President o

1. Eastern Europe
in the Global Economy
November 2012
By Ruth Stanat
President SIS International Research
AIMRI Conference, Prague 2012
Navigate the Global Economy tm

2. Table of Contents
• New Market Landscape
• Decision Points
• Country Profiles
• Case Study
• Conclusions

3. New Market Landscape 2013
Regions Trends 2013
Western Europe Slow growth or recession in many markets
Economic uncertainty
Corporate and Structural Reform
Higher taxes in some markets
Ageing population, mixed population growth rates
North America Economic recovery under pressure
New taxes from Healthcare reform, early 2013
Ageing population, slow but present population growth
Latin America Growth estimates ~ 3-6%
Growth in energy, commodities, consumer markets
Growing populations
Asia High growth markets >5% growth
Slowing manufacturing
Slowing China
Growing populations, Young societies (except China and Japan)
Middle East Potential fallout from political instability
Growing economies, young populations
CONFIDENTIAL 3
Africa High growth markets >5% growth

4. Bad News Paralysis?
Sources: StockPodium.com 4

5. Decision Points: What “Wins” Today?
Sources of Competitive Advantages:
But… corporate performance is
based on factors beyond bleak or Speed / Time to market
optimistic economic projections.
Productivity
Political and economic stability
•Are the fundamentals strong? Innovation
•Are any industries showing promise? Infrastructure
•What’s next for slowing economies?
Cost / Quality mix
Market access
Economies of Scale
5

6. Opportunities
Major Global Trends:

7. Is Eastern Europe Overlooked?
• Foreign Investment
– Eastern Europe FDI to reach
around $172 billion by 2014.
(PWC)
• Automotive Industry
– Automotive giants have discovered
the potential of Eastern Europe.
Volkswagen, for instance, established
various production facilities and
numerous companies are following.
7

8. Data Points
• Figure shows the gross domestic product based on purchasing-power-parity
(PPP) valuation of GDP
• 2012: $2,827.98 billion, with a 3.959% growth in GDP
• PPP in US Dollars for Central and Eastern Europe is forecasted to rise to
$3,316.76 billion by 2015
Source EconomyWatch
8

9. Trends in Eastern Europe
9

10. Country Profile: Poland
Growth amid the Euro Zone crisis
– Ranked 6th on 2011’s list of “world's most attractive investment countries”
(UN Trade & Development)
– FDI in 2011 grew 46% vs EU average rate of 17%
– Polish GDP forecast to grow 3.5% in 2012. (World Bank)
Robust Human Capital
– More than 87% of Polish university students master at least one foreign
language.
Vibrant Consumer Market
– Domestic spending in Poland grew by 14.5% in 2011
Sources: China Daily; Emergingmarkets.org
10

11. Country Profile: Czech Republic
• Third largest machinery market within the EU27 (Machinery output per
GDP)
• Main exports include:
– Manufactured goods
– Machinery
– Cars and Transport Equipment
– Beer
• The auto industry remains the largest single industry and accounts for
nearly 24% of Czech manufacturing.
• The Czech Republic is a stable and prosperous market economy.
– This is due to the conservative and inward-looking Czech financial
system.
Sources: Investopedia
11

12. Country Profile: Russia
• Main exports include:
– Oil and Oil Products
– Natural Gas
– Wood and Wood Products
– Metals
– Chemicals
– Weapons and Military Equipment
• Russia surpassed Saudi Arabia as the world’s leading oil producer.
• Russia is the second-largest producer of natural gas.
• Russia holds the world’s largest natural gas reserves, as well as the second-largest
coal reserves.
• Gazprom, the state-run gas monopoly, is the world’s largest producer and exporter.
12

13. Other Countries
• Hungary
– The private sector accounts for more than 80% of GDP. Foreign ownership and
investment in Hungarian firms are widespread, with a cumulative FDI worth
more than $70 billion.
• Slovakia
– Cheap and skilled labor, low taxes, a 19% flat tax for corporations and
individuals, no dividend taxes, and a relatively liberal labor code are Slovakia's
main advantages for foreign investors.
• Ukraine
– Ukraine's economy was buoyant despite political turmoil; real GDP growth
exceeded 7%, fueled by high global prices for steel - Ukraine's top export - and
by strong domestic consumption, spurred by rising pensions and wages.
Sources: CIA World Factbook
13

14. Conclusions
• Managers can find opportunities beyond the economic bad news
• Eastern Europe may be overlooked in the global economy
• Eastern Europe may be an attractive alternative to other parts Europe
for some managers
• New opportunities for investors are possible in this level playing field
14

15. Sources
• http://emergingmarkets.transactionservices.citi.com/json/browse_page/13
• http://www.emergingmarkets.org/Article/3078582/Fund-manager-sees-rebound-in-emerging-
markets.html
• http://emergingmarketmusings.com/tag/eastern-europe/
• http://www.emergingmarkets.org/Article/3074061/Meet-the-sleeping-tiger-in-CEE.html
• http://info.hktdc.com/tdcnews/0609/06090401.htm
• http://www.economywatch.com/economic-statistics/country/Central-and-Eastern-
Europe/year-2012/
15