EFTA01458955

8 December 2015 World Outlook 2016: Managing with less liquidity Inflation is expected to rebound sharply in 2016 and rise modestly further in 2017. The initial acceleration is driven primarily by the stabilization of energy price, removing what has been a considerable downward force on broad price indexes. Hence, the gap between headline and core inflation will close in the coming year. In addition, core inflation rates in the G3 economies have already begun to rise gently, and our expectation is that even after the commodity price effect lifts headline inflation, the underlying rising trend in core inflation will continue to push inflation higher. Advanced economy inflation is projected to rise by 1 percentage point next year and 0.6 percentage points in 2017. On the other hand, inflation in emerging market economies - less influenced in most cases by energy prices -- is expected to rise modestly next year and remain stable in 2017. Upside risks to inflation from food prices are a concern-- this year has seen the most pronounced El Nino cycle on record and weather patterns may be equally disruptive next year. As yet, however, food prices globally are not showing any upward momentum. Figure 7: Global inflation revised up led by emerging market economies inflation forecast & revision rvi,yoy Forecast level Current 2015E 2016F 2017F Forecast change since June 15 WO Update 2015F 2016E 20ITF (37 0.3 1.6 2.1 -0.1 -0.6 n.a US 0.2 1.9 2.3 0.0 -0.6 -0.3 Japan 0.8 0.7 2.1 -0.1 -0.3 0.2 Euro area 0.1 0.9 1.6 -0.2 -0.6 -0.1 Asia (ex-Japan) 2.4 2.9 2.9 -0.2 -0.6 n.a China 1.4 1.8 1.8 -0.2 -0.9 -1.2 India 4.9 6.4 5.0 -0.2 -0.3 -0.6 EEMEA 8.7 6.7 5.9 0.2 1.0 n.a Russia 16.6 9.2 7.1 0.4 22 0.3 Latin America 15.2 18.8 19.4 2.2 6.2 n.a Brazil 9.0 8.5 6.2 0.5 2.6 1.2 Advanced economies 0.3 1.4 2.0 -0.1 -0.6 n.a EM econrxnies 5.6 5.9 6.7 0.2 0.7 n.a t3iobai 3.4 4.0 4.2 0.1 0.2 n.a Ake* .4e• IS Ware &stet yds license t ha* best noestulad way lA0, WED batter •15 PPP warts Sow* Deuria•Sent Swat, Our inflation forecasts have undergone significant revisions since the June update. Global inflation expectations have been revised up by 0.1 and 0,2 percentage points for 2015 and 2016. The impetus for this revision is higher inflation in emerging market economies resulting from greater-than-expected currency depreciation. This is most pronounced in Latin America, where forecast inflation has been revised up by 2.2 and 6.2 percentage points for 2015 and 2016, respectively. Inflation has been marked down broadly across advanced economies and emerging Asia, with forecasts falling by a few tenths for 2015 and by about one-half of a percentage point for next year. Figure 6: G3 core inflation %yoy —US (Pa) arsa 30 25 20 15 10 05 00 .05 .10 20 2008 2009 2010 2011 2012 2013 2014 2015 Na. Non Wm Core oressoi net of ar cown000n nw Sant WC Drab* LW neer. Deutsche Bank AG/London Page 9 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0119116 CONFIDENTIAL SDNY_GM_00265300 EFTA01458955