Nomura - A dimming outlook for Japan

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					Nomura | The Economy Next Week                                                                                                                   21 September 2012

The Economy Next Week
Economics Research | Global

A dimming outlook for Japan                                                                                                          21 SEPTEMBER 2012

Last week, we lowered our GDP forecasts and in the week ahead we expect collaborating
evidence that the weakening external backdrop is taking its toll on Japan’s economy.

Forecast summary ....................................................................................................... 2
Our view in a nutshell .................................................................................................. 3
Economic data calendar .............................................................................................. 4
Data previews
             United States ................................................................................................. 5
             Europe ........................................................................................................... 7
             Japan............................................................................................................. 9
             Asia ............................................................................................................. 10
             Emerging Markets ....................................................................................... 11
Contacts..................................................................................................................... 15

Bob's World: When Money Dies I think historically important events may be
unfolding. I think that by their actions both Fed Chairman Bernanke and ECB
President Draghi may have belied how deeply worried they are about our economies
and the financial system.
Japan: BOJ monetary policy meeting The BOJ decided to increase its asset
purchase program by around ¥10trn and to remove the minimum bidding yield on
purchases of long-term JGBs and corporate bonds.
The Spanish delay How to trade markets after QE3 and prior to an expected
Spanish (and Italian) request for ESM support.
US: Housing recovery deepens Taken on the whole, better housing data this week
are noteworthy. To be sure, the US housing market is far from contributing to the
broader economy in line with historical norms. But recent data on housing have
provided growing signs that the nascent recovery is deepening.
US: Household balance sheet repair continues Flow of Funds data revealed that
the debt-to-income ratio (based on all household liabilities) declined further to 113.2
in Q2 from 114.1, and compares with a historical high of 134.4 in Q3 2007.
China primed to surprise on the upside We believe economic growth in China will
rebound earlier, and stronger, than the market currently expects. We expect growth
to rebound visibly in Q4 to 8.8%, driven by stronger infrastructure and housing
investment, which combined account for half of total investment.
GEMaRI In Nomura's Global Emerging Market Risk Index, we publish scores for Q2
2012, which have again fallen back in EEMEA and Asia, albeit at a slower pace than
before. LatAm scores ticked up very slightly but remain the lowest of any region.
Czech Republic: More signals of postmodernism. CNB Governor Singer stated
once again that the CNB has very little scope with base rates to influence monetary
conditions in the economy, and that alternative measures are available and might be
                                                                                                                                       Nomura International (HK) Limited

  See Disclosure Appendix A-1 for the Analyst Certification and Other Important Disclosures
Nomura | The Economy Next Week                                                                                         21 September 2012

Forecast Summary

                                 Real GDP (% y-o-y)             Consum er Prices (% y-o-y)          Policy Rate (% end of period)
                             2011      2012       2013            2011      2012        2013           2011       2012     2013
Global                         3.8       3.1        3.5             4.3       3.3         3.3          3.31       2.99     3.20
Developed                      1.4       1.3        1.4             2.7       2.1        1.5           0.56       0.39     0.42
Emerging Markets               6.7       5.4        5.8             6.3       4.8         5.4           6.67       6.04     6.32 
Americas                       2.5       2.4        2.4             4.5       3.7        3.5          2.47       2.10     2.30
United States*                 1.8       2.2        1.9             3.1       2.3        1.5          0.13       0.13     0.13
Canada                         2.4       2.0        2.1             2.9       2.0         2.0           1.00       1.00     1.75
Latin America††                4.3       2.8        3.6             8.5       7.7         9.0           9.06       7.55     8.11
   Argentina                   8.9       2.0        4.0           21.8       24.7        30.2         14.61      15.00    12.00
   Brazil                      2.7       1.3        4.1             6.5       5.3         5.7         11.00        7.50     9.50
   Chile                       6.0       4.6        5.8             4.4       3.0         3.1           5.25       4.75     5.50
   Colombia                    5.9       4.0        4.0             3.7       2.9         3.5           4.75       4.50     4.50
   Mexico                      3.9       3.7        3.2             3.8       4.1         3.4           4.50       4.50     4.50
   Venezuela                   4.2       6.0       -1.0           27.6       18.1        30.0         15.60      14.50    16.00
Asia/Pacific                   5.9       5.7        5.7             4.8       3.2         3.8           5.02       4.67     4.95
Japan†                        -0.8       2.3        1.1            -0.3       0.1         0.1           0.05       0.05     0.05
Australia                      2.1       3.6        2.4             3.4       1.6         2.6           4.25       3.25     3.50
New Zealand                    2.1       2.7        3.2             4.1       1.7         2.4           2.50       2.75     3.50
Asia ex Japan, Aust, NZ        7.5       6.4        6.7             5.9       3.9         4.5           6.11       5.66     5.93
   China                       9.2       8.1        7.9             5.4       2.9         4.2           6.56       6.00     6.50
   Hong Kong***                5.0       1.5        3.5             5.3       4.0         3.5           0.33       0.40     0.40
   India**                     7.5       5.5        6.6             9.5       7.8         7.2           8.50       8.00     7.50
   Indonesia                   6.5       6.1        6.3             5.4       4.5         5.0           6.00       5.75     6.50
   Malaysia                    5.1       4.8        4.3             3.2       1.7         2.4           3.00       3.00     3.50
   Philippines                 3.9       6.0        6.3             4.7       3.3         4.4           4.50       3.50     4.50
   Singapore***                4.9       1.8        4.2             5.2       4.8         2.8           0.58       0.46     0.54
   South Korea                 3.6       2.5        3.0             4.0       2.0         2.5           3.25       2.75     2.75
   Taiw an                     4.0       1.5        3.5             1.4       1.7         1.4           1.88       1.88     2.13
   Thailand                    0.1       5.5        4.7             3.8       3.0         3.0           3.25       3.00     3.00
Western Europe                 1.3      -0.5        0.7             3.0       2.3         1.6           0.92       0.50     0.50
Euro area                      1.4      -0.5        0.8             2.7       2.3         1.5           1.00       0.50     0.50
   Austria                     3.0       0.3        1.2             3.6       2.3         2.0           1.00       0.50     0.50
   France                      1.7       0.0        0.6             2.3       2.2         1.7           1.00       0.50     0.50
   Germany                     3.1       0.9        1.5             2.5       2.1         1.7           1.00       0.50     0.50
   Greece                     -6.9      -6.3       -3.6             3.1       0.8        -0.1           1.00       0.50     0.50
   Ireland                     1.4       0.1        0.6             1.2       2.0         1.5           1.00       0.50     0.50
   Italy                       0.5      -2.3        0.0             2.9       3.1         1.7           1.00       0.50     0.50
   Netherlands                 1.1      -0.1        1.2             2.5       2.6         1.9           1.00       0.50     0.50
   Portugal                   -1.7      -3.2       -2.7             3.6       2.6         0.8           1.00       0.50     0.50
   Spain                       0.4      -1.6       -1.2             3.1       1.8         1.6           1.00       0.50     0.50
United Kingdom                 0.8      -0.4        0.3             4.5       2.7         2.3           0.50       0.50     0.50
EEMEA                          4.9       2.0        2.8             4.9       5.5         4.8           4.89       4.81  4.80 
Czech Republic                 1.7      -0.7        0.9             1.9       3.3         2.0           0.75       0.25  0.75 
Hungary                        1.7      -1.1        0.3             3.9       5.9         5.3           7.00       6.25     5.00
Israel                         4.8       2.8        3.0             3.5       2.7         3.3           2.75       2.25     3.00
Poland                         4.3       2.6        2.3             4.3       4.0         3.2           4.50       4.75     4.00
Romania                        2.5       0.2       0.8            5.8       4.0         3.5           6.00       6.00     6.00
South Africa                   3.2       2.4        2.9             5.0       5.5        5.2          5.50       4.50     4.00
Turkey                         8.5       3.0        4.5             6.5       8.1         7.1           5.75       6.25     7.00

