BMW 2015 Annual Report Download - page 63

63 COMBINED MANAGEMENT REPORT
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, including
the associated material risks and opportunities, from a
Group management perspective. The outlook covers
a period of one year, in line with the Group’s internal
management system. However, risks and opportunities
are managed on the basis of a two-year assessment.
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 very
nature, subject to uncertainty. As a result, actual out-
comes, including those attributable to political and eco-
nomic developments, could differ substantially – either
positively or negatively – from the expectations de-
scribed
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 pe-
riod of one year and is based on the composition of the
BMW Group during that period. The outlook takes ac-
count of all information known up to the date on which
the financial statements are authorised for issue and
which could have a material effect on the overall perfor-
mance of the BMW Group. The expectations contained
in the outlook are based on the BMW Group’s forecasts
for 2016 and reflect the most recent status. The basis for
the preparation of and the principal assumptions used in
the forecasts – which consider the consensual opinions
of leading organisations, such as economic research
in-
stitutes and banks – are set out below. The BMW Group’s
forecast is drawn up on the basis of these assumptions.
The continuous forecasting process ensures that the
BMW Group is always ready to take advantage of op-
portunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties 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
The upturn in the world economy is likely to continue
and generate growth of 3.4 % in 2016. A more restrictive
monetary policy in the USA, the political instability in
Europe, the high levels of sovereign debt being amassed
in Japan and over-capacities in various industrial sectors
in China pose the greatest risks for global economic
growth. Unsolved geopolitical conflicts and problems
resulting from the high number of people seeking refuge,
particularly in Europe, could possibly lead to nationalis-
tic interests becoming a major issue, with correspond-
ingly negative consequences for world trade. Further in-
formation on political and global economic risks can be
found in the risk report.
Economic recovery in the eurozone is expected to con-
tinue at a growth rate of 1.6 % in 2016. Similar to the
previous year, the German economy is predicted to play
a major role and grow by 1.8 %. The economies of both
France (1.4 %) and Italy (1.3 %) are set to record higher
growth rates than one year earlier.
In southern Europe, the reforms implemented in recent
years are contributing to an economic recovery, enabling
Spain and Portugal to continue growing on the back of
the general upturn and are likely to grow by 2.7 % and
1.6 % respectively, according to forecasts.
Growth in the UK will probably be somewhat weaker,
although again in 2016 the expected GDP growth of
2.2 % is well above that of the eurozone. The referendum
on the UK remaining in the EU, which must be held by
the end of 2017, can take place at the earliest in the
second half of 2016 and is therefore a source of additional
uncertainty.
The US economy is likely to maintain its current high
pace of growth. Despite the increase in benchmark in-
terest rates, and hence a less expansive monetary policy,
growth of 2.4 % is predicted for 2016. The low price of
oil is highly likely to have a positive impact on consumer
spending.
In Japan, the central bank is again set to continue its
“cheap money” policy in 2016 and therefore guarantee
companies attractive financing conditions, which is
likely to give the Japanese economy sufficient momen-
tum to warrant 1.0 % growth.
In China, economic growth is again expected to weaken
slightly in 2016, resulting in a growth rate in the region
of 6.5 %. The realignment of the Chinese economy to-
wards a more consumption-oriented society is designed
to lead to greater stability, even if growth rates are likely
Report on Outlook, Risks and Opportunities
Outlook