Siemens 2012 Annual Report Download - page 202

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

Europe’s economic performance is expected to remain slug-
gish in the years ahead, as the region’s crisis countries will con-
tinue to suffer from high government debt levels, tight fiscal
policies and high levels of unemployment. The weak economic
development in the south is forecast to continue to dampen
northern export economies such as Germany. Nevertheless,
Germany should still be able to grow slightly due to strength-
ened domestic demand. In particular private consumption is
expected to grow further due to low unemployment and solid
growth in real wages. Exports could continue to contribute to
growth despite the deep recessions in many Euro-area econo-
mies, because non-Eurozone countries are becoming more and
more important for German exporters. The geopolitical devel-
opment in the Middle East and Africa has a strong influence on
oil prices and thus on costs in global supply chains. For exam-
ple, sanctions including oil embargos against Iran and spillover
effects of political turmoil in Syria could lead to higher oil pric-
es and a slowdown of economic activity.
Within the Americas, much in the U.S. will depend on the
handling of the fiscal cliff, which if it takes place would result
in expiration of broad-based personal income tax cuts and im-
plementation of federal spending cuts. These in turn could
lead to a recession in the U.S. Some support for the economy
will come from the Federal Reserve Bank. QE, the decision of
the Federal Reserve to make monthly purchases of mortgage-
backed securities worth US$ billion, should lower longer-
term interest rates and support investment spending and the
real estate market in . Latin America is expected to profit
from reacceleration of growth in Brazil, which should benefit
from the expansive monetary policy of the Brazilian Central
Bank. Beyond that, Brazil’s planned investments related to the
upcoming World Cup in  and the Olympic Games in 
should provide a strong fiscal stimulus.
In Asia, China and India continue to be major growth engines.
The increase in government spending should help China’s
economy counteract the negative effect of low export de-
mand. Growth in Asia is also supported by other fast-growing
countries including Indonesia and Vietnam, whose production
should expand by % to % in the coming years. The outlook
for Japan is less optimistic. For  growth will slow down
again, as consumer spending is still subdued and deflation risk
has increased again. India could benefit from its announced
macroeconomic reform package. The Indian rupee, which lost
% of its value between July  and September , stabi-
lized after the announcement. The underdeveloped infrastruc-
ture of the country is still a major risk for industrial growth.
Major grid failures due to a persistent energy supply-demand
gap can severely hurt economic activity.
All in all, growth in global GDP is expected to gradually go back
to the pre-crisis trend of around .% in . Nevertheless, the
financial crisis in the advanced economies will have a lasting
effect. For example, there remain significant downside risks of
a new escalation of the European sovereign debt crisis. On the
other hand, a fast resolution of the crisis could bring growth
back to trend sooner than expected.
Gross fixed investments in real terms are expected to grow
faster than GDP in both  and . On a global basis, IHS
Global Insight is estimating .% growth in gross fixed invest-
ments in  and .% growth in . In both years the Asia,
Australia and Americas regions are expected to achieve clear
growth in gross fixed investments while the Europe, C.I.S.,
Africa, Middle East region is lagging behind, mainly due to low
investment levels in Europe.
Manufacturing value added in real terms is also projected to
grow somewhat faster than GDP. On a global basis, IHS Global
Insight is estimating .% growth in manufacturing value add-
ed in  and .% growth in . Clear growth above the
global average is expected in the Asia, Australia region. Growth
in the Americas and Europe, C.I.S., Africa, Middle East, particu-
larly in Europe, is expected to be markedly slower than in Asia,
Australia.
The forecasts presented here for gross domestic product, gross
fixed investment and manufacturing value are based on a re-
port from IHS Global Insight dated October , . Siemens
has not independently verified this data.
...  
We expect the growth of markets served by our Energy Sector
to recover somewhat from the downturn in fiscal  and to
return to moderate growth in the fiscal years  and . On
an overall basis, we expect generally strong demand from
emerging markets, which continue to expand their power infra-
structures, and from developed economies, which need to
modernize their aging energy infrastructures and have com-
mitted to implementing environment-friendly energy policies.
Overall, the global market development for Energy depends to
a large degree on resolution of the sovereign debt crisis in a
number of developed countries. Nevertheless, for fiscal year
 we expect the fossil power generation market to return to
prior levels. For the wind onshore market we expect a flat de-
velopment, with the regions Europe, C.I.S., Africa, Middle East
and Asia, Australia offsetting a drop in demand in the U.S. Off-
shore wind markets are expected to regain growth momentum
following slack demand in fiscal . Price pressure is expect-
ed to remain very strong. The energy transmission markets are
expected to grow moderately over the next two fiscal years.