BMW 2014 Annual Report Download - page 65

65 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 outlook
covers a period of one year, in line with the Group’s in-
ternal management system. By contrast, risks and oppor-
tunities are managed on the basis of a two-year assess-
ment. The report on risks and opportunities therefore
covers a period of two years.
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group’s
expectations and assessments, which are, by their nature,
subject to uncertainty. As a result, actual outcomes, in-
cluding those attributable to political and economic de-
velopments, 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 the outlook
The following outlook relates to a forward-looking
period
of one year and is based on the 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 con-
tained in the outlook are based on the BMW Group’s
forecasts for 2015 and reflect the most recent status.
The basis for the preparation of and the principal
as-
sumptions used in our forecasts, which take account
of consensual opinions of leading organisations, such
as economic research 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 dis-
cussed 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 for 2015
For the purposes of the outlook, we assume that the
global economy will continue its moderate upswing in
2015 and grow by 3.5 %. Over-capacities and price
bubbles on the Chinese property market remain signifi-
cant risk factors. Various uncertainties prevail in Europe,
in particular with respect to future developments in
Greece as well as in Russia and neighbouring countries.
In addition, an interest rate turnaround is likely to take
place in the USA. The global economy could also be
negatively impacted by high public debt levels in Europe,
the USA and Japan, as well as political developments in
the Middle East and East Asia. More detailed informa-
tion on these matters can be found in the section “Politi-
cal and global economic risks” in the risk report.
It seems likely that the upswing in the eurozone will
continue in 2015, albeit at a low level, based on an ex-
pected growth rate of 1.1 %. Europe’s largest economy,
Germany, is forecast to grow by approximately 1.4 %.
France is likely to see an increase of around 0.9 %. Italy
should come out of recession in 2015 with a positive
growth rate of 0.4 %. The upswing in Spain seems set
to continue with growth edging up to 2.0 %. The United
Kingdom’s economy is likely to remain strong and grow
by a further 2.7 % in 2015.
Despite the anticipated interest rate turnaround in the
USA, we expect growth to remain at its current high
level. A growth rate of 3.2 % is forecast for 2015, reflect-
ing the expectation that the boom on the employment
and property markets will remain intact.
In view of the negative impact on Japan’s economy
caused by the value added tax hike in 2014, the Japanese
government has decided to postpone the second step –
originally envisaged for 2015 – until 2017. Under these
circumstances, we forecast a growth rate of 1.0 % for the
year 2015.
Economic growth in China is likely to slow down again
slightly in 2015 to a rate of 7.0 %. The prerequisite for
this forecast is that price falls on the property market do
not have any lasting adverse impact on the macroeco-
nomic trend.
The Indian economy seems to be recovering now that
the presidential elections are over and should grow by
6.2 % in 2015. The recovery in Brazil is only likely to be
a very modest 0.5 %. Russia is being negatively impacted
in particular by lower oil prices and economic sanctions
imposed in the wake of the unresolved Ukraine con-
flict. Forecasts, which are currently being adjusted fur-
ther downwards, indicate a 4.1 % drop in Russian GDP.
Currency markets
Currencies which have the greatest impact on the BMW
Group’s international business, such as the US dollar,
Report on Outlook, Risks and Opportunities
Outlook