 12 5
Portugal Portugal Portugal
Euro area Euro area Euro area
World
90 9 0
70 6 -5
50 3 -10
2000 2005 2010 1995 2000 2005 2010 1995 2000 2005 2010
12 | Public Debt | evolution of forecasts 13 | Unemployment | evolution of fcst 14 | Fiscal Balance | evolution of fcst
95 11.5 -4
2010 2011
11.0
90 -6
10.5
85 -8
10.0
2010 2010
2011 2011
80 9.5 -10

6 4
var. in % EUR bn
4 Banco BPI 1.3 2.0 - -
2 BBVA - - - -
BNP Paribas 1.0 1.1 -16.0 -13.9
2 Credit Suisse 1.1 1.3 - -
Deka Bank 1.2 1.2 -17.4 -17.4
0 Deutsche Bank 1.4 1.5 -18.1 -14.0
0 DZ Bank 1.3 1.8 - -
Portugal Experian 1.0 1.2 -17.5 -17.9
Portugal
Euro area Euro area Nomura - - - -
-2 -2 Raiffeisen Research 1.3 1.3 -13.8 -9.7
2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 UBS 1.4 1.1 -15.5 -16.4
Univ. Católica Portuguesa 1.4 2.1 -17.3 -
Summary
Minimum 1.0 1.1 -18.1 -17.9
2.0 3.0
Maximum Maximum 1.4 2.1 -13.8 -9.7
Maximum
Consensus Median 1.3 1.3 -17.3 -15.2
Consensus
Minimum Consensus 1.2 1.4 -16.5 -14.9
Minimum
1.5
History
2.0 30 days ago 1.2 1.3 -15.0 -13.7
60 days ago 1.1 1.3 -14.0 -12.8
1.0 90 days ago 1.0 1.2 -14.0 -12.8
1.0 Euro. Comm. (May 2010) 1.0 1.4 - -
0.5 IMF (Oct. 2010) 0.9 1.2 - -
OECD (May 2010) 0.9 1.1 - -
0.0 0.0

12 10
0
8
-10
4
-20
Portugal
Germany
0 -30
1995 2000 2005 2010 1995 2000 2005 2010 Notes and sources
General:
21 | Stock Market | PSI-20 22 | Current Account | evolution of fcst Long-term chart period from 1995 to 2014 unless otherwise stated. All
15,000 -12 monetary sector data are from Statistics Portugal (INE, Instituto Nacional
de Estatística) and the Central Bank of Portugal (BP, Banco de Portugal).
See below for details. Forecasts based on FocusEconomics Consensus
Forecast.
12,000
-14 15 Inflation, annual average variation in consumer price index (CPI) in
%. 2000-2014. Source: INE.
9,000
(CPI) in %. Source: INE.
6,000 19 10-year benchmark bond yield (eop). Source: BP.
20 Current account balance in EUR bn. Source: BP.
2010 21 Daily index levels, Portugal Stock Index. Source: Portugal Stock
2011
3,000
and Exchange. Jan. 2008 until end of previous month.
-18
22 Current account balance in EUR bn, evolution of 2010 and 2011
Jan Jul Jan Jul Jan Jul Jan Mar May Jul Sep Nov

FOCUSECONOMICS Slovakia November 2010
Slovakia
Slovakia
Outlook improves
• Recent data indicate that the economy continues to recover, albeit at
a more moderate pace. August industrial production slowed to a 16.3%
expansion, the slowest rate observed so far this year.

• Consensus Forecast panellists lifted their GDP growth forecast by
0.2 percentage points over last month and see the economy expanding
2000-04 2005-09 2010-14
Population (m illion): 5.4 5.4 5.6 3.4% this year. Next year, the panel sees economic growth at 3.4%.
GDP (USD bn): 28 72 100
GDP per capita (USD): 5,256 13,285 17,617
• In September, inflation inched up from the 1.0% rate observed in
GDP growth (%): 3.6 5.4 3.8
Fiscal Balance (% of GDP): -6.4 -3.5 -4.3 August to 1.1%. Panellists expect inflation to rise to 1.7% by the end
Inflation (%): 7.7 3.2 2.4 of the year, which is unchanged over last month’s forecast. For 2011,
External Debt (% of GDP): 54.2 60.4 77.8
the panel sees inflation rising further to 3.5%.
Keith Catlin REAL SECTOR | Industrial production slows slightly in August

Senior Economist In August, industrial output added 16.3% over the same month last year,
which was slightly down from the 16.8% expansion recorded in July, but
represented, in fact, the slowest expansion so far this year.
The monthly slowdown was driven by manufacturing, which accounts for the
bulk of industrial production, as the sector added 14.7% year-on-year, which
was down from the 21.5% expansion registered in July. Growth in the
Industrial Production | variation in % manufacturing sector was dragged lower as the result of negative growth in
food, beverages and tobacco production. In addition, weaker automobile
45.0 production also affected the monthly reading adversely. Meanwhile, electricity,
YoY, Annual Average
YoY
28.7
gas, steam and air conditioning added 27.4% in August, which was well
30.0
20.2 20.3 18.8 20.6
23.5
above the 0.3% expansion tallied in July, and finally, mining and quarrying fell
16.8 16.3
15.0 11.8 0.1%, which came in above the 7.1% contraction recorded in July.
%
1.4
0.0
That said, a month-on-month analysis does not corroborate the deterioration
-8.7 -7.4 -6.2
observed in the annual figures, as industrial production added 2.2% over the
-15.0
previous month in seasonally adjusted terms. In addition, the overall trend
-30.0 continues to improve, with annual average variation in industrial production
jumping from 11.7% in July to 13.7%.
Note: Year-on-year and average annual changes in %.

