· 2010. 3. 14. · This report is available on wellsfargo.com/research and on Bloomberg WFEC March 11, 2010 Economics Group Executive Summary: Will the Global Economy Expand in

This report is available on wellsfargo.com/research and on Bloomberg WFEC

March 11, 2010

Economics Group

Executive Summary: Will the Global Economy Expand in 2010? The seizing of financial markets that followed Lehman Brothers’ failure caused the global economy to fall into its deepest recession in decades. By the spring of 2009 industrial production (IP) in the 30 countries that comprise the Organisation for Economic Cooperation and Development (OECD) had plunged more than 15 percent from year-earlier levels (Figure 1).

Incredibly, it could have been far worse. The governments of the world’s major countries averted catastrophe at the height of the crisis by taking steps to prevent a wholesale collapse of their financial systems via recapitalization, loan guarantees and increased deposit insurance. In addition, major central banks slashed policy rates to unprecedented levels, and many implemented programs of “quantitative easing” to provide further stimulus. Governments in most major countries opened the fiscal taps. One year later, there are clear signs that the medicine is having its desired effects as IP in the OECD nations turned slightly positive in December 2009. Unfortunately, however, OECD IP remains 12 percent below its February 2008 peak. At its current rate of increase, IP will not return to its previous peak until mid-2011.

Figure 1

OECD Industrial ProductionYear-over-Year Percent Change

-20%

-15%

-10%

-5%

0%

5%

10%

81 85 89 93 97 01 05 09-20%

-15%

-10%

-5%

0%

5%

10%

OECD Industrial Production: Dec @ 0.7%

Figure 2

U.S. Trade Weighted Dollar Major Index March 1973=100

65

70

75

80

85

90

95

100

105

110

115

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201065

70

75

80

85

90

95

100

105

110

115

Major Currency Index: Feb @ 76.0

Source: IHS Global Insight, Organisation for Economic Cooperation and Development, Bloomberg LP and Wells Fargo Securities, LLC

The global recovery is being led by Asia where growth turned positive again last year. The financial systems of most Asian economies were not nearly as levered as their western counterparts, so banks in the region were able to ramp up lending again. In addition, most Asian governments responded to the crisis with expansionary fiscal policy. Real GDP in China increased nearly 11 percent on a year-ago basis in the fourth quarter of 2009, but the expansion is not confined to only China. Many other countries in the region, including the large economies of Japan, Korea and Taiwan, are posting positive growth rates again. Because self-sustaining

Special Commentary

Global Chartbook: March 2010

Contents Page World .........................3 United States .............4 Eurozone....................5 Japan..........................6 United Kingdom ........7 Australia.....................8 Canada .......................9 Norway.....................10 Singapore ..................11 South Korea ............. 12 Sweden..................... 13 Switzerland .............. 14 Taiwan ..................... 15 Argentina ................. 16 Brazil ........................ 17 Chile ......................... 18 China........................ 19 India........................ 20 Mexico...................... 21 Poland ......................22 Russia.......................23 South Africa .............24 Turkey ......................25 Dollar .......................26 Energy......................27

Global Chartbook: March 2010 WELLS FARGO SECURITIES, LLC March 11, 2010 ECONOMICS GROUP

economic recoveries appear to be taking hold, most Asian governments are beginning to remove emergency stimulus measures that were put in place when the outlook was bleak. However, we believe it will be quite some time before economic policies turn restrictive in most Asian countries.

Western economies have stabilized as well. Real GDP in the United States rose about 2 percent in the second half of 2009, retracing about half of the drop that occurred during the downturn. The temporary effects of fiscal stimulus certainly played a role in stabilizing the economy, but recent increases in core measures of retail sales and capital spending indicate that there is more to the story than simply fiscal stimulus. In our view, the U.S. economic recovery will remain intact this year, but the pace of the upturn will likely remain frustratingly slow. Due to slow economic growth and benign inflation, the Federal Reserve will likely refrain from hiking rates until late this year.

Economic activity in the euro area has stopped falling, but the upturn lacks vigor. Domestic demand remains weak, and exports are the only real source of growth at present. Moreover, attempts by governments in some eurozone economies to slash their budget deficits (e.g., Greece, Ireland, Portugal and Spain) will weigh on economic growth in the quarters ahead. Although we project that economic growth in the euro area will remain positive this year, the probability of a double-dip recession is not insignificant.

On a purchasing power parity basis, global GDP probably contracted about 1 percent in 2009. We project that the global economy will grow about 4 percent in 2010, a bit above its long-run average. Relative to 2004-2007, however, when global GDP grew nearly 5 percent per annum, the global recovery this year may seem a bit slow. Asia should lead the pack, and the eurozone will likely be the clear laggard. Growth in North America should fall somewhere between these two extremes.

Inflation rates in most countries shot higher in the first half of 2008 and commodity prices went through the roof. On a global basis, CPI inflation rose to 6 percent in 2008, the highest rate in about 10 years. However, the global downturn caused commodity prices to collapse, and global inflation receded significantly last year. Despite unprecedented amounts of monetary stimulus, inflation should not really be an issue until the global economy truly strengthens. Due to the relatively slow recovery that we project, we believe that inflation in most countries should remain manageable over our forecast period.

The Dollar Should Appreciate Modestly versus Major Currencies The U.S. dollar trended lower throughout most of 2009 as the recovery in the global economy caused the greenback to lose its safe-haven appeal. However, the dollar has gotten off to a strong start in 2010, especially against the euro and other European currencies. U.S. economic data has generally been stronger than expected, while the upturn on the other side of the Atlantic has been disappointing thus far. Concerns about the Greek debt situation have also weighed on the euro.

Looking ahead, our view, and that of the currency strategy team at Wells Fargo, is that the dollar will trend modestly higher against most major currencies. As the U.S. recovery gathers steam, foreign investment flows into long-term securities (e.g., corporate bonds and equities) and direct investment inflows should continue to strengthen, helping to lift the greenback. In addition, the diminished U.S. current account deficit will exert fewer headwinds on the greenback than it did earlier this decade when the dollar was trending lower.

However, most “commodity” and emerging market currencies should continue to trend higher versus the greenback in the quarters ahead. The global recovery will likely cause most commodity prices to drift higher, which should help to support “commodity” currencies (e.g., the Aussie dollar). In addition, rising levels of risk tolerance will clear the way for capital to flow to “risky” developing countries, which should put upward pressure on many of those currencies.

2


World

OECD Industrial ProductionIndex, 2005=100

40

60

80

100

120

1981 1985 1989 1993 1997 2001 2005 200940

60

80

100

120

OECD Industrial Production: Dec @ 95.6

Global Purchasing Manager's IndicesDiffusion Index

30

35

40

45

50

55

60

65

2004 2005 2006 2007 2008 200930

35

40

45

50

55

60

65

Global PMI Manufacturing: Feb @ 55.2Global PMI Services: Feb @ 52.6

Courtesy of J.P. Morgan

The global economy is bouncing back from its deepest recession in decades, though industrial production in the OECD nations remains well below the peak that was reached in early 2008. Purchasing manager indices have generally remained in expansion territory, suggesting that the global recovery remains intact. Most regions of the world are growing again, with Asia clearly in the vanguard.

The major governments of the world averted catastrophe in the fall of 2008 by taking steps to prevent the global financial system from collapsing. In addition, most major governments enacted fiscal stimulus programs to shore up economic activity.

Not only have interest rates been reduced to unprecedented lows, but major central banks have enacted “quantitative easing” programs via unconventional purchases of private sector assets. Central banks in some countries (e.g., Australia and Norway) have started to hike rates again, but the Fed, the ECB and the Bank of Japan remain firmly on hold.

Deep global recession and the collapse in commodity prices caused inflationary pressures to recede significantly. Commodity prices have risen off their lows, but elevated unemployment rates have kept a lid on wage inflation. We forecast that CPI inflation rates will trend higher this year, but runaway global inflation à la the 1970s does not seem likely.

