29 NOVEMBER 2013

The Outlook for 2014-2015: Stronger Growth, More Differentiation

Looking into 2014 and 2015 we expect broad-based acceleration in global
growth towards trend, at a gradual pace.

We forecast global growth to come in at 3.7% in 2014 which is slightly

above consensus but just below trend. In 2015 we see further acceleration to 3.9%, with many economies finally expanding at their respective trends.

In terms of broad themes, we see Developed Markets (DM)particularly the

USset to spearhead the improvement in growth momentum.

After a year of growing at the slowest pace since the global financial crisis,
we believe the US could deliver above-trend growth in 2014 and 2015.

Despite moderately higher global interest rates, the turnaround in the global
cycle should allow many Growth and Emerging Markets (Growth and EM) to gradually break out of the sluggish spell of the past two years.

However, in our view, none of the eight Growth Markets will be able to
reach their trend growth in 2014. Mexico could, perhaps, be one exception.

As structural growth rates decline in many of these economies, the

importance of reform aimed at boosting productivity will come further into focus.

While global inflation is still expected to remain subdued on average,

inflationary pressures in some Growth and EM will make policy trade-offs more difficult.

The combination of accommodative central bank policies and an improving

growth picture should support risky assets in 2014.

We believe equities are best positioned to perform well in this stage of the
cycle, driven by better corporate earnings. But it could be another difficult year for sovereign debt, particularly in DM.

We see the main risks to our views concentrated around three key areas:
(1) US growth weakness; (2) tighter-than-expected US monetary policy; (3) stress in Chinas financial system.

GSAM Macro Insights

The Outlook for 2014-2015: Stronger Growth, More Differentiation

As we approach the end of 2013, we take the opportunity to update our outlook for 2014 and introduce our forecasts for 2015. This time last year we presented our outlook for 2013, expecting a gradual growth recovery but at a relatively slow pace. As Exhibit 1 shows, this trajectory largely played out, although headline growth numbers were broadly weaker than we had anticipated. While the US cycle turned and Europe emerged from recession, the weakness in Growth and Emerging Markets (Growth and EM) has been much more persistent. Looking into 2014 and 2015 we expect broad-based acceleration in global growth towards trend, at a gradual pace. Table 1 shows our latest forecasts relative to consensus. We expect global growth to come in at 3.7% in 2014 which is slightly above consensus but just below trend. Across countries, we are slightly above consensus for advanced economies, driven by our above-trend US forecast. Our Growth Market forecasts are below consensus and below trend on average, mainly on the back of our less positive outlook for Turkey, Indonesia and Russia. In 2015 we expect global growth to accelerate further to 3.9%, with many economies finally expanding at their respective trends. In terms of broad themes, we see the developed world particularly the USset to spearhead the improvement in growth momentum. Despite moderately higher global interest rates, the turnaround in the global cycle should allow many Growth and EM countries to gradually break out of the sluggish growth spell of the past two years. As capacity constraints start binding, policy trade-offs as well as structural issues should become more visible in some places, preventing rapid growth acceleration. We explore these themes in more detail below.
Index 60 55 50 45 40 35 03 04 05 06 07 08 09 10 11 12 13 14
Source: Haver Analytics and GSAM
1

Table 1 - GDP Growth Forecasts

2012 US UK Euro area Japan Brazil China India Russia Mexico Korea Indonesia Turkey Advanced BRIC Growth Markets World 2.8 0.2 -0.6 2.0 0.9 7.7 3.2 3.4 3.6 2.0 6.2 2.2 1.4 5.5 5.1 3.0 2013 2014 2015 GSAM GSAM Consensus GSAM Consensus 3.0 3.0 1.8 2.6 3.0 2.5 2.7 1.3 2.3 2.3 0.9 1.5 -0.5 1.0 1.4 1.5 1.2 2.0 1.6 1.2 3.0 3.2 2.0 2.4 2.9 7.4 7.2 7.5 7.5 7.3 5.2 6.0 4.5 5.6 5.3 2.0 2.5 1.8 2.5 3.0 3.5 3.8 2.0 3.2 3.9 3.7 4.0 3.0 3.5 3.5 5.0 6.0 6.0 5.6 6.0 3.0 4.0 3.8 3.7 4.5 2.1 2.3 1.1 1.9 2.2 5.9 6.1 5.7 6.0 6.0 5.2 2.9 5.5 3.7 5.6 3.6 5.7 3.9 5.7 3.8