For detailed outlook tables, please see the latest Global Economic Outlook Monthly (10 September 2012).
Note: Aggregates calculated using purchasing power parity (PPP) adjusted shares of world GDP (table covers about 84% of world GDP
on a PPP basis); our forecasts incorporate assumptions on the future path of oil prices based on oil price futures, consensus forecasts
and Nomura in-house analysis. Currently assumed average Brent oil prices for 2012 and 2013 are $112 and $109, respectively, after
$111 in 2011. *2011, 2012 and 2013 policy rate forecasts are midpoints of 0-0.25% target federal funds rate range. **Inflation refers to
wholesale prices. ***For Hong Kong and Singapore, the policy rate refers to 3M Hibor and 3M Sibor, respectively. †Policy rate forecasts
in 2011, 2012 and 2013 are midpoints of BOJ‟s 0-0.10% target unsecured overnight call rate range. ††CPI forecasts for Latin America
are year-on-year changes for Q4. The ↑↓ arrows signify changes from last week.
Source: Nomura Global Economics.

Nomura | The Economy Next Week                                                                                        21 September 2012

Our View in a Nutshell (changes from last issue highlighted)

United States

 Waning business confidence will continue to dampen hiring and investment.
 Ample economic slack should restrain inflation and keep inflation expectations anchored.
 After providing further policy accommodation the FOMC is likely on hold for now, but we expect more easing early next year.
 Europe‟s debt crisis and the looming “fiscal cliff” should continue to weigh on growth through the rest of 2012.
 We expect policymakers to act after the election to avert the effects of severe fiscal tightening scheduled to begin in 2013.


 Fiscal tightening, financial deleveraging and persistent sovereign debt market tensions should keep the euro area in recession.
 We expect Spain and Italy to resist calling for help, prompting renewed market deterioration.
 A bond market sell-off as Spain delays a call for help should lead to a bailout before end-October.
 The OMTs could buy up to three months of time should countries like Spain call for help quickly and bailout conditions are light.
 We have reluctantly pushed back our 25bp rate cut to December although we still see a possibility of a cut in October.
 We expect inflation to settle close to target in the UK but in the euro area to remain above 2% for most of 2012.
 The BoE extended liquidity and funding support before announcing £50bn of QE in July. We expect £25bn more in November.


 With a robust recovery in private internal demand, external demand is also key for the recovery.
 We expect exports and consumption to drop temporarily in Q3 on slower overseas demand and the end of eco-car subsidies.
 We expect the BOJ to expand its APP and the pace of its asset purchases in Q1 2013 including on risk assets such as ETFs.
 The main risks are yen appreciation, a worsening European debt problem and the US and China slowing.


 The export slump calls for policy stimulus, but raises the risk next year of a build up in debt, inflation and asset price bubbles.
 China: Macro data are mixed, but policy easing is picking up speed, supporting the growth outlook for H2.
 Korea: Sub-potential growth and below-target inflation point to further monetary easing before year-end.
 India: With inflation likely to rise above 8% in the near term and recent reforms only incremental, rate cuts still look delayed.
 Australia: With indications that growth is slowing due to external factors, the RBA is likely to cut rates in November.
 Indonesia: An increasingly uncertain policy environment could lead to delays in reforms and sustained current account deficits.

EEMEA (Emerging Europe, Middle East and Africa) and Latin America

 South Africa: With inflation now falling fast into target and growth slowing, the SARB may cut rates further.
 Hungary: In a difficult spot having rejected the IMF aid conditions over policy concerns, market pressure should force a deal in 2013.
 Poland continues to outperform strongly and a recession is difficult to envisage, as such we don‟t see cuts occurring this year.
 Turkey: Rebalancing continues and is likely to pave the way for an upgrade to investment grade.
 Economic growth in Brazil will likely come in below 2% in 2012, despite the Selic policy rate falling to 7.5%.
 Mexico: As exports slow, consumption is increasingly supporting growth. Inflation will likely remain above the target.
 Argentina‟s growth looks set to slow down in 2012, but inflation to stay high. ARS real appreciation should continue.

