Siemens 2013 Annual Report Download - page 227

253 D. Consolidated Financial Statements
357 E. Additional Information
245 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report
246 C. Siemens AG ( Discussion on basis of
German Commercial Code)
250 C. Notes and forward-looking statements

C. Report on expected developments
and associated material opportunities and risks
C.. Report on expected developments
C... WORLDWIDE ECONOMY
In  we expect global GDP growth to accelerate moderately
to .% (using our own calculations based on IHS Global In-
sight forecasts). Unlike in recent years, we expect growth in
industrialized countries to pick up more strongly than in
emerging markets. GDP in industrialized countries is expected
to increase .%, which is . percentage points more than in
. Main drivers of the anticipated acceleration are the
strengthening of the U.S. economy; stabilization in European
countries that are strongly affected by the sovereign debt cri-
sis; less drag from fiscal consolidation policies; and the contin-
uation of accommodative monetary policies. GDP in the
emerging countries is forecast to expand .%, which is .
percentage points more than in . Downside risks include a
renewed escalation of the federal budget stalemate in the U.S.
at the beginning of calendar ; a resurgence of the Euro cri-
sis; and an intensification of balance-of-payments problems
and exchange rate devaluations in some emerging countries
(e.g. India, Indonesia) which could spread more widely. In ad-
dition, poor execution of U.S. central bank “tapering” of its ex-
pansive monetary policy could exacerbate capital flight from
emerging markets and add additional stress for these coun-
tries. Although downside risks are not negligible, they can be
contained through responsible political action. Hence we be-
lieve that the upside potential for  GDP growth dominates
the outlook. Increasing economic activity is expected to sup-
port investment spending, production and value added in the
manufacturing sector, all of which were dampened by political
and economic uncertainty and lack of demand in the last
few years. Therefore, for the global economy we expect fixed
investment to grow .% in , and value-added manu-
facturing .%.
For Europe the most severe problem is the unsustainable high
unemployment in the countries most affected by the sover-
eign debt crisis. Besides causing political uncertainties it weighs
heavily on private consumption and investment activity. How-
ever, structural reforms to regain lost competitiveness seem to
bear fruit, particularly since the spring quarter of . Labor
costs are falling and export performance is improving. For ex-
ample, surveys of consumer and business sentiment for the
Euro zone recently hit two-year highs. But even as financial in-
stitutions and private households reduce their debt levels and
governments keep on balancing their budgets, growth is ex-
pected to remain subdued for a longer period of time. A nota-
ble exception is Germany. The country ’s unemployment rate is
on a very low level historically, incomes are rising, the housing
market is gaining momentum after years of stagnation, and
monetary policy is very expansionary given the good shape of
the German economy. Hence we expect the country ’s GDP to
grow .% in , a full percentage point more than in the
whole Euro zone. GDP for the region Europe, C.I.S., Africa and
Middle East is expected to expand .% in . We expect val-
ue-added manufacturing to show nearly the same growth rate,
while fixed investment shows stronger growth of .%.
As with the “fiscal cliff” situation last year, GDP development in
the Americas will depend on the handling of the U.S. federal
budget and debt ceiling. In the months leading up to October
,  the political parties for a long time failed to reach
agreements on these issues. Accordingly, the government had
to shut down many of its services for  days. Even more worri-
some was the potential that the U.S. would have to default on
certain government bonds if the debt ceiling were not raised.
Although these consequences were averted due to an agree-
ment at the last moment, the solution of the underlying prob-
lems were only postponed. The agreement allows the govern-
ment to stay open until mid-January and the debt ceiling to be
raised only until February . Before these deadlines, the
parties have agreed to develop a budget plan for the next ten
years. For U.S. and global GDP growth to continue their posi-
tive development in , it is essential that permanent agree-
ments can be reached without further uncertainties. Assum-
ing such an outcome, the outlook for the U.S. economy is posi-
tive. Indeed economic activity was already regaining speed in
, which was supported by a recovering real estate sector,
higher household wealth and improving bank lending condi-
tions. With monetary conditions remaining favorable, real
estate and business investment should pick up in  and
contribute to accelerating GDP growth. In Brazil, we expect the
current reacceleration of growth to reach a moderate pace in
, contributing positively to economic dynamics for Latin
America. In the Americas region overall, fixed investment
spending is expected to grow .% in , faster than GDP and
value-added manufacturing which are expected to expand
.% and .%, respectively, in .
As in recent years, Asia, Australia leads the other world re-
gions in the rate of GDP growth. In China, recent data on eco-
nomic activity suggest a continuation of the modest reacceler-
ation which started in mid-, supplemented in  by a
small government stimulus program. We expect GDP in China
to grow roughly % in . The government’s actions in the
past demonstrated its commitment to provide mild stimulus if
annual growth appears to be falling below .%. Several down-
side risks remain for the next year. First, the government’s ef-
forts to rebalance growth away from investment toward con-
sumption might fail and curb economic activity too strongly.