Central Bank Policy Rates

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%ECB: Mar @ 1.00%Bank of Canada: Mar @ 0.25%US Federal Reserve: Mar @ 0.25%Bank of England: Mar @ 0.50%

Global CPIYear-over-Year Percent Change

0%

2%

4%

6%

8%

10%

12%

14%

16%

1995 1998 2001 2004 2007 20100%

2%

4%

6%

8%

10%

12%

14%

16%

Forecast

Source: U.S. Department of Commerce, U.S. Department of Labor

and Wells Fargo Securities, LLC

3


United States

Real GDP Bars = CAGR Line = Yr/Yr Percent Change

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2000 2002 2004 2006 2008 2010-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%GDPR - CAGR: Q4 @ 5.9%

GDPR - Yr/Yr Percent Change: Q4 @ 0.1%

Forecast

Retail Sales Ex. Motor Vehicles & Gasoline Stations3-Month Moving Average

-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

Year-over-Year Percent: Jan @ 1.7%

Retail Sales, ex. Autos & Gas, 3-Month Annual Rate: Jan @ 5.4%

After enduring its deepest recession in decades, the U.S. economy grew again in the second half of 2009 and monthly indicators point to continued growth in the first quarter. Some of the growth reflects the temporary effects of government stimulus. In addition, a one-time inventory swing in the fourth quarter overstates the underlying strength of the economy at present.

It would be incorrect, however, to claim that the rise in GDP over the past few quarters is due entirely to stimulus. Core measures of consumer spending and business spending have posted solid gains over the past few months.

Unfortunately, the pace of growth will probably be sluggish for the next year or so. Many consumers need to delever further, which will likely constrain growth in consumer spending. Unemployment has shot up to the highest rate since the early 1980s, and the slow pace of recovery will likely keep it elevated for the foreseeable future.

Core measures of inflation are very benign at present, which allows the Federal Reserve to keep rates low “for an extended period.” Although the Fed has started to remove some emergency measures that were put in place more than a year ago, we do not look for an increase in the fed funds rate until late this year.

Unemployment RateSeasonally Adjusted

2%

4%

6%

8%

10%

12%

60 65 70 75 80 85 90 95 00 05 102%

4%

6%

8%

10%

12%

Unemployment Rate: Feb @ 9.7%

CPI vs. Core CPIYear-over-Year Percent Change

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

92 94 96 98 00 02 04 06 08 10-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

CPI: Jan @ 2.6%

Core CPI: Jan @ 1.6%

Source: U.S. Department of Commerce, U.S. Department of Labor

and Wells Fargo Securities, LLC

4


Eurozone

Euro-zone Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Compound Annual Growth: Q4 @ 0.4%

Year-over-Year Percent Change: Q4 @ -2.1%

Euro-zone Purchasing Manager IndicesIndex

30

35

40

45

50

55

60

65

1998 2000 2002 2004 2006 2008 201030

35

40

45

50

55

60

65

E.Z. Manufacturing: Feb @ 54.2E.Z. Services: Feb @ 51.8

Following its 5 percent contraction between early 2008 and mid-2009, real GDP in the eurozone has grown for two consecutive quarters. However, the pace of the recovery remains painfully slow with real GDP up only 0.5 percent in the second half of 2009. Purchasing managers’ indices suggest that economic activity has continued to expand in the first quarter, albeit at a sluggish pace.

Despite two consecutive quarters of growth, the recovery in the eurozone is hardly self-sustaining at present. Consumer spending was flat in the fourth quarter and investment spending posted its seventh consecutive quarter of decline. Exports were the only area of strength in the fourth quarter.

The well-publicized debt problems of some European governments will also have growth implications. Although a break-up of the European Monetary Union is very unlikely, some national governments in the eurozone need to make significant fiscal corrections in the years ahead. Contractionary fiscal policy will weigh on economic prospects in the euro area for the foreseeable future.

Weak growth and benign inflation imply that the European Central Bank can keep monetary policy accommodative for an extended period. Indeed, we believe that the ECB will keep its main policy rate at 1 percent, where it has been maintained since May 2009, into early 2011.

Government Debt and DeficitsPercent of GDP

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

Greece Ireland Portugal Spain0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

Debt

Deficit

Euro-zone Consumer Price Inflation Year-over-Year Percent Change

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1997 1999 2001 2003 2005 2007 2009-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%Core CPI: Jan @ 0.9%

CPI: Jan @ 1.0%

Source: Bank of England, EuroStat, IHS Global Insight, Statistics

Canada and Wells Fargo Securities, LLC

5


Japan

Japanese Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-15%

-10%

-5%

0%

5%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-15%

-10%

-5%

0%

5%

10%



Japanese Industrial Production IndexYear-over-Year Percent Change

-40%

-30%

-20%

-10%

0%

10%

20%

1997 1999 2001 2003 2005 2007 2009-40%

-30%

-20%

-10%

0%

10%

20%

IPI: Jan @ 18.9%

3-Month Moving Average: Jan @ 6.1%

Fears of a double-dip recession in Japan have faded in recent months. Fourth-quarter GDP came in far stronger than the consensus expected. Nevertheless, the data were in line with our view that Japan’s rebound in 2010 could be somewhat stronger than many expect. Japanese exports are leading the recovery, but solid advances in domestic spending, both business and consumer, suggest the recovery in Japan is broadening out.

Japanese orders continue to advance at a robust clip. Core machinery orders rose 20.1 percent month over month in December to their highest level in 12 months. Foreign orders also remained strong, rising at a 20.9 percent pace in December. Manufacturing and business spending should continue to lead Japan out of its deep economic hole.

Even Japan’s labor market is showing increasing signs of healing. Employment jumped 0.9 percent in January, the biggest monthly gain in 24 years. This helped the unemployment rate drop to 4.9 percent, the lowest reading in 10 months and well below the July record of 5.7 percent.

Japan’s retail sales and consumer confidence both advanced in January, despite a structural shift away from department stores. Real consumption from working households is now 1.5 percent above year-ago levels. February vehicle sales remained up sharply, rising 35.9 percent from year-ago levels.

Japanese Unemployment Rate

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

1997 1999 2001 2003 2005 2007 20093.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

Unemployment Rate: Jan @ 4.9%

Japanese Retail SalesYear-over-Year Percent Change

-15.0%

-12.0%

-9.0%

-6.0%

-3.0%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

1997 1999 2001 2003 2005 2007 2009-15.0%

-12.0%

-9.0%

-6.0%

-3.0%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

Retail Sales: Jan @ 2.7%

6-Month Moving Average: Jan @ -0.4%

Source: Bloomberg LP, IHS Global Insight and

Wells Fargo Securities, LLC

6


United Kingdom

U.K. Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000 2002 2004 2006 2008-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%



U.K. Purchasing Manager IndicesIndex

30

35

40

45

50

55

60

65

2000 2002 2004 2006 2008 201030

35

40

45

50

55

60

65

UK Manufacturing: Feb @ 56.6UK Services: Feb @ 58.4

After six consecutive quarters of contraction in which real GDP fell more than 6 percent, economic growth in the United Kingdom returned to positive territory in the fourth quarter of 2009. Further increases in the purchasing managers’ indices in recent months suggest that growth has remained positive in the first quarter.

Following its downturn last year, consumer spending has strengthened over the past few quarters. In addition, exports grew at a double-digit pace in the fourth quarter. However, capital spending continues to contract. It appears that businesses may be unwilling to commit to capex as long as uncertainties regarding the economic outlook remain high.

In our view, the U.K. economy will expand throughout 2010. However, continued deleveraging by the household sector will likely exert headwinds on consumer spending growth. In addition, fiscal tightening also will weigh on overall economic growth.

The overall rate of CPI inflation is well above the Bank of England’s target of 2 percent at present. However, CPI inflation has been pushed up in recent months by some temporary factors including the hike in the value-added tax. We forecast that inflation will retreat in coming months, which will give the Bank of England the wherewithal to remain on hold until late this year.