Nomura | The Economy Next Week                                                                                                                      21 September 2012

Economic Data Calendar

The Week at a Glance
Previous, Nomura, Consensus
                   Mon 24 Sep                     Tue 25 Sep                 Wed 26 Sep                    Thu 27 Sep                     Fri 28 Sep
                                                  US Case-Shiller            US                            US                             US
                                                  composite-20 (Jul)         New home sales (Aug)          GDP (Q2-3rd)                   Personal income (Aug)
                                                  % y-o-y 0.5, 1.5, 1.2      k saar 372, 381, 380          % q-o-q saar 1.7, 1.6, 1.7     % m-o-m 0.3, 0.3, 0.2

                                                  US                        US                             US                             US
North America

                                                  Consumer confidence (Sep) New home sales (Aug)           Durable goods orders (Aug)     Personal spending (Aug)
                                                  Index 60.6, 63.2, 62.8    % m-o-m 3.6, 2.4, 2.2          % m-o-m 4.1, -6.5, -4.5        % m-o-m 0.4, 0.5, 0.5

                                                                                                           US Durable goods orders        US
                                                                                                           ex-transport (Aug)             Chicago PMI (Sep)
                                                                                                           % m-o-m -0.6, -1.0, 0.5        Index 53, 52, 53.1

                                                                                                                                          Monthly GDP (Jul)
                                                                                                                                          % m-o-m 0.2, 0.0, n.a.

                   Germany                        ECB President Draghi       Germany                       Euro area                      France & Spain
                   Ifo (business climate) (Sep)   speaks at BDI annual       HICP inflation (Sep-1st)      M3 money supply (Aug)          2013 Budget to be
Europe (ex-UK)

                   Index 102.3, 102.5, 102.7      congress in Berlin         % y-o-y 2.2, n.a., 2.1        % y-o-y, sa 3.8, n.a., 3.2     presented

                                                                             ECB Vice President            Euro area                      Euro area
                                                                             Constancio speaks at          Economic sentiment (Sep)       HICP inflation(Sep-flash)
                                                                             ICFR event in London          Index 86.1, n.a., 86.4         % y-o-y 2.6, n.a., 2.4

                                                                                                           Chancellor Merkel speaks ECB Asmussen speaks at
                                                                                                           at Kohl anniversary event panel at AHS conference
                                                                                                                                     in Berlin

                   BoE Financial Policy                                                                    GDP (Q2-3rd)                   Index of services (Jul)
                   Committee press                                                                         % q-o-q, sa -0.5, -0.5, -0.5   % m-o-m -1.7, 1.7, n.a.

                                                                                                           Current account (Q2)
                                                                                                           £bn -11.2, -13.9, -11.8

                   BOJ MPM minutes                                                                                                        Industrial production
                   (8-9 Aug)                                                                                                              (Aug)
                                                                                                                                          % m-o-m -1.0, -0.2, -0.7

                                                                                                                                          Core CPI (Aug)
                                                                                                                                          % y-o-y -0.3, -0.2, -0.3

                                                                                                                                          Consumer spending (Aug)
                                                                                                                                          % y-o-y 1.7, 1.0, 1.8

                   Singapore                      Philippines                Singapore                     South Korea                    Malaysia
                   CPI (Aug)                      Trade balance (Jul)        Industrial production (Aug)   Business confidence (Oct)      2013 Budget
                   % y-o-y 4.0, 4.0, 3.8          US$bn -0.8, -0.6, n.a.     % y-o-y 1.9, -1.7, 1.0        Index 75, 73, n.a.             announcement

                   Taiwan                         Thailand                                                                                India
                   Industrial production (Aug)    Exports (Aug)                                                                           Current account (Q2)
                   % y-o-y 0.0, -3.8, -0.9        % y-o-y -4.5, -4.7, -5.9                                                                US$bn, -21.7, -13.8, n.a.

                                                                                                                                          South Korea
                                                                                                                                          Industrial production (Aug)
                                                                                                                                          % y-o-y 0.3, -0.1, n.a.

                                                                                                                                          Industrial production (Aug)
                                                                                                                                          % y-o-y -5.8, -7.0, n.a.

                   Hungary                        Poland                                                   Czech Republic                 Colombia
                   Retail sales (Jul)             Unemployment rate (Aug)                                  CNB MPC meeting                Overnight lending rate
Emerging Markets

                   % y-o-y -1.7, -1.9, -1.8       % y-o-y 12.3, 12.3, 12.3                                 % 0.50, 0.25, 0.25             % 4.75, 4.75, 4.75

                   Israel                         Poland                                                   Romania                        Turkey
                   BOI policy meeting (Sep)       Retail sales (Aug)                                       BNR MPC meeting                Trade balance (Aug)
                   % 2.25, 2.25, 2.25             % y-o-y 6.9, 6.0, 5.9                                    % 5.25, 5.25, 5.25             $bn -7.9, n.a., n.a.

                   Mexico                         Hungary                                                  South Africa                   South Africa
                   Bi-Weekly CPI (Sep)            MNB MPC meeting (Sep)                                    PPI (Aug)                      Budget balance (Aug)
                   % 2w-o-2w 0.14, 0.39, n.a.     % 6.75, 6.50, 6.75                                       % y-o-y 5.4, 5.2, 5.4          ZARbn -57.6, -8.5, n.a.

Sources for consensus forecasts: Bloomberg, Reuters.

Nomura | The Economy Next Week                                                                                  21 September 2012

United States | Data preview
The week ahead

Data releases this week should reveal more good news on housing, with important
consumer confidence and spending data also on tap.

