1. Much of Europe Stumbles Into Recession Central Europe’s Resiliency Weakens Presented by: Kris Bledowski Senior Economist kbledowski@mapi.net

2. Europe’s Economies are Slowing Gross Domestic Product, 2012 forecast Source(s): Eurostat and European Commission and MAPI

3. Exports Support Growth in the Absence of Government Demand Domestic Demand and Exports, Eurozone Source(s): Eurostat

4. Unemployment Rate Inches Up and Long-Term Jobless Ranks Swell Unemployment in the Eurozone Source(s): Eurostat Percent Unemployed

5. Industrial Sentiment Indicator Forward-Looking Indicators Point Toward Slower Industrial Growth Source(s): Eurostat

6. Eurozone’s Manufacturing Sector Is Outperforming the Overall Economy… Inflation-Adjusted GDP Versus Manufacturing Production Index, Eurozone Source(s): Eurostat and MAPI

7. Manufacturing Sector Capacity Utilization Rate Source(s): Eurostat Percent of Capacity …But Industrial Capacity Usage Is Far From Pre-Recession Levels

8. Industry Inflation-Adjusted Percent Change 20112012(F)2013(F) Fabricated Metals6.83.94.6 Machinery & Equipment11.63.53.7 Chemicals0.93.34.2 Electrical equipment5.13.33.9 Computers & electronics9.12.84.6 Motor vehicles12.12.12.7 Construction-1.21.52.5 Food, beverages, tobacco products1.30.3-0.5 Petroleum & Coke-0.2-0.1-0.4 Rubber & Plastics4.2-0.2 Paper & products-0.5-0.6-0.4 Non-Metallics2.9-0.6-0.4 Wood & products1.4-1.8-0.9 Textiles-3.2-5.9-6.8 MAPI Manufacturing Production Forecast, Eurozone F=Forecast Source(s): Eurostat and MAPI Investment Goods Top Industrial Growth Tables

9. Industry Inflation-Adjusted Percent Change 20112012(F)2013(F) Motor vehicles17.212.814.1 Electrical equipment37.912.714.6 Rubber & Plastics11.05.45.5 Machinery & Equipment-6.53.67.1 Construction-6.51.40.0 Chemicals5.80.91.7 Computers & electronics0.3-1.4-6.1 Paper & products0.4-2.9-0.3 Non-Metallics2.9-3.2 Fabricated Metals12.8-5.22.9 Wood & products-10.8-5.4-2.4 Food, beverages, tobacco products1.0-5.7-8.4 Petroleum & Coke-4.0-6.4-2.9 Textiles13.0-9.9-10.4 MAPI Manufacturing Production Forecast, Central Europe F=Forecast Source(s): Eurostat and MAPI Central Europe Decelerates Sharply on the Back of Eurozone’s Recession

10. Economic Risks o External growth environment weakens o Fiscal straightjacket dampens domestic demand Political Risks o Anti-Establishment Political Parties Win o Resentment Toward Brussels-Centered Policies Grows Greece – a Special Case? o New parliamentary election likely o Lurch to the left possible o Deadlock over IMF program looms in June o Political instability a stepping stone to Eurozone exit? Risks to Outlook