United Kingdom Retail SalesYear-over-Year Percent Change

-3.0%

0.0%

3.0%

6.0%

9.0%

1999 2001 2003 2005 2007 2009-3.0%

0.0%

3.0%

6.0%

9.0%



U.K. Consumer Price IndexYear-over-Year Percent Change

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1997 1999 2001 2003 2005 2007 20090.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

CPI: Jan @ 3.4%

Source: Bank of England, EuroStat, IHS Global Insight, Bloomberg,

LP and Wells Fargo Securities, LLC

7


Australia

Australian Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-6%

-4%

-2%

0%

2%

4%

6%

8%

10%


Year-over-Year Percent Change: Q4 @ 2.7%

Australian GDP ContributionsYear-over-Year Percentage Contribution to GDP

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

2007 2008 2009-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

Household Expenditures: Q4 @ 0.4%

General Government Expenditures: Q4 @ 0.3%

After sidestepping the worst of the fallout from the global financial crisis, Australian economic growth picked up speed in the last quarter of 2009 expanding at a 3.7 percent annualized pace. The largest contribution to growth came from an increase in government spending, likely a reflection of public infrastructure projects created to help jumpstart the economy.

But growth in the fourth quarter was supported by consumer spending as well. A 6.8 percent jump in auto purchases was the main contributor to growth in household final consumption, along with a more modest 0.7 percent pick-up in rent and other dwelling services. It is not yet clear how much the strength in spending has to do with government incentive programs, but we suspect domestic demand may wane somewhat as government programs wind down. Indeed, following the year-end expiration of the rebate program for cars, January auto sales slipped 3.4 percent.

The Reserve Bank of Australia (RBA) has been at the forefront of central banks willing to “take away the punch bowl” as it has raised its key lending rate 100 basis points since this past October. Still, we expect the RBA will take a measured approach to removing stimulus from the economy. Inflation is not yet a big concern. The RBA will also be watching to see if the recovery is self-sustaining once incentives fade.

Australian Consumer Price IndexYear-over-Year Percent Change

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1995 1998 2001 2004 2007-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Overall CPI : Q4 @ 2.1%


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%US Federal Reserve: Mar @ 0.25%Bank of England: Mar @ 0.50%Reserve Bank of Australia: Mar @ 4.00%



8


Canada

Canadian Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%



Canadian Merchandise Trade BalanceMillions of Canadian Dollars, Seasonally Adjusted

-C$4,000

-C$2,000

C$0

C$2,000

C$4,000

C$6,000

C$8,000

C$10,000

1997 1999 2001 2003 2005 2007 2009-C$4,000

-C$2,000

C$0

C$2,000

C$4,000

C$6,000

C$8,000

C$10,000

Merchandise Trade Balance: Dec @ -246M CAD

The Canadian economy shrank 2.6 percent for the full-year 2009—the biggest contraction since 1982. But it ended the year on an upswing, growing at a 5.0 percent annual pace in the fourth quarter—the fastest sequential growth rate since the third quarter of 2000.

The recovery in the third quarter was fueled by a 3.5 percent annualized increase in personal consumption expenditures. Business and government spending also posted gains in the fourth quarter. Final domestic demand is now just 0.6 percent off its pre-recession peak.

Domestic demand is supporting growth in real imports, which grew at an 8.9 percent pace in the fourth quarter building on big gains in the prior quarter. Gross exports rose at a faster pace than imports, causing net exports to contribute 1.3 percentage points to the overall growth rate.

The overnight rate in Canada has been at 0.25 percent since April of last year. While the Bank of Canada (BoC) has reiterated its intent to leave the target rate unchanged through the second quarter of 2010, recent strength in the Canadian economy has many market-watchers in Canada speculating that the Bank will act swiftly when that time comes. In the mean time, the core rate of inflation remains near the bottom of BoC’s target range of 1 to 3 percent, giving them cover to keep rates low for now.

Canadian Consumer Price IndexYear-over-Year Percent Change

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%"Headline": Jan @ 1.9%

"Core": Jan @ 1.3%


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%US Federal Reserve: Mar @ 0.25%

Bank of Canada: Mar @ 0.25%



9


Norway

Norwegian Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

16.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-8.0%

-4.0%

0.0%

4.0%

8.0%

12.0%

16.0%Compound Annual Growth Rate: Q4 @ 0.4%


Volume of Norwegian Retail SalesYear-over-Year Percent Change

-2%

0%

2%

4%

6%

8%

10%

2001 2003 2005 2007 2009-2%

0%

2%

4%

6%

8%

10%


Norway experienced a mild recession in 2008/2009, but real GDP growth has returned to positive territory recently. Recent monthly indicators, including the manufacturing PMI and industrial production data, suggest that the Norwegian economy has continued to expand at a modest pace in the first quarter.

The weak growth rate that the economy registered in the fourth quarter understates, at least to some extent, the overall state of the economy at present. Real consumer spending rose in excess of 5 percent in the fourth quarter. Not only has the labor market remained relatively supported, but the rise in the price of oil, which is one of the country’s main exports, has helped to lift real income. The overall GDP growth rate was depressed by the 11 percent increase in gross imports, which reflects solid growth in domestic demand.

The overall rate of CPI inflation has rebounded to 2.5 percent, a bit above the core rate of 2.3 percent. Although inflation is not a problem at present in Norway, the core rate could begin to trend higher in the months ahead if growth strengthens.

Norges Bank, the country’s central bank, has raised its main policy rate from 1.25 percent last October to 1.75 percent at present. Although the Bank kept rates unchanged at its last policy meeting in early February, most investors look for more rate hikes in the months ahead.

Norwegian Industrial Production IndexYear-over-Year Percent Change

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1997 1999 2001 2003 2005 2007 2009-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

IPI: Jan @ 5.2%3-Month Moving Average: Jan @ 4.8%

Norwegian Consumer Price IndexYear-over-Year Percent Change

-2%

0%

2%

4%

6%

1997 1999 2001 2003 2005 2007 2009-2%

0%

2%

4%

6%

CPI: Jan @ 2.5%



10


Singapore

Singapore Real GDPYear-over-Year Percent Change

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

2000 2002 2004 2006 2008-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%


Singaporean Industrial Production IndexManufacturing Production, Year-over-Year Percent Change

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

1997 1999 2001 2003 2005 2007 2009-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%


Singapore’s fourth quarter GDP was revised up to a 2.8 percent decline on a seasonally adjusted annualized rate, leaving the year-over-year increase a much stronger 4.0 percent. The fourth quarter decline is seen as only a pause in a somewhat stronger recovery trend. The government revised up its projection for 2010 GDP growth to a range of 4.5 percent to 6.5 percent based on the stronger data. Private consumption and investment are bouncing back to pre-crisis growth rates as manufacturing and exports accelerate. In the fourth quarter, services and agricultural sectors appeared to join the expansion.

Singapore’s manufacturing expansion continues. February’s PMI edged up to 51.9 from 51.4 in January. Singapore’s PMI has been in expansion territory for ten consecutive months now. January industrial production figures confirmed the trend, rising 11.8 percent from December levels and jumping 39.4 percent from year-ago levels.

Labor market conditions are on the mend as well. Singapore added 38,700 jobs in the fourth quarter with the unemployment rate falling to 2.1 percent, the lowest rate in seven quarters.

Singapore has exited deflation, at least for one month. January CPI rose 0.4 percent, leaving consumer prices up 0.2 percent from a year ago, after eight straight months of deflation.

Singapore Unemployment RateSeasonally Adjusted

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1999 2001 2003 2005 2007 20091.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Unemployment rate: Q4 @ 2.1%

Singapore Consumer Price IndexYear-over-Year Percent Change

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1997 1999 2001 2003 2005 2007 2009-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

CPI: Jan @ 0.2%



11


South Korea

South Korean Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2001 2002 2003 2004 2005 2006 2007 2008 2009-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%



South Korean Industrial Production IndexYear-over-Year Percent Change

-30%

-20%

-10%

0%

10%

20%

30%

40%

1997 1999 2001 2003 2005 2007 2009-30%

-20%

-10%

0%

10%

20%

30%

40%

IPI: Jan @ 31.0%


South Korea’s expansion lost some significant momentum in the fourth quarter, leaving much uncertainty around the growth outlook for 2010. The fourth quarter GDP estimate rose a modest 0.7 percent at an annualized rate, though year-over-year GDP still advanced 6.0 percent when many other countries in the region saw year-over-year declines.

South Korea’s industrial production in January was flat compared to December, and consumer confidence has not increased since October. The worsening job market continues to weigh on consumers’ willingness and ability to spend.