Weekly chain store sales (Tuesday): Sales slipped in the latest week in a typical lull between      Ellen Zentner
                                                                                                    +1 212 667 9668
the back-to-school and traditional fall seasons. We continue to watch rising gasoline prices,
which threaten to curtail spending. Nevertheless, September sales continue to run slightly
                                                                                                    Aichi Amemiya
ahead of retailers‟ target.                                                                         +1 212 667 9347
Case-Shiller home price index (Tuesday): We expect the Case-Shiller 20-city home price
index to show a 1.5% y-o-y increase in July as price gains continue to spread across the            Roiana Reid
                                                                                                    +1 212 298 4221
country. An increasing number of major cities each month are now experiencing year-on-year
price gains – 13 in June compared with three in January.

Consumer confidence (Tuesday): Consumer confidence fell sharply in August to a reading of
60.6, and appeared to be tied to weaker labor market conditions. We expect calmer financial
markets and a gain in equities to prompt an increase in the Conference Board‟s index back to
63.2 in September, remaining lower compared with levels earlier this year.

New home sales (Wednesday): New home sales data are estimated using single-family
building permits data, which increased in August and support our forecast for a rise in sales of
new single-family homes of 2.4% to an annual rate of 381k in August.

Monday 24 Septem ber                            Units     Period     Prev 2     Prev 1     Last    Nom ura     Consensus
      No indicators w ill be released
Tuesday 25 Septem ber
9.00  Case-Shiller composite-20                % y-o-y      Jul       -1.8       -0.7       0.5     1.5             1.2
10.00 Consumer confidence                       Index       Sep       62.7       65.4       60.6    63.2            62.8
13.00 2-yr note auction                          $bn                                        n.a.     35             n.a.
Wednesday 26 Septem ber

7.00    Mortgage applications                 % w -o-w 21-Sep          -2.4      11.1       -0.2     n.a.           n.a.
10.00 New home sales                          000s saar Aug            372       359        372      381            380
10.00 New home sales                          % m-o-m   Aug             3.9      -3.5        3.6     2.4            2.2
13.00 5-yr note auction                          $bn                                        n.a.      35            n.a.
Thursday 27 Septem ber
8.30    Initial jobless claims                  000s     22-Sep        367       385        382      n.a.           n.a.
8.30    Durable goods orders                  % m-o-m     Aug          1.5        1.6        4.1     -6.5           -4.5
8.30    Durable goods orders ex-trans         % m-o-m     Aug          0.7       -2.2       -0.6     -1.0            0.5
8.30    GDP                                   % q-o-q ar Q2-3rd        4.1        2.0        1.7      1.6            1.7
10.00 Pending home sales                      % m-o-m     Aug          5.5       -1.4        2.4     n.a.           -0.3
13.00 7-yr note auction                          $bn                                        n.a.      29            n.a.
Friday 28 Septem ber
8.30    Personal income                       % m-o-m  Aug             0.3        0.3       0.3     0.3             0.2
8.30    Personal spending                     % m-o-m  Aug            -0.2        0.0       0.4     0.5             0.5
8.30    PCE index                             % m-o-m  Aug            -0.2        0.1       0.0     0.5             0.5
8.30    Core PCE index                        % m-o-m  Aug             0.1        0.2       0.0     0.1             0.1
9.45    Chicago PMI                            Index   Sep            52.9       53.7       53.0    52.0            53.1
9.55    U of M consumer sentiment              Index  Sep-fin         72.3       74.3       79.2    n.a.            78.8

Note: Eastern Daylight Time (EDT).
Source: Bloomberg, Haver Analytics, Nomura.

Nomura | The Economy Next Week                                                                      21 September 2012

Initial jobless claims (Thursday): Jobless claims have risen in the past two weeks, but largely
reflect the temporary effects of Hurricane Isaac. The 4-week moving average of jobless claims
moved up to 378k, but continues largely to move sideways.

Durable goods orders (Thursday): Orders for Boeing planes dropped off sharply in August
after surging in July. Large shifts in aircraft orders tend to heavily influence the headline for
durable goods orders. We expect orders to drop by 6.5% in August. Excluding the effect of
transportation orders, we expect orders to decline by 1.0% in August, reflecting an earlier
reported decrease in industrial production of manufactured goods.

GDP, Q2 final (Thursday): We believe real GDP growth will be revised downward to an
annualized pace of 1.6% versus the previously reported 1.7%.

Personal income (Friday): Employers added just 96k jobs in August and average hourly
earnings were flat, underpinning our forecast that personal income increased by a modest
0.3%. Retail sales were robust, but may have been slightly tempered by a decline in demand for
utilities. Nevertheless, we forecast a rise of 0.5% in personal consumption in August. Largely
reflecting the effects of higher gasoline and food prices, we expect the headline PCE price index
to increase by 0.5% in August, with a rise of 0.1% in the core (excludes food and energy).

Chicago PMI (Friday): The Chicago PMI surveys manufacturing and service sectors, but is
dominated by manufacturing activity. Earlier released regional Fed manufacturing surveys
remained weak in September and provide a basis for our forecast of 52.0 in September
compared with 53.0 in August.

U of M consumer sentiment (Friday): After falling sharply from a level of 79.3 in May,
consumer sentiment has since recovered to a level of 79.2 in early September. Consensus
expects sentiment to pull-back slightly to a level of 78.8 in the final reading of September.

Nomura | The Economy Next Week                                                                                 21 September 2012

Europe | Data preview
The week ahead

The German Ifo index and euro-area M3 money supply are the main data released
this week.

Germany Ifo business climate (Monday): We expect the German Ifo business climate index             Nick Matthews
                                                                                                   +44 (0) 20 710 25126
to rise slightly to 102.5 in September (up from 102.3 in August), a temporary pause in its
continuous decline since May. In terms of breakdown, we think the current assessment sub-
                                                                                                   Philip Rush
index is likely to rise from 111.2 in August to 111.9 in September. This should reflect not only   +44 20 7102 9595
the stabilisation in the manufacturing sector, which is consistent with the message from 

manufacturing PMI, but also some potential payback effects from August‟s sharp decline in the      Stella Wang
wholesale and retail trade sectors. However, we look for the business expectations index to fall   +44 (0) 20 710 20599
to 93.9 in the month (from 94.2 in August), as indicated by the weak readings of new export
orders in the manufacturing PMI and business expectations in the services PMI.