Source: Slovakia Statistical Office (SSOR) and FocusEconomics calculations. Panellists currently expect industrial production to expand 13.7% this year,
which is down 1.0 percentage points from last month’s estimate. Next year,
industrial production is likely to slow to 7.4%
The Central Bank expects the economy to expand 4.3% this year, with
economic growth slowing to 3.0% in 2011. Consensus Forecast panellists
expects the economy to expand 3.4% in this year, which is up 0.2 percentage
points over last month’s forecast. For next year, the panel sees growth at
3.4%.
FocusEconomics Consensus Forecast Eastern Europe | 94
MONETARY SECTOR | Inflation edges up despite flat monthly reading

In September, consumer prices remained unchanged over the previous
0.4 1.5
Monthly (left scale) 0.4 month, which came in above the 0.1% price drop recorded in August. Lower
0.3 prices for health helped compensate for higher prices in clothing and footwear.
0.2
0.2 1.0
0.1
0.1
Despite the flat reading, annual headline inflation inched up from 1.0% in
0.1
%
0.0
0.1
0.0
% August to 1.1%. Annual average harmonised inflation (based on the
0.0
0.0
0.5 harmonised index of consumer prices, HICP, which is the reference rate for
0.0
measuring price increases within the European Union), was rose a notch
-0.1
from 0.3% in August to 0.4% in September.
-0.1
-0.2 0.0
The Slovak Central Bank currently expects annual average harmonised
inflation to reach only 0.9% this year. For next year, the Central Bank expects
Note: Annual and monthly variation of consumer price index in %.
Source: Slovakia Statistical Office (SSOR). harmonised inflation to average 2.6%.
Consensus Forecast participants expect headline inflation to rise and close

the year at 1.7%, which is unchanged over last month’s estimate. Next year,
panellists expect inflation to rise to 3.5%.


Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP per capita (USD) 8,874 10,326 13,799 17,380 16,046 16,801 16,530 17,283 18,173 19,297
GDP (USD bn) 47.9 55.9 75.0 95.0 88.2 93.0 92.3 97 104 111
GDP (EUR bn) 38.5 44.5 54.7 64.6 63.3 68.9 73.0 78.0 83.2 88.9
Fixed Investment (annual variation in %) 17.5 9.3 9.1 1.8 -10.5 2.3 3.6 5.3 5.0 4.9
Industrial Production (annual variation in %) -2.5 12.2 16.1 7.4 -13.1 17.0 7.5 6.6 7.0 6.4
Public Debt (% of GDP) 34.2 30.5 29.3 27.7 35.7 - - - - -
Money (annual variation of M1 in %) 24.3 41.2 14.0 -7.5 28.2 - - - - -
Inflation (Core, annual variation in %) 1.1 2.5 2.4 3.3 -0.2 - - - - -
Inflation (HICP, annual avg. variation in %) 2.8 4.2 2.0 3.9 0.9 - - - - -
Inflation (PPI, annual variation in %) 6.2 5.6 2.4 6.0 -3.6 - - - - -
3-Month EURIBOR in %, eop 2.49 3.73 4.68 2.89 0.70 0.95 1.50 2.39 3.29 3.18
Stock Market (variation of SAX in %) 26.5 0.6 7.2 -19.4 -25.7 - - - - -
External Sector
Current Account (% of GDP) -8.4 -7.0 -5.3 -6.5 -3.2 -3.1 -3.2 -3.8 -3.7 -3.5
Current Account (USD bn) -4.0 -3.9 -4.0 -6.2 -2.8 -2.9 -3.0 -3.7 -3.8 -3.9
Trade Balance (USD bn) -2.5 -3.1 -0.9 -1.0 1.7 1.2 1.4 0.8 0.7 0.7
Exports (USD bn) 32.1 41.6 57.5 69.9 55.3 59.6 62.4 68.0 72.6 78.4
Imports (USD bn) 34.5 44.7 58.4 70.9 53.7 58.5 61.1 67.2 72.3 78.1
International Reserves (USD bn) 15.5 13.4 18.6 18.8 1.8 1.5 1.6 1.7 1.8 2.0
International Reserves (months of imports) 5.4 3.6 3.8 3.2 0.4 0.3 0.3 0.3 0.3 0.3
External Debt (USD bn) 26.9 32.2 44.3 52.5 65.3 71.1 77.8 78.7 78.4 80.2
External Debt (% of GDP) 56.2 57.6 59.1 55.3 74.0 76.4 84.2 80.8 75.7 72.1
Monthly Data Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
Industrial Production (annual variation in %) 11.8 20.2 20.3 18.8 20.6 28.7 23.5 16.8 16.3 -
Inflation (CPI, mom variation in %) -0.1 0.2 0.0 0.1 0.4 0.1 0.0 0.1 -0.1 0.0

Real and Monetary Sector | Gross Domestic Product and Fiscal Balance
1 | Real GDP | 1995- 2014 | % variation 2 | Real GDP | Q1 07-Q4 11 | % variation Economic Growth and Fiscal Balance
12 18 Real GDP Fiscal Balance
Slovakia
Eastern Europe variation in % % of GDP
World
6 BofA Merrill Lynch 1.4 4.1 - -
Capital Economics 4.0 1.5 -8.0 -6.0
6
CSOB 3.0 3.2 -7.2 -5.5
0
DZ Bank 2.7 3.6 -6.0 -5.5
0
Erste Bank 3.1 4.0 -7.5 -6.0
Experian 3.2 2.9 - -
-6
Slovakia -6 ING 2.8 3.5 -6.4 -5.5
Eastern Europe OTP Bank 4.2 2.8 -7.8 -4.9
World
-12 -12 Raiffeisen Research 4.2 4.0 -7.8 -4.9
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 UniCredit 4.3 3.1 -7.8 -5.0
VÚB Banka 4.2 3.6 -8.0 -6.5
WIIW 4.0 4.0 -7.0 -6.5
Summary
6 8
Maximum Minimum 1.4 1.5 -8.0 -6.5
Maximum
Consensus Maximum 4.3 4.1 -6.0 -4.9
Consensus
Minimum
4 6 Minimum Median 3.6 3.6 -7.6 -5.5
Consensus 3.4 3.4 -7.4 -5.6
History
2 4 30 days ago 3.2 3.4 -7.1 -5.5
60 days ago 2.9 3.4 -6.8 -5.4
90 days ago 2.9 3.4 -6.8 -5.4
0 2
IMF (Oct. 2010) 4.1 4.3 - -
Euro. Comm. (May 2010) 2.7 3.6 - -
-2 0
May Aug Nov Feb May Aug May Aug Nov Feb May Aug
5 | Unemployment | % of active pop. 6 | Fiscal Balance | % of GDP

22 5
Slovakia Slovakia
Eastern Europe Eastern Europe
World
18 0
14 -5
10 -10
6 -15
1995 2000 2005 2010 1995 2000 2005 2010
7 | Unemployment | evolution of fcst 8 | Fiscal Balance | evolution of fcst

15 -2
Notes and sources
2010
2011
General:
real sector data are from the Statistical Office of the Slovak Republic
(SVSR, Štatisticky úrad Slovenskej republiky). Forecasts based on
13 -4 FocusEconomics Consensus Forecast.

