FY 2012 - Investor Relations - NIS

Business environmentWorld EconomyA high level of debt and slow development are themain characteristics of the world economy in 2012. TheEuro Zone crisis continued in 2012 as well, and weakenedfinancial institutions and inadequate policies in main developedeconomies additionally worsened negative results.The Euro Zone crisis is the greatest threat to the worldeconomy. The economic catastrophe, in particular in theEuropean Union, was avoided by Greek debt restructuring.Unemployment has been increased in many countriesworldwide. Unemployment in France has reachedthe level of 10.3%, representing the minimum level ofunemployment in the last 13 years. The Euro Zone crisiswill continue in 2013 as well, with the possibility that oneor more countries leave the Euro Zone. The active continuationof reforms and recovery of economy are requiredprimarily in the countries facing a deep economic crisis,and/or in: Greece, Spain, Portugal and Italy.On the other hand, the world economic situation dependsto a great extent on the economic situation of theUSA where a certain economic growth has been identified.The unemployment rate in the USA has dropped tothe lowest level in the last four years, real estate markethas been stabilized and financial markets operate withsufficient cash. Based on the assessment of analytic experts,the USA economy has not recovered as strongly asit has been expected.GDP movement in EU countries, region and SerbiaA drop in economic activity and BDP growth has beenestablished in almost all countries in the world. As assessedby the Statistical Office of the EU (Eurostat), a dropin GDP growth at the level of the European Union in 2012will amount to 0.3%.The year 2012 in Serbia was marked, in particular,with a high inflation rate, drop in the economic activityand a high unemployment rate. A drop of economic activityin Italy and other countries, important partners toSerbia in foreign trade, reflected on the drop of exportdemand and local investments. Due to extremely badagricultural season and increase of production costs,food products prices have made the greatest increase.The increase of general VAT rate from 18% and 20% andexcise tax increase effective as of 1 October 2012 resultedin the price increase of a great number of productsand services.GDP Trend in Serbia from 2000 to 2012, in %, *2012**201120102009200820072006200520042003200220012000-2.0eBased on the World Bank's estimates, the GDP inSerbia will drop by 2% in 2012 which is one of the lowestscores made in the South East European region. A realdrop of GDP in 2012 results from the decrease of the totallocal private demand, both in the area of fast movingconsumer goods, as well as in the area of investmentconsumption. The GDP increase of 2% is expected in2013, mainly due to the acceleration of Fiat exports andits suppliers, as well as due to the increase of agriculturalproduction.2.54.35.33.65.41.61.0-3.53.85.40 500,000 1,000,000 1,500,000 2,000,000* GDP for the first two quarters in 2012** Amount in million RSD9.3Amount in million RSDGDP Growth Rate in 2011 and its estimate in 2012 , in %, Eurostat2.71.5 1.7 2.21.60.8 0.8 0.8-0.3-6,0-7,1-1.2ЕУ 27 Bulgaria Greece Hungary Austria Romania Slovenia Croatia* Source: Eurostat, national statistical offices0.62011 2012-2.30.0-1.9USD/RSD and EUR/RSD exchange rate trendsUSD/RSD2010 2011 2012907050I II III IV V VI VII VIII IX X XI XIEUR/RSD2010 2011 20121201101009080I II III IV V VI VII VIII IX X XI XI60 • Business environment Annual report 2012Annual report 2012Business environment • 61