BMW 2013 Annual Report Download - page 63

63 COMBINED MANAGEMENT REPORT
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, together
with associated material risks and opportunities, from
the perspective of Group management .
The report on outlook, risks and opportunities contains
forward-looking assertions, which are based on BMW AG’s
expectations and assessments and are, by their nature,
subject to uncertainty. As a result, depending on the po-
litical and economic situation, actual outcomes could differ
substantially – either positively or negatively – from the
expectations described below. Further information can be
found in the section “Report on risks and opportunities”.
Outlook
Assumptions used in outlook
The following outlook relates to a forward-looking period
of one year and is based on the expected composition
of the BMW Group during that period. The outlook takes
account of all information known up to the date on
which the financial statements are authorised for issue
and which could have a material impact on the course of
business of the BMW Group. The expectations contained
in the outlook are based on BMW Group’s forecasts for
2014 and reflect the most recent status. The basis for
the preparation of and the principal assumptions used
in our forecasts, which take account of consensual
opinions of leading organisations, such as economic
re-
search institutes and banks, are set out below. The
BMW Group’s forecast is drawn up on the basis of these
assumptions.
Our continuous forecasting process ensures that the
BMW Group is always ready to take advantage of oppor-
tunities as they arise and to react appropriately to un-
expected risks. The principal risks and opportunities are
described in detail in the section “Report on risks and
opportunities”. The risks and opportunities discussed
in that section are relevant for all of the BMW Group’s
key performance indicators and could result in variances
between the outlook and actual outcomes.
Economic outlook in 2014
For the purposes of the outlook, it is assumed that the
pace of global economic growth, having stabilised in
2013, will quicken slightly in 2014 to approximately
3.0 %. High public debt levels in Europe, the USA and
Japan, over-capacities in China and the unresolved con-
flicts in the Middle East and East Asia continue to pose
risk factors which could have a material, unexpectedly
adverse impact on the outlook. Further information can
be found in the section “Risks Report”.
After two years of recession, we expect the eurozone to
grow moderately at a rate of approximately 1.0 %. The
German economy, the largest in Europe, should again
grow faster than the average for the region at a rate
of approximately 1.7 %. The outlook assumes a growth
rate of 0.8 % for France, whereby it should be noted
that simmering internal political conflicts and the loss
of international competitiveness still pose significant
risks for the economy in that country. Similarly, we
forecast a return to growth for Italy, albeit at a modest
rate of 0.5 %. Spain is expected to grow by 0.8 % and
therefore escape the recession caused primarily by a
weak property market. A growth rate of 2.5 % is pre-
dicted for the UK, Europe’s largest market outside the
eurozone.
In the USA, the consequence of cuts in public spending
in 2014 is likely to be less significant, having held down
growth quite substantially in 2013. We are therefore
working on the basis that the gross domestic product
(GDP)
will continue to rise in 2014 (by 2.9 %).
The dominant issue for Japan’s economy is likely to be
the increase in value added tax from 5 to 8 % with effect
from 1 April 2014. This may have the effect of bringing
some business forward into the first quarter of 2014,
at
the expense of a temporary downturn in domestic
spending in the second quarter. It is generally accepted
that the tax hike is unavoidable, however, given the
need to fund the new government’s economic stimulus
programmes. For 2014 as a whole, the rate of growth is
set to slow down slightly to 1.6 %.
Economic growth in China should stabilise in the cur-
rent
year at the level of approximately 7.5 %. The struc-
tural shift in economic growth from the construction
and heavy industries sectors to stronger domestic con-
sumer spending represents the most significant factor
for the
way the Chinese economy is heading. The new
Chinese government is also keen to put economic growth
onto a more sustainable footing by increasing the market
orientation of the energy and financial sectors and im-
proving ecological and social conditions.
The growth rate in India should begin to pick up again
in the second half of the year, once the “wait-and-see”
phase in advance of parliamentary elections in spring
has stopped having a negative impact on domestic de-
mand. For 2014 as a whole, the growth rate is expected
to be in the region of 5.3 %. At 2.2 % in both countries,
GDP rates in Brazil and Russia in 2014 are again expected
to be lower than their recent past averages. In both of
Report on Outlook, Risks and Opportunities
Outlook