2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.
11 -6
5 Unemployment, % of active population.
2010 6 Balance of non-financial public sector, % of GDP.
2011
7 Unemployment, evolution of 2010 and 2011 forecasts during the last
9 -8 18 months.
May Aug Nov Feb May Aug May Aug Nov Feb May Aug 8 Balance of non-financial public sector, evolution of 2010 and 2011
forecasts during the last 18 months.

Monetary and External Sector | Inflation, Interest Rate, Exchange Rate and Current Account Balance
9 | Inflation | in % 10 | Interest Rate | in % Consumer Price Index and Current Account

24 40 CPI Current Account
Slovakia Slovakia variation in % USD billion
Eastern Europe
Eastern Europe Individual Forecasts 2010 2011 2010 2011
18 30 BofA Merrill Lynch - - - -
Capital Economics - - -2.9 -2.7
CSOB 1.6 3.1 - -
12 20
DZ Bank - - - -
Erste Bank 2.0 4.0 -2.0 -2.6
Experian - - -3.9 -3.3
6 10
ING - - -3.1 -3.8
OTP Bank 1.5 2.2 -3.1 -2.1
0 0 Raiffeisen Research 1.7 3.8 -1.0 -1.6
2000 2005 2010 2000 2005 2010 UniCredit 1.9 4.2 -4.1 -
VÚB Banka 1.7 3.4 -3.2 -3.2
WIIW - - -2.8 -4.4
11 | Inflation | evolution of forecast 12 | Interest Rate | evolution of forecast
Summary
4 4
Minimum 1.5 2.2 -4.1 -4.4
Maximum 2.0 4.2 -1.0 -1.6
3 Median 1.7 3.6 -3.1 -3.0
3 Consensus 1.7 3.5 -2.9 -3.0
History
2 30 days ago 1.7 3.2 -2.9 -3.1
60 days ago 2.0 3.1 -3.0 -3.3
2 90 days ago 2.0 3.1 -3.0 -3.3
1
2011
2010 IMF (Oct. 2010) 1.0 2.0 - -
2011
Euro. Comm. (May 2010) 1.3 2.8 - -
1 0
13 | Exchange Rate | USD per EUR 14 | Current Account | % of GDP

1.6 8
Slovakia
Eastern Europe
4
1.4
1.2
-4
1.0
-8
Notes and sources

0.8 -12
1995 2000 2005 2010 1995 2000 2005 2010 General:
real sector data are from the Statistical Office of the Slovak Republic
(SVSR, Štatisticky úrad Slovenskej republiky) and the Bank of Slovakia
15 | USD/EUR | evolution of fcst 16 | Current Account | evol. of fcst
(NBS, Národná banka Slovenska). See below for details. European Com-
1.5 -2 mission forecasts refer to annual average harmonised inflation. Fore-
2010 2010 casts based on FocusEconomics Consensus Forecast.
2011 2011
9 Inflation, annual variation in consumer price index (CPI) in % (eop).
1.4 -3
2000-2014. Source: Slovakia Statistical Office.
10 Interest rate, ECB Refinancing rate in % (eop). 2000-2014. Source:
NBS.
1.3 -4 11 Inflation, evolution of 2010 and 2011 forecasts during the last 18
months.
12 Interest rate, evolution of 2010 and 2011 forecasts during the last
18 months.
1.2 -5
13 Exchange rate, USD per EUR (eop). Source: NBS.
14 Current account balance as % of GDP. Source: NBS.
15 Exchange rate, evolution of 2010 and 2011 forecasts during the
1.1 -6 last 18 months.
May Aug Nov Feb May Aug May Aug Nov Feb May Aug 16 Current account in USD billion, evolution of 2010 and 2011

FOCUSECONOMICS Slovenia November 2010
Slovenia
Slovenia
Outlook improves
• Recent data point to a continued recovery in the Slovenian economy.
Industrial production accelerated strongly in August to a 14.0% year-
on-year expansion, buttressed by robust manufacturing growth.

• Consensus Forecast panellists anticipate GDP to expand 1.1% this
year, which is up 0.3 percentage points over last month’s estimate.
2000-04 2005-09 2010-14
Population (million): 2.0 2.0 2.0 For 2011, the panel expects economic growth to accelerate to 2.1%.
GDP (USD bn): 24.8 44.8 50.4
GDP per capita (USD): 12,466 22,131 24,730 • Inflation fell from 2.3% in August to 2.0% in September. Panellists
GDP growth (%): 3.7 2.6 2.5
Fiscal Balance (% of GDP): -3.0 -2.0 -3.6 expect inflation to inch up to 2.1% by the end of the year, which is
Inflation (%): 6.8 3.0 2.3 down 0.3 percentage points over last month’s forecast. For 2011, the
panel sees inflation rising to 2.3%.
External Debt (% of GDP): 46 96 113
Keith Catlin REAL SECTOR | Industrial production jumps in August