M3 money supply (Thursday): The ECB will adjust the measurement of M3 and its
counterparts for repurchase agreements with central counterparties (CCPs) as from the release
of the end-August monetary figures (on 27 September 2012) onwards. According to the ECB,
the adjustment will alter the monthly flow of M3 and loans to the private sector substantially,
while the effects to the annual growth rates (i.e. the medium-term dynamics) of the above
indicator will be limited.

UK GDP (Thursday): In the ONS‟s third (never final) attempt at estimating Q2 GDP, we expect
no headline revision. Monthly external trade data are not as bad as assumed in the second
GDP estimate, which also marginally eases its negative effect on the current account (by £0.2bn
to -£10.9bn). But with income struggling (£2.5bn) and current transfers persistently negative
(-£5.5bn) in our forecast, we expect a current account balance of -£13.9bn. Trade revisions lead
us to expect a small worsening in the Q1 deficit too.

Nomura | The Economy Next Week                                                                                                                21 September 2012

Sometime in the week                                                              Units       P eriod      P rev 2     P rev 1      Last     Nomura       Consensus
24-28    UK               Nationwide house prices                            %m-o-m, sa         Sep          -0.5        -0.8        1.3        n.a.         0.2
M onday 24 September                                                              Units       P eriod      P rev 2     P rev 1      Last     Nomura       Consensus
         European Union   European Parliament Committee hearing on Libor scandal
8.30     Netherlands      GDP                                                %q-o-q, sa        Q2-2nd        -0.6        0.2         0.2         0.2         n.a.
9.00     Germany          Ifo (business climate)                                   Index        Sep         105.2       103.2       102.3       102.5        102.7
9.00     Germany          Ifo (current assessment)                                 Index        Sep           1
                                                                                                             1 3.8       11
                                                                                                                          1 .5       1 .2
                                                                                                                                    11           1 .9
                                                                                                                                                11            1 .0
9.00     Germany          Ifo (expectations)                                       Index        Sep          97.2        95.5       94.2        93.9         95.0
9.30     UK               Financial Policy Committee press statement
13.00    Germany          Parliamentary hearing on Swiss-German tax accord
19.00    Portugal         Central Government Budget Report (ytd)
Tuesday 25 September
         Spain            Budget balance                                            bn
                                                                                    €          Aug-ytd      -36.4       -43.1       -48.5       n.a.         n.a.
7.00     Germany          GfK consumer confidence                                  Index        Oct          5.8         5.9         5.9        n.a.         5.9
7.45     France           INSEE business confidence                                Index        Sep           91         89          90         n.a.          89
9.00     Italy            Consumer confidence                                      Index        Sep          85.4        86.5       86.0        n.a.         86.0
9.30     UK               BBA loan approvals for house purchases                     k          Aug          30.0        25.9       28.4        n.a.         n.a.
10.00    Italy            Hourly wages                                            %y-o-y        Aug           1.4        1.5         1.5        n.a.         n.a.
13.30    Euro area        Finnish FM Urpilainen holds talks with German FM Schaeuble and Dutch FM de Jager in Vantaa, Finland
14.00    Euro area        ECB President Draghi keynote address at German Industries (BDI) annual congress in Berlin. Cllr Merkel also attends the event
Wednesday 26 September
         Euro area        ECB Vice President Constancio speaks at ICFR event in London
         Portugal         BdP Governor da Silva speaks at OMFIF event in London
7.45     France           Consumer confidence                                      Index        Aug           90         89          87         n.a.          86
9.00     Italy            Retail sales                                       %m-o-m, sa          Jul         -1.6        0.1         0.4        n.a.         n.a.
13.00    Germany          HICP inflation                                          %y-o-y       Sep-1st       2.0         1.9         2.2        n.a.          2.1
13.00    Germany          Consumer price index                                    %y-o-y       Sep-1st        1.7        1.7         2.1        n.a.         2.0
Thursday 27 September
         UK               Record of FPC meeting                                                 4
                                                                                               1 Sep
         Spain                                      3
                          Cabinet due to approve 201 budget
8.00     Spain            Housing permits                                         %y-o-y        Jun         -27.8       -32.4       -32.6       n.a.         n.a.
8.55     Germany          Unemployment change                                        k          Sep           7           9           9         n.a.          10
8.55     Germany          Unemployment rate                                        %sa          Sep          6.8         6.8         6.8        n.a.         6.8
9.00     Euro area        ECB MFI balance sheet
9.00     Euro area        Bank loans to private sector                            %y-o-y        Aug          0.5         0.3         0.5        n.a.         n.a.
9.00     Euro area        M3 money supply                                        %y-o-y, sa     Aug           3.1        3.2         3.8        n.a.         3.2
9.00     Italy            Business confidence                                      Index        Sep          88.7        87.1       87.2        n.a.         87.5
9.30     UK               GDP                                                %q-o-q, sa        Q2-3rd        -0.4        -0.3        -0.5       -0.5         -0.5
9.30     UK               GDP                                                     %y-o-y       Q2-3rd        0.6         -0.2        -0.5       -0.5         -0.5
9.30     UK               Current account                                           £bn          Q2            1
                                                                                                             -1 .3       -7.2         1
                                                                                                                                    -1 .2       -13.9          1
                                                                                                                                                             -1 .9
9.30     UK               Total business investment                          %q-o-q, sa        Q2-fin        -0.8        1.9         -1.5       -0.5         n.a.
9.30     UK               Total business investment                               %y-o-y       Q2-fin        4.5         14.8        1.7         2.7         n.a.
10.00    Euro area        Economic sentiment                                       Index        Sep          89.9        87.9        86.1       n.a.         86.4
10.00    Euro area        Industrial confidence                                    Index        Sep          -12.8       -15.1      -15.3       n.a.         -15.0
15.00    Euro area        Consumer confidence                                      Index       Sep-fin       -21.5      -24.6       -25.9       n.a.         -25.9
17.00    Germany          Chancellor Merkel speaks at Kohl anniversary event
Friday 28 September
         France              3
                          201 Budget expected to be presented at the Parliament
         Spain               3
                          201 Budget due to be presented at the Parliament
         Spain            Banks' stress test second result to be published
         Spain            Current account                                           bn
                                                                                    €            Jul         -1.7        -0.8        -0.3       n.a.         n.a.
         European Union   European Socialist party conference in Brussels
0.01     UK               GfK consumer confidence                                  Index        Sep          -29         -29         -29        n.a.         -28
6.30     France           GDP                                                %q-o-q, sa        Q2-2nd        0.0         0.0         0.0         0.0         n.a.
6.30     France           GDP                                                    %y-o-y, sa    Q2-2nd         1.2        0.3         0.3         0.3         n.a.
7.45     France           Consumption of manufactured goods                  %m-o-m, sa         Aug          0.5         0.5         0.1        n.a.         -0.4
8.00     Spain            HICP inflation                                          %y-o-y       Sep-1st        1.8        2.2         2.7        n.a.         2.8
8.00     Spain            Consumer price index                                    %y-o-y       Sep-1st        1.9        2.2         2.7        n.a.         n.a.
8.45     Germany          Chancellor Merkel speaks to Global Female Executive Group
9.00     Italy            Producer prices                                         %y-o-y        Aug          2.3         2.2         2.4        n.a.         n.a.
9.30     UK               Index of services                                      %m-o-m          Jul         -0.3        0.9         -1.7        1.7         n.a.
9.30     UK               Index of services                                  %3m-o-3m            Jul         -0.1        0.4         -0.1        0.3         n.a.
10.00    Euro area        HICP inflation flash estimate                           %y-o-y      Sep-flash      2.4         2.4         2.6        n.a.         2.4
10.00    Italy            HICP inflation                                          %y-o-y       Sep-1st       3.6         3.6         3.3        n.a.         2.6
10.00    Italy            Consumer price index                                    %y-o-y       Sep-1st       3.3         3.1         3.2        n.a.         3.2
12.30    Euro area        ECB Asmussen participates in discussion at Alfred Herrhausen Society conference in Berlin

