Global economic outlook — Summary Key questions Global growth expected at just under e Can emerging markets (EM) continue to offset developed market (DM) weakness to buoy global 3% in 2012 growth? a é A 2011 2012F 2013F 2011 2012F 2013F e What are the risks of near-term faltering of the US economic recovery? oa nS a; a ca Ca e When is the European economy likely to return to sustainable economic expansion? Gatada _ad 2) _24__28 _21 _238 ClO View (Probability: 60%*) __—— a ¢ Global economic activity remains moderate; the growth impulse stems largely (some 80%) from the EM oe SS region. As expected, China started to ease monetary policy. The country is better placed than other EM Europe Eurozone i504 04 27. 23 20 and particularly DM countries to counter growth weakness with further monetary and fiscal stimuli. Thus, ~ mE S we expect EM growth to stabilize soon and pick up in 2H 2012. italy 05. 18 02 29. «#34 «39 e US economic indicators have on balance been disappointing recently, especially data related to business USS fixed investment and employment growth. Thus, we lowered our 2Q 2012 real GDP growth forecast to an Switzerland 200137020 annualized rate of 1.5% from 2%. We still expect growth slightly above 2% in 2H 2012. We think that the =) (—{j————@- $2 risk that the Fed will take measures in addition to the extension of "Operation Twist" is still significant. Source: UES C16, asoF ZB JanelZ012 e Large parts of Western Europe are in recession or stagnation. We expect the economies of the Eurozone In developing the ClO economic forecasts, CIO economists and the UK to show mild improvement in 2H 2012. Still, economic activity is likely to remain very sluggish worked in collaboration with economists employed by UBS d P f | il 9 d | ie | terit The B k fE | d t Investment Research. Forecasts and estimates are current espite support from lower oil prices and less rigorous fiscal austerity. The Bank of England may suppor ale 6S oe the wide oP Lore eublietien aw! racy S