Senior Economist In August, industrial output increased 14.0% annually, which more than
doubled the 6.9% expansion recorded in July (previously reported: +7.1%
year-on-year).
The acceleration in industrial production was broad-based, as growth in all

three major categories picked up the pace over the previous month.
Manufacturing output, which accounts for the bulk of industrial production,
rose 15.0% over the same month last year, up from the 7.6% reading recorded
10.0 10.0 the previous month. Electricity, gas and water added 1.1%, which contrasted
MoM s.a. (left scale) YoY, Ann. Average (right scale)
6.1
the 3.6% decline in July, and finally, production in the mining sector soared
5.2
5.0 3.8
4.8 36.9%, which nearly doubled the 18.5% expansion observed in July.
3.5 3.1 2.9 0.0
0.6
0.0 Seasonally adjusted data corroborate the pick up suggested by the annual
%
% -0.8
data, as industrial production added 5.2% over July. Furthermore, annual
-2.1 -10.0
-2.8
-5.0 -3.9 average growth in industrial production jumped from minus 2.0% to a positive
-5.2
0.4%.
-10.0 -20.0
Consensus Forecast panellists expect industrial production to continue
recovering throughout the year and expect it to expand 3.7% in the full year.
Note: Month-on-month seasonally adjusted changes and annual average growth of For next year, the panel sees industrial output moderating to 3.5%.
industrial production index in %.
Source: Statistical Office of the Republic of Slovenia (SORS).
Meanwhile, Consensus Forecast panellists the economy to grow 1.1% this

year, which is up 0.3 percentage points over the previous month’s projection.
In 2011, the panel expects the economy to expand 2.1%.

MONETARY SECTOR | Inflation dips in September

In September, consumer prices fell 0.5% over the previous month, which
contrasted the 0.3% increase registered in August. The price decrease was
mainly driven by lower prices for restaurants and hotels, as well as for
transport.
1.2 1.1 3.0
1.0
0.9
As a result of the September reading, annual headline inflation moderated
0.6
0.4 0.4
2.0 from 2.3% in August to 2.0%. Annual harmonised inflation (based on the
0.3 0.3
0.1 harmonised consumer price index – HICP), which is the reference rate for
0.0 1.0 measuring price increases within the European Union, followed suit and
% -0.2 % decreased from 2.4% in August to 2.1%.
-0.6 -0.5 -0.5 0.0
-0.8 -0.7 At the current level, inflation in Slovenia is well above the 1.8% September
-1.2 -1.0 inflation rate estimated for the entire Euro area. The Euro area inflation is
slowly approaching the 2.0% ceiling set by the European Central Bank (ECB).
Nevertheless, on 7 October, the ECB left the benchmark interest rate
Note: Annual and monthly variation of consumer price index in %. unchanged at a historic low of 1.00% for the 17th consecutive month.
Source: Statistical Office of the Republic of Slovenia (SORS).
Consensus Forecast participants expect headline inflation to rise to 2.1%

this year. Next year, panellists anticipate inflation to inch up further to 2.3%.


Annual Data 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Real Sector
GDP per capita (USD) 17,469 19,019 23,475 26,893 23,798 23,674 23,109 24,092 25,463 27,313
GDP (USD bn) 35.0 38.2 47.4 54.6 48.6 48.5 47.3 49.3 51.9 55.3
GDP (EUR bn) 28.1 30.7 37.7 39.8 33.1 35.9 37.4 39.4 41.7 44.2
Private Consumption (ann. var. in %) 2.8 2.9 6.7 3.0 -0.6 -0.2 1.9 2.2 2.9 3.0
Fiscal Balance (% of GDP) -1.4 -1.3 0.0 -1.7 -5.5 -5.9 -4.4 -3.4 -2.3 -1.9
Public Debt (% of GDP) 27.0 26.7 23.4 22.6 35.7 - - - - -
Money (annual variation of M1 in %) 13.0 8.2 2.2 -3.7 7.7 - - - - -
Inflation (HICP annual average variation in %) -0.7 -1.1 -2.9 0.7 -0.6 - - - - -
Inflation (PPI, annual variation in %) 1.5 3.3 3.4 2.2 -1.2 - - - - -
External Sector
Current Account (% of GDP) -1.8 -2.6 -4.7 -6.1 -1.0 -1.0 -1.7 -1.4 -1.0 -1.0
Current Account (USD bn) -0.6 -1.0 -2.2 -3.3 -0.5 -0.5 -0.8 -0.7 -0.5 -0.5
Trade Balance (USD bn) -1.3 -1.5 -2.3 -3.9 -0.9 -0.6 -0.8 -1.0 -0.8 -0.8
Exports (USD bn) 18.1 21.3 27.1 29.6 22.6 23.7 25.8 27.0 27.9 28.9
Imports (USD bn) 19.4 22.8 29.4 33.5 23.4 24.8 27.1 28.5 29.2 30.3
International Reserves (USD bn) 6.9 7.1 1.0 1.0 1.1 0.8 0.8 0.8 0.8 0.8
International Reserves (months of imports) 4.3 3.8 0.4 0.3 0.6 0.4 0.4 0.3 0.3 0.3
External Debt (USD bn) 24.3 31.7 51.1 54.5 57.8 58.7 58.4 53.1 55.8 56.8
External Debt (% of GDP) 69 83 108 100 119 121 123 108 108 103
Economic Growth (GDP, annual var. in %) -8.8 -5.7 -1.1 2.2 1.8 1.0 2.5 2.3 1.5 3.3
Inflation (CPI, annual variation in %) -0.1 1.8 1.4 1.9 2.0 2.1 2.4 2.0 1.9 2.3
Monthly Data Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
Industrial Production (annual variation in %) 4.7 -8.7 -1.2 8.4 9.1 14.4 10.3 6.9 14.0 -
Inflation (CPI, mom variation in %) -0.5 -0.8 0.4 1.1 1.0 0.4 0.3 -0.7 0.3 -0.5