Note: London times.
Source: Bloomberg, Reuters and Nomura Global Economics.

Nomura | The Economy Next Week                                                                                      21 September 2012

Japan | Data preview
The week ahead

We forecast a 0.2% m-o-m decline in industrial production, following a 1.0% fall in July,
as the index is likely to remain weighed down by slowing overseas economies.

All-Japan CPI (Friday): In August we expect the all-Japan core CPI to show a month-on-month              Mika Ikeda
                                                                                                         +81 3 6703 1287
decline of 0.2%, slightly smaller than the 0.3% fall in July. We also think the core core CPI –
defined as headline CPI excluding food (except for alcoholic beverages) and energy – fell 0.5%
                                                                                                         Kohei Okazaki
m-o-m in August, again less than the 0.6% fall in July. The already announced August Tokyo               Kohei Okazaki
                                                                                                         +81 3 6703 1291
                                                                                                         +81 3 6703 1291
CPI showed a smaller decline in prices overall, and we expect to see a similar trend in the all-
Japan CPI. We expect the Tokyo core CPI (overall inflation excluding fresh food) for September           Asuka Tsuchida
to show a decline of 0.3% y-o-y, slightly less than the 0.5% fall in August actual data. We expect       +81 3 6703 1297
                                                                                                         Asuka Tsuchida
a smaller decline in core CPI because of higher utility charges following Tokyo Electric Power's         +81 3 6703 1297
hike in household electricity rates, as well as a higher contribution from oil products, reflecting

higher oil prices.

August Indices of Industrial Production (Friday): We forecast a 0.2% m-o-m fall in the
industrial production index for August, after a 1.0% fall in July, confirming the standstill in
Japanese production. Many already released related statistics for August suggest a continued
decline in production: the output index in the Japanese manufacturing PMI was down for the
fifth consecutive month in August (at 46.9, -0.4pt m-o-m), and the current conditions DI in the
Economy Watchers Survey (an indicator of corporate business sentiment) fell for the fourth
straight month (43.6, down 1.3pt). With corporate production plans also at a lackluster +0.1% for
August, we think firms are becoming increasingly cautious in their assessment of the economy.

Family Income and Expenditure Survey real household consumption expenditure
(Friday): We expect August‟s real consumption expenditure to come in at +1.0% y-o-y (a 0.7%
m-o-m rise). Real personal consumption fell 1.3% in June and July but a rebound looks likely in
August. According to the Economy Watchers Survey, overall corporate and household
sentiment is still declining, but in August there were signs of recovery in sectors closely
associated with consumer spending. Specifically, the current conditions DI rose for department
stores (44.8pt, +5.9pt m-o-m), supermarkets (43.7pt, +2.2), and convenience stores (46.7pt,
+1.8pt). We think consumer spending may have been bolstered by strong summer merchandise
sales and increased spending on utility bills, reflecting hotter weather this year than last.