South Korea’s unemployment rate unexpectedly spiked to 4.8 percent in January from 3.6 percent in December. The unemployment rate is now at an 11-year high.

The government’s leading economic indicators also point to a continued moderation in growth, especially in the second half of 2010. Six out of the 10 components in this measure are now contracting. The fact that China, South Korea’s largest trading partner, is also tightening loan growth, puts even more downside risk into the outlook.

The consensus is still expecting some interest rate hikes from the Bank of Korea in 2010, but more than 50 basis points in hikes seems unlikely in this environment, especially considering household debt, as a share of disposable income remains at 144 percent.

South Korean Unemployment RatePercent and 12-Month Moving Average

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 20102.5%

3.0%

3.5%

4.0%

4.5%

5.0%



South Korean Rates3-M Bill, 10-Yr Government Bond

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2004 2005 2006 2007 2008 2009 20101.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

3-Month Government: Mar @ 2.18%

South Korean 10-Yr Government: Mar @ 5.21%



12


Sweden

Swedish Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-20%

-15%

-10%

-5%

0%

5%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-20%

-15%

-10%

-5%

0%

5%

10%

Compound Annual Growth: Q4 @ -2.2%Year-over-Year Percent Change: Q4 @ -1.5%

Swedish Manufacturing PMI

30

35

40

45

50

55

60

65

70

2002 2003 2004 2005 2006 2007 2008 2009 201030

35

40

45

50

55

60

65

70

Swedish Manufacturing PMI: Feb @ 61.5%

Although growth has returned to most other areas of the world, the Swedish economy continues to contract. Relative to its peak in early 2008, real GDP has declined nearly 7 percent. However, the rise in the manufacturing PMI recently suggests that real GDP growth may have turned positive in the first quarter.

About 60 percent of the country’s exports are destined for the European Union and another 10 percent go to emerging Europe. Both regions have lagged the global upturn, which has weighed on Swedish exports. Consumer spending has posted modest gains over the past few quarters, but investment spending continues to plunge at a double-digit pace.

Due to the rise in energy prices over the past year the overall inflation rate returned to positive territory in December, and it will likely trend a bit higher in the months ahead. That said, a major inflationary outbreak in Sweden does not seem likely due to the weakness in the economy.

The Riksbank (the country’s central bank) cut its main policy rate to only 0.25 percent last summer, where it has subsequently been maintained. However, the Riksbank recently stated that because the recovery is now on “firmer ground” it expects to begin raising its main policy rate sometime this summer or autumn.

Swedish Merchandise Trade BalanceBillions of Swedish Krona, Seasonally Adjusted

0

5

10

15

20

25

1997 1999 2001 2003 2005 2007 20090

5

10

15

20

25Merchandise Trade Balance: Jan @ 7.5B SEK12-Month Moving Average: Jan @ 7.3B SEK

Swedish Consumer Price IndexYear-over-Year Percent Change

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

1997 1999 2001 2003 2005 2007 2009-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%CPI: Jan @ 0.6%



13


Switzerland

Swiss Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%



Swiss Manufacturing PMIDiffusion Index

30

35

40

45

50

55

60

65

70

1997 1999 2001 2003 2005 2007 200930

35

40

45

50

55

60

65

70

Swiss Manufacturing PMI: Feb @ 57.4

After experiencing a mild recession in late 2008/early 2009 in which real GDP contracted 2.4 percent, the Swiss economy is growing again. Real GDP rose at a solid rate in the second half of last year, and monthly indicators, including the manufacturing PMI, suggest that growth has remained positive in the first quarter of 2010.

House prices in most parts of Switzerland did not get overly inflated during the past decade, so the economy is not suffering from the hangover of a burst housing bubble. Real consumer spending has turned up over the past few quarters, and investment spending has also strengthened. Unless global economic activity lurches lower again, which we do not expect, a self-sustaining expansion appears to be taking hold in Switzerland.

CPI inflation has returned to positive territory again as energy prices have rebounded. As measured by the core rate of CPI inflation, however, there are few inflationary pressures in the economy at present. The core rate of inflation is currently 0.6 percent, down a full percentage point from late 2008.

The Swiss National Bank (SNB) has maintained its target for Swiss franc LIBOR at the very low rate of only 0.25 percent since March 2009. Given the recovery in the economy, however, most investors look for the SNB to hike rates later this year.

Swiss Retail SalesYear-over-Year Percent Change

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2003 2004 2005 2006 2007 2008 2009 2010-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%Retail Sales: Dec @ 112.4%3-Month Moving Average: Dec @ 1.3%

Swiss Consumer Price IndexYear-over-Year Percent Change

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

1997 1999 2001 2003 2005 2007 2009-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

CPI: Jan @ 1.0%



14


Taiwan

Taiwanese Real GDPYear-over-Year Percent Change

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%


Taiwanese Industrial Production IndexYear-over-Year Percent Change

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

1997 1999 2001 2003 2005 2007 2009-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

IPI: Jan @ 69.7%


Taiwan’s economic recovery continued to build momentum in the fourth quarter. GDP surged at an 18 percent annualized pace and is now 9.2 percent higher than a year ago. The rebound is being paced by large increases in manufacturing and exports, as Taiwan deepens trading relations with China and taps their outsized growth rate.

Taiwan’s industrial production jumped 69.7 percent in January from a year ago, while January exports exploded, rising 71.8 percent from last year. These increases partly reflect the steep declines registered last year at the height of the financial crisis and certainly are not sustainable on a prolonged basis. Year-over-year growth rates are expected to diminish as 2010 progresses and base effects fade.

Price deflation has rapidly retreated as growth reasserts itself. In fact, CPI inflation increased year over year to 2.35 percent in February. The economy exited deflation after 11 consecutive months. Core inflation, excluding volatile food and energy categories, continues to moderate however, falling to minus 1.1 percent.

Taiwan’s central bank cut rates seven times during the crisis and has held rates steady since February 2009. With core inflation pressures still relatively low, the central bank will likely not be hiking interest rates until perhaps mid-year at the earliest. A strengthening Taiwanese dollar also reduces the pressure on the central bank to hike interest rates to stabilize the currency.

Taiwanese Consumer Price IndexYear-over-Year Percent Change

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

1997 1999 2001 2003 2005 2007 2009-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

6-Month Moving Average: Feb @ -0.3%

CPI: Feb @ 2.4%

Taiwanese RatesOvernight Rate, 10-Yr Government Bonds

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

1999 2001 2003 2005 2007 20090.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Overnight Rate: Mar @ 0.11%

Taiwan 10-Yr Government: Mar @ 3.96%



15


Argentina

Argentine Economic Activity IndexYear-over-Year Percent Change

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

1997 1999 2001 2003 2005 2007 2009-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Economic Activity: Dec @ 5.0%

Argentine Consumer Price IndexYear-over-Year Percent Change

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 20100%

2%

4%

6%

8%

10%

12%

14%

Consumer Price Index: Jan @ 8.2%

After a tumultuous period for Martín Redrado, the president of the central bank, he was finally fired from the institution and a more government-friendly successor was appointed by the Fernández-Kirchner administration. The new president of the central bank is Ms. Mercedes Maró del Pont.

The Argentine government has started to recognize a higher rate of inflation, even though the opposition and private analysts are still claiming that the real rate of inflation is at least twice as much as the official rate. The INDEC, the country’s statistical office, reported that consumer prices increased by 1.0 percent in January with a 12-month rate of 8.24 percent.

Private analysts are following labor union salary negotiations because these unions are asking for up to 25 percent salary increases. Labor unions are pro-government institutions, and thus acceptance of those salary increases would tend to confirm analysts’ arguments that inflation is at least twice as much as the official reported rate.

Argentine exports increased by 18.6 percent in January compared to the same month a year earlier, while imports rose by 16.2 percent. The January trade balance was $1.22 billion, taking the 12-month trade surplus to $17.23 billion. However, trade is still well below pre-crisis levels.