Real and Monetary Sector | Gross Domestic Product and Fiscal Balance
1 | Real GDP | 1995 - 2014 | % var. 2 | Real GDP | Q1 07-Q4 11 | % variation Economic Growth and Fiscal Balance
10 15
Slovenia Real GDP Fiscal Balance
Eastern Europe variation in % % of GDP
World
5
Capital Economics 1.5 1.8 -5.0 -4.0
5 DZ Bank 1.1 1.8 -6.5 -6.0
0 Experian 1.3 1.8 - -
0
IMAD 0.9 2.5 - -
Institute EIPF 1.5 2.7 -5.8 -2.9
-5 Raiffeisen Research 0.5 2.0 -6.0 -4.5
Slovenia -5
Eastern Europe
UniCredit 1.2 2.1 -6.0 -4.7
World WIIW 0.5 2.0 -6.0 -4.5
-10 -10
Summary
1995 2000 2005 2010 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11
Minimum 0.5 1.8 -6.5 -6.0
Maximum 1.5 2.7 -5.0 -2.9
3 | GDP 2010 | evolution of forecasts 4 | GDP 2011 | evolution of forecasts Median 1.2 2.0 -6.0 -4.5
4 5 Consensus 1.1 2.1 -5.9 -4.4
Maximum Maximum
Consensus Consensus History
Minimum Minimum 30 days ago 0.8 2.1 -5.7 -4.4
4 60 days ago 0.8 2.2 -5.7 -4.5
2
90 days ago 0.8 2.2 -5.7 -4.5
3
IMF (Oct. 2010) 0.8 2.4 - -
Euro. Comm. (May 2010) 1.1 1.8 - -
0
2
-2 1
5 | Unemployment | % of active pop. 6 | Fiscal Balance | % of GDP

12 5
Slovenia
Eastern Europe
World
10
0
-5
6
Slovenia
Eastern Europe
4 -10
1995 2000 2005 2010 2000 2005 2010
7 | Unemployment | evolution of fcst 8 | Fiscal Balance | evolution of fcst

8.0 0 Notes and sources
2010 2010
2011 2011 General:
7.5 real sector data are from the Statistical Office of the Republic of Slovenia
-2 (SORS). Forecasts based on FocusEconomics Consensus Forecast.

7.0
2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %.
-4 4 GDP, evolution of 2011 forecasts during the last 18 months.
6.5 5 Unemployment, % of active population.
6 Balance of non-financial public sector, % of GDP. 2000-2014.
7 Unemployment, evolution of 2010 and 2011 forecasts during the last
6.0 -6
18 months.
8 Balance of non-financial public sector, evolution of 2010 and 2011

Monetary and External Sector | Inflation, Interest Rate, Exchange Rate and Current Account Balance
9 | Inflation | in % 10 | Interest Rate | in % Consumer Price Index and Current Account

24 40
CPI Current Account
Slovenia Slovenia
Eastern Europe Eastern Europe
variation in % USD billion
30
18
Capital Economics - - -0.6 -0.7
DZ Bank - - - -
12 20 Experian - - -0.7 -0.7
IMAD 1.8 2.3 -0.4 -0.5
Institute EIPF 2.2 1.5 -0.6 -1.3
6 10 Raiffeisen Research 2.0 2.0 -0.4 -0.7
UniCredit 2.5 3.2 -0.5 -1.0
WIIW - - -0.4 -0.7
0 0
Summary
2000 2005 2010 2000 2005 2010
Minimum 1.8 1.5 -0.7 -1.3
Maximum 2.5 3.2 -0.4 -0.5
11 | Inflation | evolution of forecast 12 | Interest Rate | evolution of forecast Median 2.1 2.2 -0.5 -0.7
3.0 4 Consensus 2.1 2.3 -0.5 -0.8
2010
2010 2011 History
2011 30 days ago 2.4 2.2 -0.5 -0.8
3 60 days ago 1.9 2.2 -0.6 -0.9
2.5
90 days ago 1.9 2.2 -0.6 -0.9
2
IMF (Oct. 2010) 2.1 2.4 - -
Euro. Comm. (May 2010) 1.8 2.0 - -
2.0
1
1.5 0
13 | Exchange Rate | USD per EUR 14 | Current Account | % of GDP

1.6 4
1.4
0
1.2
-4
1.0 Slovenia
Eastern Europe
Notes and sources
0.8 -8
1995 2000 2005 2010 1995 2000 2005 2010
General:
real sector data are from the Statistical Office of the Republic of Slovenia
(SORS) and the Central Bank of Slovenia (BS, Banka Slovenije). See
15 | USD/EUR | evolution of fcst 16 | Current Account | evol. of fcst
below for details. European Commission Forecasts refer to annual aver-
1.5 0 age harmonised inflation. Forecasts based on FocusEconomics Con-
2010 sensus Forecast.
2011 2010
2011
9 Inflation, annual variation in consumer price index (CPI) in % (eop).
1.4
2000-2014. Source: SORS.
-1
10 Interest rate, ECB refinancing rate in % (eop). 2000-2014. Source:
BS.
1.3 11 Inflation, evolution of 2010 and 2011 forecasts during the last 18
months.
-2 12 Interest rate, evolution of 2010 and 2011 forecasts during the last
18 months.
1.2
13 Exchange rate, USD per EUR (eop). Source: BS.
14 Current account balance as % of GDP. Source: BS.
15 Exchange rate, evolution of 2010 and 2011 forecasts during the
1.1 -3 last 18 months.
May Aug Nov Feb May Aug May Aug Nov Feb May Aug 16 Current account in USD billion, evolution of 2010 and 2011

FOCUSECONOMICS Cyprus November 2010
Cyprus
Cyprus
Outlook improves
• Consensus Forecast panellists expect the economy to contract
0.1% this year, which is up 0.1 percentage points from last month’s
forecast. For 2011, panellists expect the economy to rebound and
grow 1.4%.
LONG-TERM TRENDS | 5-year averages • Inflation rose from 3.2% in August to 3.5% in September. Panellists
2000-04 2005-09 2010-14 expect inflation to average 2.6% this year, which is up 0.1
GDP (EUR bn): 11.2 15.6 19.0
percentage points from last month’s figure. In 2011, the panel
GDP per capita (EUR): 15,777 20,063 22,368 anticipates inflation will moderate to 2.4%.
GDP growth (%): 3.5 3.0 1.7
Inflation (%): 3.1 2.2 2.5
Joan Enric Domene