August Labor Force Survey (Friday): We expect the unemployment rate for August to come
in at 4.3%. There are concerns that the impact of the deterioration in production and business
sentiment since May could spread to employment. However, given the rapid decline in non-
scheduled working hours since June, we think firms are reducing working hours to mitigate the
impact of the economic slowdown. As a result, the number of people in employment and the
number of unemployed have been pegging level, which should keep the unemployment rate flat
Monday 24 Septem ber                            Units     Period     Prev 2     Prev 1     Last       Nom ura   Consensus
8.50    MPM Minutes (8/8, 9)
Tuesday 25 Septem ber
        No indicators
Wednesday 26 Septem ber
        No indicators
Thursday 27 Septem ber
        No indicators
Friday 28 Septem ber
8.15    PMI                                     Index       Sep       49.9       47.9      47.7         n.a.        n.a.
8.30    Core CPI                               % y-o-y      Aug        -0.1       -0.2     -0.3        -0.2         n.a.
8.30    Unemployment rate                         %         Aug        4.4        4.3       4.3         4.3         n.a.
8.30    Consumer spending                      % y-o-y      Aug        4.0        1.6       1.7         1.0         n.a.
8.50    Industrial production                  % m-o-m      Aug       -3.4        0.4       -1         -0.2         n.a.
8.50    Retail sales                           % y-o-y      Aug        3.6        0.2      -0.7         n.a.        n.a.
14.00   Housing starts                         % y-o-y      Aug        9.3       -0.2      -9.6        -8.0         n.a.

Note: Tokyo Times.
Source: Cabinet Office, Ministry of Economy, Trade, and Industry, BOJ, and Nomura Global Economics.

Nomura | The Economy Next Week                                                                                        21 September 2012

Asia | Data preview
The week ahead

We expect industrial production growth to contract on a year-on-year basis in
Singapore, South Korea, Thailand and Taiwan in August.

Production: Mostly dragged down by weakening exports and partially by sluggish domestic                    Wendy Chen
                                                                                                           +86 21 6193 7237
demand, we expect industrial production in Singapore, South Korea, Thailand and Taiwan to all    
contract on a year-on-year basis in August. This is expected to be the first negative production
growth in seven months in South Korea which, together with likely sagging consumer and
business confidence, will strengthen our case for the Bank of Korea to cut rates at its October
meeting. For Singapore, this would be the first negative production growth in four months, which
may increase market speculation that the Monetary Authority of Singapore (MAS) will ease its
NEER policy next month. While a close call, our base case, with a 55% likelihood, is that the
MAS will not ease its monetary policy, as domestic demand remains strong and inflation

Current account: In India, we expect the current account deficit to narrow substantially to
around USD14bn (3.3% of GDP) in Q2 from USD21.7bn (4.5% of GDP) in Q1 because of the
lagged impact of currency depreciation, lower crude oil prices and gold imports. Our expectation
should support our Asia chief FX strategist, Craig Chan‟s short-term recommendation of being
short USD/INR. In South Korea, we expect the current account surplus to also narrow, while
Thailand‟s should remain close to balance in August. In the Philippines, the trade deficit should
narrow on robust exports in July, even as solid domestic demand may have supported imports.
In Thailand, we expect another large trade deficit on contracting exports but solid imports.

Inflation: In Singapore, we expect inflation to remain stable in August, helped by base effects
offsetting higher food and transportation costs. We expect core inflation to moderate only
slightly, consistent with the decline in the import price index.

Fiscal: We expect the fiscal deficit of the Philippines to narrow sharply in August, supported by
proceeds from the privatization of Food Terminal Inc. We expect the Malaysian government to
budget a 2013 fiscal deficit of 5% of GDP, but we expect the actual outturn to be a larger deficit.

Sometime in the week                                              Units      Period    Prev 2     Prev 1     Last    Nomura Consensus
      Philippines Budget balance                                 PHPbn        Aug      -19.9      -11.7     -39.2     -6.0     n.a.
Monday 24 September
08.30 Taiwan     Unemployment rate                               % sa         Aug        4.3        4.2       4.3      4.3         4.3
13.00 Singapore Consumer price index                             % y-o-y      Aug        5.0        5.3       4.0      4.0         3.8
13.00 Singapore Core inflation                                   % y-o-y      Aug        2.7        2.7       2.4      2.3         n.a.
16.00 Taiwan     Industrial production                           % y-o-y      Aug       -0.2       -2.2       0.0      -3.8        -0.9
Tuesday 25 September
05.00 S. Korea    Consumer confidence                             Index       Sep       101        100        99       97           n.a.
09.00 Philippines Trade balance                                  US$bn        Jul      -0.1       -0.5       -0.8     -0.6          n.a.
15.00 Thailand    Customs exports                                % y-o-y      Aug      10.2       -2.3       -4.5     -4.7         -5.9
15.00 Thailand    Customs trade balance                          US$bn        Aug      -1.7       -0.5       -1.7     -1.1         -1.5
Wednesday 26 September
13.00 Singapore Industrial production                            % y-o-y      Aug       6.9        8.0       1.9      -1.7         1.0
Thursday 27 September
05.00 S. Korea    Business confidence                              Index      Oct        81        70         75       73          n.a.
Friday 28 September
        Malaysia     2013 budget announcement
        Thailand     Manufacturing production                    % y-o-y      Aug       6.0        -9.6      -5.8      -7.0        n.a.
07.00   S. Korea     Current account balance                     US$bn        Aug       3.6         5.9       6.1       2.0        n.a.
07.00   S. Korea     Industrial production                     % m-o-m, sa    Aug       1.3        -0.6      -1.6      -1.0        n.a.
07.00   S. Korea     Industrial production                       % y-o-y      Aug       2.9         1.5       0.3      -0.1        n.a.
15.30   Thailand     Current account balance                     US$bn        Aug      -1.5         0.6       0.1       0.1        n.a.
19.30   India        Current account balance                     US$bn        Q2       18.9       -20.2     -21.7     -13.8        n.a.

Note: Hong Kong times.
Source: Bloomberg; Reuters; Nomura Global Economics.

Nomura | The Economy Next Week                                                                                                21 September 2012

Emerging Markets | Data preview
The week ahead

The central banks of Israel, Hungary, Romania, Czech Republic and Colombia will
decide on their policy rates.