Argentine Exchange RateBRL per USD

2.50

2.75

3.00

3.25

3.50

3.75

4.00

03 04 04 05 06 07 08 092.50

2.75

3.00

3.25

3.50

3.75

4.00

ARS per USD: Mar @ 3.857

Argentine Merchandise Trade BalanceMillions of USD, Not Seasonally Adjusted

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

1997 1999 2001 2003 2005 2007 2009-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

Merchandise Trade Balance: Jan @ $1,217



16


Brazil

Brazilian Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%



Brazilian Retail SalesYear-over-Year Percent Change

-8%

-4%

0%

4%

8%

12%

2001 2002 2003 2004 2005 2006 2007 2008 2009-8%

-4%

0%

4%

8%

12%

Retail Sales: Dec @ 9.1%6-Month Moving Average: Dec @ 7.0%

As we were expecting, Brazilian inflation rates have started to accelerate, and the central bank will have to start increasing interest rates very soon if they do not want to face resetting inflation expectations in the coming quarters. This is even more imperative during 2010 considering that 2010 is a presidential election year and such years have been characterized, in the past, by changing inflation expectations.

Consumer prices increased by 0.78 percent in February after posting a 0.75 percent increase during the first month of the year. The year-earlier rate stood at 4.83 percent in February, up from a 4.59 percent rate in January. Meanwhile, while the year-over-year wholesale rate was still in deflationary territory in February (-1.19 percent), it was up strongly, 1.38 percent, on a month-over-month basis and could start threatening consumer inflation in the coming months.

Brazilian exports surged by 27.2 percent in February compared to the same month a year earlier, while imports skyrocketed by 50.9 percent during the same period. The trade deficit was $394 million in February, up from a $166 million deficit in January. While the country has benefited considerably by a strong rebound in the price of petroleum, the main difference compared to last year’s commodity export performance was due to a large increase in overall production of commodities.

Brazilian Merchandise Trade BalanceMillions of USD, Not Seasonally Adjusted

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

1997 1999 2001 2003 2005 2007 2009-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Merchandise Trade Balance: Jan @ $-166

Brazilian Exchange RateBRL per USD

1.00

1.50

2.00

2.50

3.00

3.50

4.00

99 00 01 02 03 04 05 06 07 08 09 101.00

1.50

2.00

2.50

3.00

3.50

4.00

BRL per USD: Mar @ 1.778



17


Chile

Chilean Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%



Chilean Consumer Price IndexYear-over-Year Percent Change

-4%

0%

4%

8%

12%

1997 1999 2001 2003 2005 2007 2009-4%

0%

4%

8%

12%

CPI: Jan @ 0.8%

While early indicators on the country’s productive capacity tend to indicate that GDP will be negatively affected during the first and second quarter of the year, the reconstruction effort will bump GDP growth up during the second half of the year. Early estimates on the cost of the earthquake are approaching $30 billion, or about 19 percent of GDP.

We expect the Chilean economy to grow by 2.7 percent during 2010, down from our previous forecast of 4.4 percent before the earthquake. We estimate the largest impact on GDP to be allocated to the second quarter of the year and then envision relatively strong growth during the third and fourth quarter of the year. While inflation may be an issue for the central bank due to scarcity of products across the economy, we should expect central bank policy to remain accommodative for the first three quarters of the year.

Chile’s currency experienced high volatility going into late last year and during the first two months of this year. This volatility was exacerbated following the massive earthquake that struck the country in late February. While the earthquake hurt the currency at first, the peso seems to have regained its composure and has been on a strengthening path during the early part of March.

Chilean Economic Activity IndexYear-over-Year Percent Change

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2004 2005 2006 2007 2008 2009-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Economic Activity: Dec @ 3.9%

Chilean Exchange RateBRL per USD

400

500

600

700

800

99 00 01 02 03 04 05 06 07 08 09 10400

500

600

700

800

CLP per USD: Mar @ 512.500



18


China

Chinese Real GDPYear-over-Year Percent Change

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2000 2002 2004 2006 20080.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%


Chinese Manufacturing PMISeasonally Adjusted

35

40

45

50

55

60

2005 2006 2007 2008 2009 201035

40

45

50

55

60

Chinese Manufacturing PMI: Feb @ 52.0

After slowing significantly in early 2009, real GDP growth in China has rebounded sharply in recent quarters. Because Chinese banks were not overly leveraged, the government directed them to increase lending aggressively. In addition, the government stimulated the economy via acceleration of planned infrastructure spending.

Growth in domestic demand has been solid. The value of retail sales is currently growing nearly 18 percent on a year-over-year basis, and export growth also rebounded in the second half of last year.

Now that the economy is firmly back on track, the government is directing banks to slow down the pace of credit creation before inflation becomes an issue. Most indicators point in the direction of continued strong growth in the first quarter but, as the recent decline in the manufacturing PMI suggests, the pace of growth may slow somewhat going forward.

Will Chinese authorities tighten too much? Probably not, because inflation largely remains benign. The overall rate of CPI inflation is very low at present—only 1.5 percent in January—and the core rate of inflation is barely above zero percent at present. Although economic policies will become less accommodative in the months ahead, there is no reason for Chinese authorities to slam on the brakes.

Chinese Loan GrowthYear-over-Year Percent Change

0%

5%

10%

15%

20%

25%

30%

35%

99 01 03 05 07 090%

5%

10%

15%

20%

25%

30%

35%

Chinese Loan Growth: Jan @ 29.3%

Chinese CPI InflationYear-over-Year Percent Change

-4%

-2%

0%

2%

4%

6%

8%

10%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-4%

-2%

0%

2%

4%

6%

8%

10%Overall CPI: Jan @ 1.5%

Non-food CPI: Jan @ 0.4%



19


India

Indian Real GDPYear-over-Year Percent Change

0%

3%

6%

9%

12%

2004 2005 2006 2007 2008 20090%

3%

6%

9%

12%


Indian Industrial Production IndexYear-over-Year Percent Change

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

1997 1999 2001 2003 2005 2007 20090.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%3-Month Moving Average: Dec @ 12.9%

Real GDP growth in the Indian economy has fluctuated over the past year or so. After slowing in the wake of the global recession, growth bounced back up in mid-2009. However, overall GDP growth weakened again in the fourth quarter as agricultural output, which accounts for nearly 20 percent of Indian GDP, fell because of the effects of last year’s drier-than-normal monsoon.

Despite the fluctuations in the overall rate of GDP growth, the underlying state of the Indian economy remains relatively strong at present. Growth in industrial production rebounded strongly last year, and recent monthly indicators suggest that growth remained solid in the first quarter. For example, the manufacturing PMI remained well above “50” in January and February.

Strong growth in automobile sales shows that consumer spending generally remains solid. In addition, exports have accelerated with the year-over-year growth rate in the value of Indian exports growing at a double-digit pace at present.

Wholesale price inflation, which is the benchmark inflation gauge in India, has shot up over the past few months. With recovery taking hold and inflation starting to trend higher, the RBI will probably start to take back some of its previous rate cuts in the near term.

Indian Wholesale Price InflationYear-over-Year Percent Change

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-2%

0%

2%

4%

6%

8%

10%

12%

14%

Wholesale Price Inflation: Jan @ 8.6%

Indian Real GDPYear-over-Year Percent Change

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

2000 2002 2004 2006 2008-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Overall GDP: Q4 @ 6.0% (Left Axis)

Agricultural Output: Q4 @ -2.8% (Right Axis)



20


Mexico

Mexican Real GDPYear-over-Year Percent Change

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2004 2005 2006 2007 2008 2009-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%


Industrial Production IndicesYear-over-Year Percent Change

-15%

-10%

-5%

0%

5%

10%

1999 2001 2003 2005 2007 2009-15%

-10%

-5%

0%

5%

10%

Mexico, 3-Month Moving Average: Dec @ -1.8%U.S.: Jan @ 0.9%

The Mexican economy is starting to show signs of life after the worst crisis in more than forty years. According to the INEGI, the country’s statistical institute, the Mexican economy contracted by 2.3 percent during the fourth quarter of 2009 compared to the same period a year earlier, leaving the full year with a drop of 6.5 percent. However, the Mexican economy ended on an up-note, growing 2.0 percent during the last quarter of the year compared to the previous quarter on a seasonally adjusted basis.