Economist
1 | GDP | % variation 2 | Fiscal Balance | % of GDP 3 | Inflation | in %

6 5 6
Cyprus
Euro area Cyprus
World Euro area
3
0 4
-5 2
-3
Cyprus
Euro area
World
-6 -10 0
2000 2003 2006 2009 2000 2003 2006 2009 2000 2003 2006 2009
4 | GDP | evolution of forecasts 5 | Fiscal Balance | evolution of fcst 6 | Inflation | evolution of forecasts
3 -5 3.0
2010 2010 2010
2011 2011 2011
2
-6 2.5
-7 2.0
0
-1 -8 1.5

FOCUSECONOMICS Cyprus November 2010
Annual Data 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Real Sector
GDP (EUR bn) 11.0 11.8 12.7 13.5 14.4 15.9 17.2 16.9 17.4 18.0
Economic Growth (GDP, ann. var. in %) 2.1 1.9 4.2 3.9 4.1 5.1 3.6 -1.7 -0.1 1.4
Private Consumption (annual var. in %) 1.3 2.1 6.5 4.2 4.7 9.4 8.4 -3.0 -1.5 1.8
Fixed Investment (annual variation in %) 8.6 2.4 11.6 4.1 10.2 13.4 8.6 -12.0 -6.3 -0.3
Fiscal Balance (% of GDP) -4.4 -6.5 -4.1 -2.4 -1.2 3.4 0.9 -6.1 -6.8 -7.0
Inflation (HICP, annual variation in %) 3.1 2.2 3.9 1.4 1.5 3.7 1.8 1.6 - -
External Sector
Exports (EUR bn) 0.9 0.8 0.9 1.2 1.1 1.1 1.2 1.0 1.0 1.1
Imports (EUR bn) 4.2 3.9 4.6 5.1 5.5 6.4 7.4 5.7 5.8 6.1
Exports (annual variation in %) -18.6 -6.7 14.9 31.2 -9.5 -2.6 9.9 -19.1 4.6 8.4
Imports (annual variation in %) -1.7 -7.3 16.3 10.7 8.8 15.2 15.9 -23.2 2.6 5.5
7 | Unemployment | % of active pop. 8 | Current Account | EUR bn

12 0
Cyprus
Euro area
-1
9
-2
6
-3
Notes and sources
3 -4 General:
Long-term chart period from 2000 to 2011 unless otherwise stated.
2000 2003 2006 2009 2000 2003 2006 2009
All data are from the Central Bank of Cyprus (CBC), the Statis-
tical Service of the Republic of Cyprus (CYSTAT) and Eurostat.
See below for details. Forecasts based on FocusEconomics
Consensus Forecast.
9 | Unemployment | evol. of fcst 10 | Current Account | evol. of fcst
7.0 -1.2 1 GDP, annual variation in %. Source: CYSTAT.
2010 2 Balance of non-financial public sector, % of GDP. Source:
2010
2011 CYSTAT.
2011 3 Inflation, annual average variation in harmonised index of
consumer prices (HICP) in % (aop). Source: CYSTAT.
6.5 -1.4 4 GDP, evolution of 2010 and 2011 forecasts since January
2010.
5 Balance of non-financial public sector, evolution of 2010 and
2011 forecasts since January 2010.
-1.6
6 Inflation, evolution of 2010 and 2011 forecasts since January
6.0
2010.
7 Unemployment, % of active population. Source: Eurostat.
8 Current account balance EUR bn. Source: Eurostat.
9 Unemployment, evolution of 2010 and 2011 forecasts since
5.5 -1.8 January 2010.
Jan Mar May Jul Sep Nov 10 Current account balance in EUR bn, evolution of 2010 and

FOCUSECONOMICS Luxembourg November 2010
Luxembourg
Luxembourg
Outlook improves
• Consensus Forecast panellists raised their projections for 2010
growth by 0.2 percentage points and anticipate the economy to
grow 2.2%. Next year, the panel expects the economy to expand
2.5%.
LONG-TERM TRENDS | 5-year averages • Inflation stepped up from 2.2% in August to 2.4%. Consensus
2000-04 2005-09 2010-14 Forecast panellists expect inflation to remain stable in the remain-
Population (million): 0.4 0.5 0.5 der of the year and average 2.4%, which is up 0.1 percentage points
GDP (EUR bn): 24.4 35.8 43.3
GDP per capita (EUR): 54,694 74,995 83,282 from last month’s projection. Next year, the panel sees inflation
GDP growth (%): 4.2 2.8 2.7 moderating to 1.9%.
Fiscal Balance (% of GDP): 2.7 1.4 -1.8
Inflation (%): 2.8 2.7 2.0
Armando Ciccarelli
Senior Economist
1 | GDP | variation in % 2 | Fiscal Balance | % of GDP 3 | Inflation | in %

10 8 6
4 4
5
0 2
0
-4 0
Luxembourg Luxembourg
Luxembourg
Euro area Euro area
World World Euro area
-5 -8 -2
2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010
3.0 -3.0 3.0
2010 2011
2.5 -3.5 2.5
2.0 -4.0 2.0
1.5 -4.5 1.5
2010 2011 2010 2011

1.0 -5.0 1.0

FOCUSECONOMICS Luxembourg November 2010
Annual Data 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Real Sector
GDP (EUR bn) 24.0 25.8 27.5 30.3 34.2 37.5 39.3 37.8 39.5 41.2
Economic Growth (GDP, annual var. in %) 4.1 1.5 4.4 5.4 5.6 6.5 0.0 -3.4 2.2 2.5
Private Consumption (annual var. in %) 5.7 -5.9 1.9 2.2 2.4 2.5 3.2 -0.7 1.0 2.2
Fixed Investment (annual var. in %) 5.5 6.3 2.7 2.5 4.7 12.6 -0.1 -14.9 1.6 3.8
Fiscal Balance (% of GDP) 2.1 0.5 -1.1 0.0 1.4 3.6 2.9 -0.7 -3.3 -3.3
HICP (annual variation in %) 2.8 2.4 3.5 3.4 2.3 4.3 0.7 2.5 - -
Inflation (PPI, annual variation in %) 0.8 0.1 17.3 2.1 7.1 4.1 6.0 -9.9 - -
External Sector
Exports (EUR bn) 10.1 9.7 10.9 11.7 13.2 13.4 14.5 11.2 11.9 12.8
Imports (EUR bn) 12.3 12.3 13.7 15.1 16.6 16.9 18.9 14.2 14.4 14.9
Exports (annual variation in %) -0.3 -3.6 12.2 8.0 12.0 2.2 8.1 -23.1 6.6 7.1
Imports (annual variation in %) -4.5 0.4 11.4 10.1 9.5 2.1 11.5 -24.6 1.5 3.1

