1. A Global Economic and Market Outlook March 2011 Presented by Dr Chris Caton

2. 2 Production in flooded areas-- % of national production

3. 3 Queensland black coal production

4. 4 US Housing starts are bumping along the bottom Source: Datastream (Millions)

5. 5 It keeps taking longer to get back the jobs (% decline from peak employment)

6. 6 2011 Growth Forecasts (%) Month of Forecast A-10S-10O-10N-10D-10J-11F-11 Australia3.4 3.5 3.23.12.9 New Zealand3.43.33.2 3.32.92.7 US2.82.4 2.73.2 Japan1.51.31.2 1.11.21.5 China9.0 9.1 9.29.3 Germany1.71.92.02.12.22.5 UK2.02.11.92.0 2.11.9 “World”3.33.1 3.23.43.5 Source: Consensus Economics

7. 7 Industrial production (2005=100)

8. 8 Food prices relative to US GDP deflator (1970=100, log scale)

9. 9 Real GDP growth in Australia and the US Source: Datastream Year to % change

10. 10 China is tracking Japan very closely

11. 11 What goes up…..

12. 12 The Labour market is on the mend Source: ABS 000’s% Employment (LHS) Unemployment Rate (RHS)

13. 13 Australian Inflation Source: ABS % BT Forecasts GST Effect

14. 14 Proportion of prices in the CPI that went up in the quarter

15. 15 House prices since 2005

16. 16 Gross Domestic Product Source: ABS % BT Forecasts GST Effect

17. 17 Capital spending is set to grow further

18. 18 Source: Consensus Economics GDPInflation Australia3.32.7 United States2.91.7 New Zealand2.72.6 Canada2.52.0 Norway2.42.9 Sweden2.52.0 United Kingdom2.31.8 Spain2.01.7 Switzerland1.91.4 France1.91.5 Netherlands1.72.2 Euro Zone1.71.8 Germany1.6 Japan1.40.2 Italy1.01.8 Global Medium-Term Economic Growth and Inflation Prospects (2011-2023)

19. 19 Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2010-2020) GDPConsumer Prices China8.43.3 India8.16.2 Indonesia6.35.5 Malaysia5.32.8 Philippines5.14.5 Singapore5.02.0 Thailand4.93.2 Taiwan4.92.0 South Korea4.13.0 Hong Kong3.93.0 Australia3.32.7 New Zealand2.72.6 Japan1.40.2 Source: Consensus Economics

20. 20 Financial Market Forecasts Now (4 March) End-Jun 2011 End-Dec 2011 AUD/USD 1.014 0.950.87 Official cash rate (%) 4.75 5.00 10 Year Bond yield (%) 5.59 5.60 ASX 200 4850 50005250

21. 21 The Australian Dollar and US Trade Weighted Index Source: Datastream IndexAUD/USD US TWI inverted (LHS) AUD/USD (RHS)

22. 22 Average daily trading range in the Australian dollar

23. 23 Australian Sharemarket Performance – ASX200 Source: Bloomberg

24. 24 The Australian market is again cheap (forward P/E ratio)

25. 25 World share markets are cheap also

26. 26 It makes a difference when you buy

27. 27 Economics does matter!

28. 28 Morgan Stanley Capital Indexes Source: Datastream Developed IndexAsian Emerging Markets Index Asian Emerging Markets Index (RHS) World Developed Index (LHS)

29. 29 Summary  The global economic recovery continues, albeit at a moderate pace. This makes it a long recovery.  The Australian economy should continue to grow well, led in the short term by mining investment. The floods will have only temporary effects on the macroeconomic data.  Interest rates should eventually rise further.  The exchange rate is above fair value. The rest of the world is on sale for Australians.  Share markets are still cheap.

30. 30 This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time)

31. 31 Australia’s public debt problem is complete fiction!