Quickening inflation will likely become a new threat to this year’s economic recovery. January’s 1.1 percent month-over-month increase in the consumer price index was unexpected and unwelcomed as the central bank tries to give continuity to last year’s expansionary monetary policy. However, if this trend continues, the central bank will have to move fast if it wants to avoid a resetting of inflation expectations.

On the positive side, the Mexican peso has strengthened considerably during the first months of the year, and this could contribute to lower price pressure in coming months.

While the Mexican trade sector improved considerably in January with exports increasing by 26.7 percent year over year, the strength of this recovery has left a bitter flavor, as many were expecting an even larger surge in exports.

Mexican Consumer Price IndexYear-over-Year Percent Change

2%

4%

6%

8%

10%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20102%

4%

6%

8%

10%

12%

CPI: Jan @ 4.5%

Mexican Exchange RateMXN per USD

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

16.00

1999 2001 2003 2005 2007 20098.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

16.00

MXN per USD: Mar @ 12.66



21


Poland

Polish Real GDP Year-over-Year Percent Change

0.0%

3.0%

6.0%

9.0%

1995 1997 1999 2001 2003 2005 2007 20090.0%

3.0%

6.0%

9.0%


Polish Industrial Production IndexYear-over-Year Percent Change

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jan 2008 Jul 2008 Jan 2009 Jul 2009 Jan 2010-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

IPI: Jan @ 8.5%

Poland’s economy grew 1.2 percent in the fourth quarter of 2009 from the previous quarter, and 3.1 percent from the same quarter a year ago. Trade led the way, contributing 2.2 percentage points to the annual growth rate. Inventory replenishment also supported growth. Private consumption growth slowed during the quarter. Meanwhile, gross fixed investment was unchanged from the previous quarter, but was up 1.6 percent year over year. For all of 2009 real GDP rose 1.7 percent, meaning Poland was the only European Union member to avoid recession during the global economic crisis—a remarkable achievement.

Stimulus packages in many Western European markets, along with the lagged effects of the zloty’s depreciation during the crisis, have fueled robust export growth. This, in turn, has supported a rebound in industrial production. However, recent year-over-year industrial production growth rates are also benefiting from a very low base of comparison. Looking ahead, fading European stimulus and the lagged effects of the zloty’s appreciation during 2009 could dampen export growth.

Inflation has accelerated over the past few months. However, the expected slowdown in exports, rising unemployment, slowing wage growth, the stronger zloty and more favorable bases of comparison for prices will allow the central bank to hold off on raising short term interest rates for several more months.

Polish Merchandise Trade BalanceMillions of Polish Zloty, Not Seasonally Adjusted

-$11,000

-$10,000

-$9,000

-$8,000

-$7,000

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

1997 1999 2001 2003 2005 2007 2009-$11,000

-$10,000

-$9,000

-$8,000

-$7,000

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

Merchandise Trade Balance: Dec @ -$4,484 M

Polish Consumer Price IndexYear-over-Year Percent Change

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

CPI: Jan @ 3.6%



22


Russia

Russian Real GDPYear-over-Year Percent Change

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2001 2002 2003 2004 2005 2006 2007 2008 2009-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%


Russian Merchandise Trade BalanceBillions of USD, Seasonally Adjusted

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

1999 2001 2003 2005 2007 2009$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20Merchandise Trade Balance: Dec @ $12.7B

Russian real GDP was down 8.9 percent year 0ver year in the third quarter of 2009, an improvement over the 10.9 percent drop in Q2. Strong export growth and improving retail sales suggests growth improved further in the fourth quarter. In February the government released a preliminary estimate of a 7.9 percent decline in real GDP for all of 2009.

Exports were up 20.1 percent from a year ago in December, a vast improvement over the 22.3 percent decline seen just two months prior. A recovering global economy has spurred demand for oil, natural gas and metals, which together comprise nearly 75 percent of Russia’s exports. Imports have also improved, but not as much as exports. This has led to a trade surplus nearly triple that of a year ago, helping to bolster economic growth.

Retail sales have improved quickly over the past few months, rising 7.9 percent in January from a year earlier, a marked improvement over the 0.9 percent decline seen in September. Demand has improved as real wage growth has finally turned positive, while personal disposable income growth is trending higher. However, a jump in the unemployment rate in January to 9.2 percent, along with tight credit conditions, will likely keep consumers’ contribution to economic growth limited.

Annual inflation slowed further in February to 7.2 percent. Thus, further interest rate cuts could follow February’s 25 basis point cuts.

Russian Retail SalesYear-over-Year Percent Change

-20%

0%

20%

40%

60%

80%

100%

120%

1997 1999 2001 2003 2005 2007 2009-20%

0%

20%

40%

60%

80%

100%

120%


Russian Unemployment RatePercent of Labor Force

5.0%

6.5%

8.0%

9.5%

11.0%

12.5%

14.0%

15.5%

1999 2001 2003 2005 2007 20095.0%

6.5%

8.0%

9.5%

11.0%

12.5%

14.0%

15.5%




23


South Africa

South African Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%



South African Merchandise Trade BalanceBillions of Rand, Not Seasonally Adjusted

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

1997 1999 2001 2003 2005 2007 2009-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

Merchandise Trade Balance: Jan @ -33,310.4

For the full-year 2009, the South African economy contracted 1.8 percent. But like many foreign economies it ended the year on an up-note rising at a 3.2 percent annualized pace in the fourth quarter.

Manufacturing grew at a 10.1 percent pace in the fourth quarter, thanks in part to an increase in export activity as the broader global recovery helped support foreign demand for manufactured goods from South Africa.

Despite the strength in exports, other parts of the economy remain rather weak, most notably in the consumer sector. Indeed, retail trade weighed on fourth quarter GDP growth. Year-over-year retail sales numbers have been in negative territory since February of 2009.

The South African Reserve Bank is stuck between a rock and a hard place. The inflation rate is back above the central bank’s 3 percent to 6 percent target band for a second month in January. But with the pick-up in economic activity just starting to take shape, this is no time to throw a wet blanket on the budding recovery. Recognizing the challenge facing the central bank, South Africa’s Finance Minister sent a letter to Central Bank Governor Marcus in February encouraging him to be “flexible” and that “temporary deviations" of inflation from the target rate are acceptable. We expect the Reserve Bank to exercise its flexible mandate and leave the repurchase rate unchanged at 7 percent for some time.

Real South African Retail SalesYear-over-Year Percent Change

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

2003 2004 2005 2006 2007 2008 2009-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

Wholesale & Retail Sales: Dec @ -3.7%

South African Consumer Price IndexYear-over-Year Percent Change

0%

3%

6%

9%

12%

15%

2003 2005 2007 20090%

3%

6%

9%

12%

15%

CPI: Jan @ 6.2%



24


Turkey

Turkish Real GDPYear-over-Year Percentage Change

-15.0%

-12.5%

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-15.0%

-12.5%

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%


Turkish Industrial Production IndexYear-over-Year Percent Change

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1997 1999 2001 2003 2005 2007 2009-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

IPI: Jan @ 12.1%3-Month Moving Average: Jan @ 11.7%

The year-over-year contraction in Turkish GDP slowed to just 3.3 percent in the third quarter of 2009. Inventory replenishment and government spending provided a boost, while trade contributed as export declines slowed. Recent data suggests the economy continued to improve in the fourth quarter, for which GDP data is not yet available.

Industrial production was up 12.1 percent in January from a year ago after surging 25.2 percent in December, which was the biggest increase in over four years. The recent large increases are being driven in part by a low base of comparison as production losses were heavy around the same time a year earlier.

With the increase in production, has come an increase in imports of intermediate goods used in production of goods for export. This, along with improved domestic demand, has led to a re-widening of the trade deficit, which nearly tripled in January from a year earlier. Strong export growth has helped the economy recover, but looking ahead, weakness in Europe and the lagged effects of the lira’s recent appreciation could dampen exports as the year progresses.

Inflation is starting to rear its ugly head once again, rising 10.1 percent year over year in February. Very low levels of comparison during the crisis and higher taxes are factoring into the rebound. This has led the central bank to halt its rate easing cycle, and rates could start to rise later this year should inflation persist.