12 4
Luxembourg
Euro area
9
3
2
3
Notes and sources

0 1
General:
2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010
Long-term chart period from 2000 to 2011 unless otherwise
stated. All data are from the Central Bank of Luxembourg (BCL),
Eurostat, and the Statistics Office (STATEC, Service Central
de la Statistique et des Études Économiques). See below for
9 | Unemployment | evol. of fcst 10 | Current Account | evol. of fcst details. Forecasts based on FocusEconomics Consensus
8 4 Forecast.
2010 2011 2010 2011 1 GDP, annual variation in %. Source: STATEC.
2 General government balance, % of GDP. Source: Eurostat.
7 3 consumer prices (HICP) in % (aop). Source: STATEC.
4 GDP, evolution of 2010 and 2011 forecasts since January
2010.
5 General government balance, evolution of 2010 and 2011
6 2 6 Inflation, evolution of 2010 and 2011 forecasts since January
2010.
7 Unemployment, % of active population. Source: STATEC.
8 Current account balance in EUR bn. Source: BCL.
5 1 January 2010.
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 10 Current account balance in EUR bn, evolution of 2010 and

FOCUSECONOMICS Malta November 2010
Malta
Malta
Outlook improves
• Consensus Forecast panellists expect the economy to expand
1.5% this year, which is up 0.3 percentage points from last month’s
forecast. For 2011, panellists expect economic growth to
accelerate to 1.9%.
LONG-TERM TRENDS | 5-year averages • Panellists expect inflation to average 1.9% this year, which is down
2000-04 2005-09 2010-14 0.1 percentage points from last month’s estimate. In 2011, the
Population (million): 0.4 0.4 0.4 panel anticipates inflation will average 2.1%.
GDP (EUR bn): 4.4 5.4 6.5
GDP growth (%): 2.2 2.3 2.1
Inflation (%): 2.5 2.5 2.2
Marcos Felipe Casarin

Economist
1 | GDP | % variation 2 | Fiscal Balance | % of GDP 3 | Inflation | in %

10 5 6
Malta Malta Malta Euro area
Euro area
World Euro area
World
5 0 4
0 -5 2
-5 -10 0
2000 2003 2006 2009 2000 2003 2006 2009 2000 2003 2006 2009
3 -3.5 2.4
2010
2011
2.2
2 -4.0
2.0
1 -4.5
1.8
2010
2010 2011 2011
0 -5.0 1.6

FOCUSECONOMICS Malta November 2010
Annual Data 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Real Sector
GDP (EUR bn) 4.5 4.4 4.5 4.8 5.1 5.5 5.7 5.7 5.9 6.2
Economic Growth (GDP,annual var. in %) 2.6 -0.3 0.7 3.9 3.6 3.8 1.7 -1.5 1.5 1.9
Private Consumption (annual var. in %) -1.5 3.9 2.4 2.3 0.6 2.2 5.1 1.3 1.1 1.9
Fixed Investment (annual variation in %) -19.5 23.1 -0.8 12.1 5.1 -0.6 -21.7 -18.8 5.6 5.7
HICP (annual variation in %) 2.1 2.4 1.9 3.4 0.8 3.1 5.0 -0.4 - -
External Sector
Current Account Balance (% of GDP) 2.4 -3.1 -6.0 -8.8 -9.2 -6.1 -5.6 -3.9 -5.7 -6.2
Current Account Balance (EUR bn) 0.1 -0.1 -0.3 -0.4 -0.5 -0.3 -0.3 -0.2 -0.3 -0.4
Trade Balance (EUR bn) 0.1 -0.1 -0.2 -0.3 -0.3 -0.1 -0.2 0.1 -0.3 -0.4
Exports (EUR bn) 3.8 3.6 3.6 3.7 4.5 4.9 4.7 4.2 4.1 4.4
Imports (EUR bn) 3.7 3.6 3.7 4.0 4.7 5.0 4.9 4.1 4.4 4.7
Exports (annual variation in %) 7.6 -5.7 -0.3 3.7 20.5 10.0 -4.0 -11.5 -0.3 6.7
Imports (annual variation in %) -1.2 -0.8 2.5 5.7 19.1 6.3 -2.8 -16.5 7.6 7.1

12 0.5
Malta Euro area
10
0.0
-0.5
6
Notes and sources

4 -1.0
General:
2000 2003 2006 2009 2000 2003 2006 2009
Long-term chart period from 2000 to 2011 unless otherwise stated.
All data are from the Central Bank of Malta (BCM, Bank Centrali
ta’ Malta) and Eurostat. See below for details. Forecasts based
9 | Unemployment | evol. of fcst 10 | Current Account | evol. of fcst
7.6 -0.1 1 GDP, annual variation in %. Source: Eurostat.
2010 2 Balance of non-financial public sector, % of GDP. Source:
2010
2011 Eurostat.
7.4 2011 3 Inflation, annual average variation in harmonised index of
-0.2 consumer prices (HICP) in % (aop). Source: Eurostat.
4 GDP, evolution of 2010 and 2011 forecasts since January
7.2 2010.
-0.3 5 Balance of non-financial public sector, evolution of 2010 and
7.0
6 Inflation, evolution of 2010 and 2011 forecasts since january
2010.
-0.4 7 Unemployment, % of active population. Source: Eurostat.
6.8
8 Current account balance in EUR bn. Source: Eurostat.
6.6 -0.5
January 2010.
10 Current account balance in EUR bn, evolution of 2010 and