Mexico, Bi-weekly CPI (Monday): We forecast the headline and core inflation to grow at                          Peter Attard Montalto
                                                                                                                +44 (0) 20 710 28440
0.39% 2w-o-2w and 0.36% 2w-o-2w for the first half of September. The current rising pressures         
on inflation are related to supply side shocks. We have changed our December 2012 forecast to
                                                                                                                Benito Berber
4.1% y-o-y from 4.0% and simultaneously decreased the December 2013 projection to 3.4%                          +1 212 667 9503
y-o-y from 3.5%.                                                                                      

Colombia, Overnight lending rate (Friday): BanRep has decreased the policy rate for the
second time in a row in the August meeting to 4.75%. We believe that the central bank of
Colombia (BanRep) will adopt a “wait and see” stance and will keep the policy rate at 4.75% in
the September meeting. However, we do expect an additional 25bps policy rate cut to 4.50% for
the remainder of the year because we believe the global economy may decelerate a little more.

Monday 24 Septem ber                                                          Period   Prev 2   Prev 1   Last        Nom ura      Survey
  08:00  Hungary            Retail sales                     % y-o-y            Jul     -2.8     -2.5    -1.7          -1.9        -1.8
  14:00  Mexico             Bi-Weekly CPI                    %, 2w -o-2w       Sep      0.24     0.39    0.14          0.39        n.a.
  14:00  Mexico             Bi-Weekly Core CPI               %, 2w -o-2w       Sep      0.10     0.20    0.16          0.36        n.a.
  15:30  Israel             BOI rate announcement            %, policy rate    Sep      2.25     2.25    2.25          2.25        2.25
Tuesday 25 Septem ber
  09:00  Poland             Unemployment rate                % y-o-y           Aug      12.6     12.4    12.3          12.3         12.3
  09:00  Poland             Retail sales                     % y-o-y           Aug      7.7       6.4    6.9           6.0          5.9
  13:00  Hungary            MNB MPC meeting                  %, policy rate    Sep      7.00     7.00    6.75          6.50         6.75
  14:00  Mexico             IGAE Global economic indicator   % y-o-y           Jul      4.7       4.2    3.8           3.8          n.a.
Wednesday 26 Septem ber

Thursday 27 Septem ber
           Romania          BNR MPC meeting                  %, policy rate    Sep      5.25     5.25    5.25          5.25         5.25
  10:30    South Africa     PPI                              % y-o-y           Aug      6.6       6.6    5.4           5.2          5.4
  12:00    Czech Republic   CNB MPC meeting                  %, policy rate    Sep      0.75     0.50    0.50          0.25         0.25
Friday 28 Septem ber
  07:00    South Africa     PSCE                             % y-o-y           Aug       8.31    8.67     8.34          7.7         7.95
  07:00    South Africa     M3                               % y-o-y           Aug       6.43    7.00     8.26         n.a.         8.10
  07:30    Hungary          Current account                  EUR mn            2Q       438.7    134      186          n.a.         675
  08:00    Hungary          Unemployment rate                %                 Aug       11.2   10.86    10.51         10.5         10.5
  08:00    Hungary          PPI                              % y-o-y           Aug       7.8      6.9     6.2          n.a.         5.3
  08:00    Turkey           Trade balance                    USD bn            Aug      -8.58   -7.18    -7.89         n.a.         n.a.
  13:00    South Africa     Budget balance                   ZAR bn            Aug     -21.26    18.2    -57.6         -8.5         n.a.
           Colombia         Overnight lending rate           %, policy rate    Sep       5.25    5.00     4.75         4.75         4.75

Note: London times.
Source: Bloomberg, National Statistics Offices and Nomura Global Economics.

Nomura | The Economy Next Week                                                                                                       21 September 2012

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Nomura | The Economy Next Week                                                                                                     21 September 2012

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Nomura | The Economy Next Week                                                                                                   21 September 2012

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The Economy Next Week

North America
Lewis Alexander                                   US Chief Economist        1-212-667-9665

David Resler                                   Chief Economic Advisor         1-212-667-2415

Aichi Amemiya                                            United States         1-212-667-9347

Charles St Arnaud                                             Canada        1-212-667-1986

Ellen Zentner                                            United States        1-212-667-9668

Jacques Cailloux                 Chief European Economist; Euro area       44-20-7102-2734

Nick Matthews                                               Euro area        44-20-7102-5126

Dimitris Drakopoulos                                        Euro area      44-20-7102-5846

Lefteris Farmakis                                           Euro area    eleftherios.farmakis     44-20-7103-9242

Takuma Ikeda                                                   Europe        44-20-7102-1605

Philip Rush                                           United Kingdom          44-20-7102-9595

Stella Wang                                                 Euro area         44-20-7102-0599

Tomo Kinoshita                                 Chief Economist Japan         81-3-6703-1280

Mika Ikeda                                                                      81-3-6703-1287

Shuichi Obata                                                                81-3-6703-1295

Kohei Okazaki                                                                81-3-6703-1291

Asuka Tsuchida                                                              81-3-6703-1297

Rob Subbaraman                                   Chief Economist Asia           852-2536-7435

Young Sun Kwon                       South Korea, Hong Kong, Taiwan           852-2536-7430

Euben Paracuelles                                      Southeast Asia           65-6433-6956

Sonal Varma                                                      India        91-22-4037-4087

Zhiwei Zhang                                    Chief Economist China          852-2536-7433

Emerging Markets
Olgay Buyukkayali         Head of EM Research, Europe; Turkey, Israel       44-20-7102-3242

Tony Volpon               Head of EM Research, Americas; Brazil, Chile         1-212-667-2182

Peter Attard Montalto         South Africa, Central and Eastern Europe           44-20-7102-8440

Benito Berber                                       Mexico, Colombia         1-212-667-9503

Boris Segura                                     Argentina, Venezuela         1-212-667-1375

Nomura Global Economics                                                           15                        21 September 2012

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