Turkish Merchandise Trade BalanceMillions of USD, Not Seasonally Adjusted

-$9,000

-$8,000

-$7,000

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

1997 1999 2001 2003 2005 2007 2009-$9,000

-$8,000

-$7,000

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

Merchandise Trade Balance: Jan @ -3,640.0 USD

Turkish Consumer Price IndexYear-over-Year Percent Change

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

1997 1999 2001 2003 2005 2007 20090.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

CPI: Feb @ 10.1%



25


Dollar Exchange Rates

U.S. Trade Weighted Dollar Major Index March 1973=100

65

70

75

80

85

90

95

100

105

110

115

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201065

70

75

80

85

90

95

100

105

110

115

Major Currency Index: Feb @ 76.0

Euro-zone Exchange RateUSD per EUR

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1999 2001 2003 2005 2007 20090.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

USD per EUR: Mar @ 1.360

The weighted-average value of the dollar trended lower throughout most of 2009 as the recovery in the global economy caused the greenback to lose its safe-haven appeal. However, the dollar has gotten off to a strong start in 2010, especially against the euro and other European currencies.

The appreciation of the dollar versus the euro this year reflects, at least in part, some investor nervousness regarding the Greek debt situation. However, U.S. economic data generally have been stronger than expected this year whereas data from the eurozone have largely been disappointing.

The U.S current account deficit has narrowed considerably over the past few years, which exerts fewer headwinds on the dollar. At the same time, net capital inflows into the United States have strengthened over the past few months, which have also helped boost the greenback.

Wells Fargo projects the dollar will appreciate modestly over the next few quarters versus most major currencies, as the U.S. economic recovery continues to prompt foreign buying of higher yielding U.S. assets. However, “commodity” and emerging market currencies will likely appreciate further on a trend basis as commodity prices continue to grind higher and as increasing levels of risk tolerance causes capital to flow to those countries.

Monthly Net Securities PurchasesBillions of Dollars

-$120

-$80

-$40

$0

$40

$80

$120

$160

2004 2005 2006 2007 2008 2009-$120

-$80

-$40

$0

$40

$80

$120

$160

Net Securities Purchases: Dec @ $63 Billion

3-Month Moving Average: Dec @ $70 Billion

Current Account DeficitQuarterly in Billions of Dollars, Seasonally Adjusted

-$240

-$200

-$160

-$120

-$80

-$40

$0

$40

92 94 96 98 00 02 04 06 08-$240

-$200

-$160

-$120

-$80

-$40

$0

$40

Balance on Current Account: Q3 @ $-108.0 B

Source: Bloomberg LP, Federal Reserve Board, IHS Global Insight,

Intl. Monetary Fund and Wells Fargo Securities, LLC

26


Energy

Crude OilNYMEX Front-Month Contract, Dollars per Barrel

$0

$20

$40

$60

$80

$100

$120

$140

$160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010$0

$20

$40

$60

$80

$100

$120

$140

$160

Crude Oil: Mar @ $81.50

Crude Oil InventoryYear-over-Year Percent Change

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009 2010-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Oil Inventory: Feb @ -2.6%

After collapsing from their all-time high in July 2008, oil prices have trended higher since early 2009. The recent upturn in global economic activity is helping spur a modest recovery in petroleum demand. More recently, colder-than-usual weather in North America has helped boost demand.

Global supply has declined a bit, which is also helping support prices. The combination of slightly higher demand and the marginal reduction in supply has caused stocks of petroleum products to drop. Indeed, excess stocks of crude have been pared back significantly over the past few months, and inventories are currently at year-ago levels. Distillate inventories, which rose significantly in the second half of last year, have retreated somewhat as well. Stocks of gasoline have started to rise in recent weeks in advance of the summer driving season.

We project that oil prices will grind slowly higher in the quarters ahead. Oil demand should rise further as the global economy continues to recover.

Natural gas prices trended lower throughout most of 2009 due to weak demand and excessive inventories. However, colder-than-normal weather has caused gas in storage to return to year-ago levels over the past few weeks. Assuming that the U.S. economic recovery remains intact, gas prices should slowly trend higher over the course of the year.

Natural GasHenry Hub Spot, Dollars per MMBTU

$0

$2

$4

$6

$8

$10

$12

$14

$16

2005 2006 2007 2008 2009 2010$0

$2

$4

$6

$8

$10

$12

$14

$16

Natural Gas: Mar @ $4.75

Natural Gas StorageYear-over-Year Percent Change

-30%

-15%

0%

15%

30%

45%

2005 2006 2007 2008 2009 2010-30%

-15%

0%

15%

30%

45%

Natural Gas Storage: Feb @ -2.2%



27


28

We

lls

Fa

rg

o I

nte

rna

tio

na

l In

tere

st R

ate

Fo

rec

ast

(End

of

Qua

rter

Rate

s)3-

Mon

th L

IBO

R10-

Year

Bon

d20

10201

120

10

2011

Q2

Q3

Q4

Q1

Q2

Q3

Q2

Q3

Q4

Q1

Q2

Q3

U.S

.0.3

5%0.

55%

0.80%

1.5

0%2.

35%

3.10%

3.8

0%4.0

0%4.1

0%4.2

0%4.

30%

4.30%

Japan

0.2

5%0.

25%

0.25%

0.2

5%0.

25%

0.25%

1.3

5%1.3

5%1.4

5%1.5

0%1.

60%

1.80%

Eur

oland

0.6

0%0.

80%

1.00%

1.4

0%2.

25%

3.00%

3.2

5%3.3

0%3.7

0%4.0

0%4.

25%

4.40%

U.K

.0.6

5%0.

75%

1.00%

1.7

5%2.

75%

3.40%

4.1

0%4.4

0%4.7

0%4.8

0%4.

90%

5.00%

Can

ada

0.4

0%0.

50%

1.00%

2.0

0%3.

00%

3.50%

3.6

0%3.9

0%4.1

0%4.3

0%4.

40%

4.45%

Fore

cast

as

of:

Mar

ch 1

0, 2

010

We

lls

Fa

rgo

In

tern

ati

on

al

Ec

on

om

ic F

ore

ca

st(Y

ear-

ove

r-Y

ear

Perc

ent

Ch

ang

e)

GDP

CPI

2009

2010

2011

2009

2010

201

1

Glo

bal (P

PP

weig

hts

)-0.8

%4.1

%4

.1%

2.8

%4.2

%4.2

%G

lobal (M

ark

et

Exc

hange R

ate

s)

-2.0

%2.9

%2

.9%

n/a

n/a

n/a

Advanced E

conom

ies1

-3.3

%2.4

%2

.5%

-0.3

%1.5

%1.7

%Unit

ed S

tate

s-2.4

%2.9

%2

.5%

-0.3

%2.1

%2.1

%Euro

zone

-4.0

%1.3

%2

.2%

0.3

%1.1

%1.3

%Unit

ed K

ingdom

-5.0

%1.5

%2

.2%

2.2

%2.8

%1.9

%Ja

pan

-5.1

%2.6

%1

.7%

-1.3

%-0

.8%

0.4

%Kore

a0.1

%5.0

%3

.5%

2.8

%2.6

%2.7

%Canada

-2.5

%2.3

%2

.8%

0.3

%1.9

%1.9

%

Develo

pin

g E

conom

ies1

2.3

%6.1

%5

.9%

6.5

%7.3

%7.3

%Chin

a8.5

%9.4

%9

.0%

-0.7

%2.4

%3.3

%In

dia

6.8

%8.0

%7

.8%

11.4

%12.2

%8.0

%M

exi

co

-6.5

%3.4

%3

.5%

5.3

%5.1

%5.3

%Bra

zil

-0.9

%3.5

%3

.9%

4.9

%5.2

%5.6

%Russ

ia-7.9

%3.6

%4

.1%

11.8

%6.8

%8.8

%

Fore

cast

as

of:

Mar

ch 1

0,

201

01A

ggre

gat

ed U

sing

PP

P W

eig

hts

We

lls

Fa

rgo

Ba

nk

Cu

rre

ncy

Str

ate

gy G

rou

p F

ore

ca

st(E

nd

of

Quart

er

Rate

s)

201

02011

Q2

Q3

Q4

Q1

Q2

Q3

Ma

jor

Curr

enc

ies

Euro

($/€

)1.3

41.3

01.2

81.2

51.2

31.2

3U

.K.