FOCUSECONOMICS November 2010
Notes and Statements
PUBLICATION NOTE
Consensus forecasts are mean averages of projections of economic forecasters surveyed by

FocusEconomics for our monthly publication. Quarterly averages may not correspond to the annual
figures due to different forecast panels.
The GDP-weighted averages for the world refer to economies surveyed by FocusEconomics on a
monthly basis, and include the following countries and regions, comprising more than 90% of total
global output:
G7 (7 countries): Canada, Japan, United Kingdom and United States; France, Germany and Italy
are also Euro area countries.
Euro area (16 countries): Austria, Belgium, Cyprus, Finland, Greece, Ireland, Luxembourg, Malta,
Netherlands, Portugal, Slovakia, Slovenia, and Spain.
Eastern Europe (14 countries): Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Romania, Russia, Turkey and Ukraine.
Asia-Pacific (11 countries): Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, New
Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam.
Latin America (20 countries): Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Do-
minican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Uruguay and Venezuela.
Weights are based on market exchange rates and reflect the latest forecasts on GDP growth, infla-
tion and exchange rates.
BRIC (4 countries): Brazil, Russia, India, and China. The term was coined by Goldman Sachs in
November 2001 and has since been widely adopted in investment and finance.
Slovakia and Slovenia are from Eastern Europe publication. For publication and poll dates please
refer to FocusEconomics Consensus Forecast Eastern Europe.
COPYRIGHT NOTE
© Copyright 2009 FocusEconomics S.L. Duplication, reproduction, transmission, publication or re-

distribution in any form or by any means electronic, mechanical, or otherwise without prior written
consent of FocusEconomics S.L. is strictly prohibited. Please cite source when quoting. All rights
reserved under International Copyright Conventions.
The FocusEconomics Consensus Forecast - Major Economies is a monthly publication of

FocusEconomics. Communications to the Editor or FocusEconomics in general should be addressed
as follows:
FocusEconomics S.L.
Gran Via 657
E-08010 Barcelona
Spain
tel: +34 932 651 040
fax: +34 932 650 804
e-mail: info@focus-economics.com
web: http://www.focus-economics.com
DISCLOSURE STATEMENT
The FocusEconomics Consensus Forecast – Euro Area (“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
Forecast is accurate, complete or timely. The Information Providers do not make any warranties with regard to the results obtained from
the Forecast. The Information Providers are not responsible for any errors or omissions, or for any injuries or damages resulting from the
use of this information, including incidental and consequential damages. Recipients should not regard the Forecast as a substitute for
the exercise of their own judgement. The recommendations made in the Forecast may be unsuitable for investors depending on their
specific investment objectives and financial position. The Forecast has been prepared solely for informational purposes and is not a
solicitation of any transaction or an offer to enter into any transaction. Any opinions expressed in this report are subject to change without
notice and the Information Providers are under no obligation to update the information contained herein.

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FOCUSECONOMICS

FORECAST Euro area ................................. 1 2

Euro Area Germany .................................. 2 9

Slovenia ................................. 101

Cyprus ................................... 107

Luxembourg .......................... 109

Malta ....................................... 111

Notes ....................................... 113

Order Form ............................. 114

Arne Pohlman Gerardo Morán Marcos Felipe Casarin

Armando Ciccarelli Ricardo Aceves Joan Enric Domene

© FocusEconomics 2010 Gran Via 657 E-08010 Barcelona, Spain

• Consensus Forecast panellists have raised their 2010 GDP growth

• Inflation forecasts for 2010 remained unchanged at last month’s 1.5%.

Forecast Changes over last Month

Change in 2010 GDP Growth Forecast Change in 2010 Inflation Forecast

FocusEconomics Consensus Forecast Euro Area | 2

On 29 October, leaders of the European Union member states agreed on an amendment of

According to a preliminary estimate, inflation inched up from 1.8% in September to 1.9% in

FocusEconomics Consensus Forecast Euro Area | 3

FocusEconomics Consensus Forecast Euro Area | 4

Quarterly Data | Economic Growth and Inflation | Q1 2009 - Q4 2011

Gross domestic product 2009 2010 2011

GDP, yoy var. in % Inflation, yoy var. of quarterly avg. CPI in %

Inflation, yoy var. of 2009 2010 2011

FocusEconomics Consensus Forecast Euro Area | 5

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

4 Notes and sources

GDP per capita, EUR GDP per capita, 2010

40,000 Notes and sources

FocusEconomics Consensus Forecast Euro Area | 6

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

2 Notes and sources

2008 2009 2010 2011

Investment, annual variation in % Investment Growth, 2010

Euro area -1.0 -11.3 -0.5 2.2 2.8 3.2 3.2

6 Notes and sources

2008 2009 2010 2011

FocusEconomics Consensus Forecast Euro Area | 7

Industrial Production, annual variation in % Industrial Production Growth, 2010

16 Notes and sources

Unemployment, % of active population Unemployment, 2010

21 Notes and sources

FocusEconomics Consensus Forecast Euro Area | 8

Fiscal Balance, % of GDP Fiscal Balance, 2010

5 Notes and sources

2008 2009 2010 2011 Note: Fiscal balance as % of GDP.

Public Debt, % of GDP Public Debt, 2010

125 Notes and sources

FocusEconomics Consensus Forecast Euro Area | 9

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

6 Notes and sources

10-year Bond Rate, % 10-year Bond Rate, 2010

France 3.4 3.6 2.8 3.2 4.0 5.2 5.2 Spain

Germany 2.9 3.3 2.6 3.2 3.2 3.7 4.2 Ireland

FocusEconomics Consensus Forecast Euro Area | 10

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

10 Notes and sources

Exports, annual variation in % Export Growth, 2010

20 Notes and sources

2008 2009 2010 2011

FocusEconomics Consensus Forecast Euro Area | 11

Imports, annual variation in % Import Growth, 2010

2008 2009 2010 2011