Commodity prices and the World Economy. Global Chief Economist Helge J. Pedersen Kemiens dag København 16. November 2011

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1 Commodity prices and the World Economy Global Chief Economist Helge J. Pedersen Kemiens dag København 16. November

2 Growth to be found in East and South <0% 0%-3% N/A 3%-6% 6%-10% >10% 2 2

3 3 The bleak economic outlook gives room for a verry easy monetary policy

4 4 Fundamentals, easy monetary policy and geopolitical uncertainty keeps commodity prices high

5 5 Financialization of commodity markets might have an impact on prices

6 Expensive spending programmes weigh on budgets - OPEC needs higher oil price to balance budgets 140 USD per barrel OPEC may have changed its price target range to USD /barrel from USD 70-90/barrel as Nordea forecast: Q1 Q2 Q3 Q4 Year E E E Kuwait Venezuela Saudi Arabia Nigeria Iraq Algeria Russia Iran 6

7 7 Monetary policy expectations is decisive for the FX markets. A weak dollar increases commodity prices

8 8 A strong USD means lower commodity prices

9 9 The new world order is close to getting a reality

10 Real GDP at PPPs $bn Real GDP at PPPs $bn and China will become the biggest economy in the world by 2020 (real GDP at PPP) 60,000 50,000 40,000 60,000 50,000 40,000 30,000 20,000 10, US CN IN JP DE EU BR RU 30,000 20,000 10,

11 Demographics tell everything Region, million persons 2050: 9.15 billion Euro p a, 575 R usland, : 2,53 billion N o rd A merika, Lat in A merika, 72 9 A f rika, Europa 547 Nord Amerika 172 Rusland 103 Latin Amerika 167 Oceanien 13 Afrika 227 Asien Oceanien, 51 A sien,

12 The demands for cars will soon start to rise at a dramatic pace in China and India Source: World Bank, Nordea Markets 12

13 Expected oil demand growth in China assuming Japan's and Korea's historic motorization rate - this might have a dramatic impact on oilprices USA Europe Source: EIA 13

14 China will account for 90% of net oil import growth between Source: IEA

15 The Changing Global Diet Source: Global Harvest Initiative According to FAO global food demand will increase by70% by

16 Factors affecting food prices Weather conditions Demographics Wealth Biofuel Speculation 16

17 G20 on the Action Plan on Food Price Volatility and Agriculture We have decided to act on the five objectives of this Action Plan 1. Improving agricultural production and productivity 2. Increasing market information and transparency 3. Reducing the effects of price volatility for the most vulnerable 4. Strengthening international policy coordination 5. Improving the functioning of agricultural commodity derivatives markets Cannes Summit Final Declaration, 4. November

18 Nordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S. The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient. The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets. Thank you Helge J. Pedersen Global Chief Economist, Nordea Markets helge.pedersen@nordea.com 18