($/£

)1.5

01.4

81.4

51.4

31.4

01.4

0U

.K.

(£/€

)0.8

90.8

80.8

80.8

80.8

80.8

8Ja

pan

(¥/$

)92

95

98

100

102

105

Canada

(C$

/US

$)

1.0

21.0

41.0

71.1

01.1

11.1

2S

wit

zerl

and (

CH

F/$

)1.0

91.1

21.1

51.1

81.2

21.2

2

Oth

er

Curr

encie

sA

ust

ralia

(U

S$

/A$)

0.9

40.9

40.9

20.9

00.8

80.8

7C

hin

a (

CN

Y/$

)6.8

26.8

06.7

06.6

06.5

06.4

0S

outh

Kore

a (

$/K

RW

)1100

1075

1050

1050

1025

1050

Sin

gapo

re (

$/S

GD)

1.4

01.3

91.4

11.4

21.4

31.4

5T

aiw

an (

$/T

WD)

31.7

53

1.7

53

1.5

03

1.5

03

1.2

53

1.2

5M

exic

o (

$/M

XN

)1

2.6

01

2.4

01

2.2

01

2.2

01

2.0

01

2.0

0N

orw

ay

(NO

K/$

)5.9

06.0

06.0

46.0

86.2

46.2

9S

weden

(SE

K/$

)7.2

47.3

87.4

57.5

27.6

77.7

6

Fore

cast

as

of:

Ma

rch

10,

201

0

We

lls

Fa

rg

o I

nte

rna

tio

na

l In

tere

st R

ate

Fo

rec

ast

(End

of

Qua

rter

Rate

s)3-

Mon

th L

IBO

R10-

Year

Bon

d20

10201

120

10

2011

Q2

Q3

Q4

Q1

Q2

Q3

Q2

Q3

Q4

Q1

Q2

Q3

U.S

.0.3

5%0.

55%

0.80%

1.5

0%2.

35%

3.10%

3.8

0%4.0

0%4.1

0%4.2

0%4.

30%

4.30%

Japan

0.2

5%0.

25%

0.25%

0.2

5%0.

25%

0.25%

1.3

5%1.3

5%1.4

5%1.5

0%1.

60%

1.80%

Eur

oland

0.6

0%0.

80%

1.00%

1.4

0%2.

25%

3.00%

3.2

5%3.3

0%3.7

0%4.0

0%4.

25%

4.40%

U.K

.0.6

5%0.

75%

1.00%

1.7

5%2.

75%

3.40%

4.1

0%4.4

0%4.7

0%4.8

0%4.

90%

5.00%

Can

ada

0.4

0%0.

50%

1.00%

2.0

0%3.

00%

3.50%

3.6

0%3.9

0%4.1

0%4.3

0%4.

40%

4.45%

Fore

cast

as

of:

Mar

ch 1

0, 2

010

We

lls

Fa

rgo

In

tern

ati

on

al

Ec

on

om

ic F

ore

ca

st(Y

ear-

ove

r-Y

ear

Perc

ent

Ch

ang

e)

GDP

CPI

2009

2010

2011

2009

2010

201

1

Glo

bal (P

PP

weig

hts

)-0.8

%4.1

%4

.1%

2.8

%4.2

%4.2

%G

lobal (M

ark

et

Exc

hange R

ate

s)

-2.0

%2.9

%2

.9%

n/a

n/a

n/a

Advanced E

conom

ies1

-3.3

%2.4

%2

.5%

-0.3

%1.5

%1.7

%Unit

ed S

tate

s-2.4

%2.9

%2

.5%

-0.3

%2.1

%2.1

%Euro

zone

-4.0

%1.3

%2

.2%

0.3

%1.1

%1.3

%Unit

ed K

ingdom

-5.0

%1.5

%2

.2%

2.2

%2.8

%1.9

%Ja

pan

-5.1

%2.6

%1

.7%

-1.3

%-0

.8%

0.4

%Kore

a0.1

%5.0

%3

.5%

2.8

%2.6

%2.7

%Canada

-2.5

%2.3

%2

.8%

0.3

%1.9

%1.9

%

Develo

pin

g E

conom

ies1

2.3

%6.1

%5

.9%

6.5

%7.3

%7.3

%Chin

a8.5

%9.4

%9

.0%

-0.7

%2.4

%3.3

%In

dia

6.8

%8.0

%7

.8%

11.4

%12.2

%8.0

%M

exi

co

-6.5

%3.4

%3

.5%

5.3

%5.1

%5.3

%Bra

zil

-0.9

%3.5

%3

.9%

4.9

%5.2

%5.6

%Russ

ia-7.9

%3.6

%4

.1%

11.8

%6.8

%8.8

%

Fore

cast

as

of:

Mar

ch 1

0,

201

01A

ggre

gat

ed U

sing

PP

P W

eig

hts

We

lls

Fa

rgo

Ba

nk

Cu

rre

ncy

Str

ate

gy G

rou

p F

ore

ca

st(E

nd

of

Quart

er

Rate

s)

201

02011

Q2

Q3

Q4

Q1

Q2

Q3

Ma

jor

Curr

enc

ies

Euro

($/€

)1.3

41.3

01.2

81.2

51.2

31.2

3U

.K.

($/£

)1.5

01.4

81.4

51.4

31.4

01.4

0U

.K.

(£/€

)0.8

90.8

80.8

80.8

80.8

80.8

8Ja

pan

(¥/$

)92

95

98

100

102

105

Canada

(C$

/US

$)

1.0

21.0

41.0

71.1

01.1

11.1

2S

wit

zerl

and (

CH

F/$

)1.0

91.1

21.1

51.1

81.2

21.2

2

Oth

er

Curr

encie

sA

ust

ralia

(U

S$

/A$)

0.9

40.9

40.9

20.9

00.8

80.8

7C

hin

a (

CN

Y/$

)6.8

26.8

06.7

06.6

06.5

06.4

0S

outh

Kore

a (

$/K

RW

)1100

1075

1050

1050

1025

1050

Sin

gapo

re (

$/S

GD)

1.4

01.3

91.4

11.4

21.4

31.4

5T

aiw

an (

$/T

WD)

31.7

53

1.7

53

1.5

03

1.5

03

1.2

53

1.2

5M

exic

o (

$/M

XN

)1

2.6

01

2.4

01

2.2

01

2.2

01

2.0

01

2.0

0N

orw

ay

(NO

K/$

)5.9

06.0

06.0

46.0

86.2

46.2

9S

weden

(SE

K/$

)7.2

47.3

87.4

57.5

27.6

77.7

6

Fore

cast

as

of:

Ma

rch

10,

201

0

Wells Fargo Securities, LLC Economics Group

Diane Schumaker-Krieg Global Head of Research & Economics

(704) 715-8437 (212) 214-5070

[email protected]

John E. Silvia, Ph.D. Chief Economist (704) 374-7034 [email protected]

Mark Vitner Senior Economist (704) 383-5635 [email protected]

Jay Bryson, Ph.D. Global Economist (704) 383-3518 [email protected]

Scott Anderson, Ph.D. Senior Economist (612) 667-9281 [email protected]

Eugenio Aleman, Ph.D. Senior Economist (612) 667-0168 [email protected]

Sam Bullard Economist (704) 383-7372 [email protected]

Anika Khan Economist (704) 715-0575 [email protected]

Azhar Iqbal Econometrician (704) 383-6805 [email protected]

Adam G. York Economist (704) 715-9660 [email protected]

Ed Kashmarek Economist (612) 667-0479 [email protected]

Tim Quinlan Economic Analyst (704) 374-4407 [email protected]

Kim Whelan Economic Analyst (704) 715-8457 [email protected]

Yasmine Kamaruddin Economic Analyst (704) 374-2992 [email protected]

Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wachovia Bank N.A., Wells Fargo Bank N.A, Wells Fargo Advisors, LLC, and Wells Fargo Securities International Limited. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2010 Wells Fargo Securities, LLC.

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Documents

· 2010. 3. 14. · This report is available on wellsfargo.com/research and on Bloomberg WFEC March 11, 2010 Economics Group Executive Summary: Will the Global Economy Expand in