Source: GSAM, Bloomberg and Consensus Economics

Global growth acceleration driven by DM

After a year of growing at the slowest pace since the global financial crisis, we believe the United States economy is set to deliver above-trend growth in 2014 and 2015. The key pillars of this view are a fading of the fiscal drag, stronger private consumption, a renewed pick-up in the housing sector and a recovery in corporate investment. As Exhibit 2 shows, 2013 saw a meaningful improvement in the US fiscal balance of around 3 percentage points (pp). Our estimates suggest the fiscal tightening likely reduced 2013 GDP growth by as much as 1.3pp. With a significantly lower fiscal drag in 2014, the negative impact on growth should only be around 0.5pp, mostly frontloaded to the first half of the year. As fiscal headwinds subside, consumption growth should accelerate from a very low base reached in 2013, particularly as the impact of tax hikes eases. As the labour market continues to improve, lower unemployment and higher wage growth should also contribute to the recovery in consumption in 2014-2015. Given the very large share of consumption in GDP, this will be a key dynamic. Although housing indicators softened significantly in the second half of 2013, the housing sector should continue boosting growth. But instead of home price appreciation, we believe an increase in construction and constructionrelated job growth will be an important driver behind the stronger economy. In addition, multiplier effects from housing-related industries should compound this tailwind.1 Outside of housing, we also expect acceleration in non-

Exhibit 1 - We expect the current upward growth trajectory to continue

% qoq annual. 6 3 0

Global Manufacturing PMI (LHS) Global GDP Growth (RHS)

-3 -6 -9

For further detail on the US housing sector prospects, see The Housing Handoff: From Price Gains to Job Gains, GSAM Fixed Income Paper, November 2013. Disclosure: The economic and market forecasts presented herein have been generated by GSAM for informational purposes as of the date of this presentation. They are based on proprietary models and there can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Goldman Sachs Asset Management 2 November 2013

GSAM Macro Insights

% GDP 0 -2 -4 -6 -8 -10 -12 -14 -16 03

Exhibit 2 - The US fiscal drag is set to be smaller in 2014 OECD Forecast

Index, Jan '00=100 155 145 135 125 115

Exhibit 3 - Italy has made little progress in improving its competitiveness France Germany Greece* Ireland Italy Portugal Spain

US fiscal balance 04 05 06 07 08 09 10 11 12 13 14

105 95 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Source: Haver Analytics. * Greece proxied with average labour cost.

Source: Haver Analytics

residential investment. After two years of subdued growth, investment spending seems to have bottomed out and is set to pick-up, with the potential to surprise on the upside. After emerging from recession at the end of 2013, the Euro areas expansion is poised to continue, although the pace of growth acceleration is likely to be gradual. The material progress by the peripheral countries in improving competitiveness and pushing through structural reform should help reap growth benefits going forward, particularly in light of a slightly lower fiscal drag. Spains upside growth surprise this year is one example of this transmission which we expect to continue. As Exhibit 3 illustrates, there has been a significant compression in unit labour cost differentials across the Euro area, with Italy being the only peripheral country that has seen little progress so far. Weak credit growth is likely to remain a material headwind to Euro area expansion in 2014, particularly as European banks seek to shore up their balance sheets ahead of the year-end asset review. We expect further rebalancing between the core and periphery to continue gradually, together with slow convergence of financial conditions within the Euro area. Certainly Germany could help accelerate the process by raising wages faster and tolerating higher inflation, but this seems unlikely for now. Japan faces a significant challenge in 2014 as it seeks to consolidate the positive growth impulse of Abenomics against the backdrop of the consumption tax hike, from 5% to 8%, at the start of April 2014. According to the IMF, the fiscal deficit in Japan is set to decrease by approximately 2pp. While Japans previous consumption tax hike in April 1997 resulted in a prolonged economic slump, this time the hike is taking place in a more benign environment of accelerating global growth coupled with more supportive fiscal policies domestically. A fiscal package of around 5 trillion should come into force to soften the blow from the tax hike. Exceptionally loose monetary policy from the BoJ is likely to

be another supporting factor to help the economy get over the hurdle. While the sequential path of growth will be volatile, we still expect Japan to grow at trend of 1.5% in 2014.

with Growth and EM economies picking up gradually

After a weak 2013, we expect Growth and EM economies to finally start picking up momentum. However, in our view, none of the eight Growth Markets we produce forecasts for will be able to reach their trend growth in 2014. Mexico could, perhaps, be one exception. Convergence to trend among Growth Markets is not likely to be a more prominent theme until 2015. External and domestic factors that came sharply into focus over the last two years will continue to drive growth outcomes in Growth Markets in 2014-2015. Pressures on external funding from rising rates globally and a slower China will serve as headwinds in the years to come. Countries with persistent current account deficits such as Turkey, South Africa, Brazil, India and Indonesia are likely to feel the pressure of tighter financial conditions more acutely than others with stronger balances. Furthermore, due to elevated inflation levels, it will be harder for these countries to correct imbalances by allowing their currencies to depreciate. The prospect of elections in all these countries, while potentially positive for the shorter-term growth trajectory, could fuel these imbalances further. As structural growth rates decline in many of these economies, the importance of reform aimed at boosting productivity will come further into focus. Progress on postcrisis structural reform has been disappointing overall and the recent sluggish growth has been, in large part, symptomatic of this. Only China and Mexico have delivered good news on this front recently. While certainly positive for the quality of growth, Chinas reform agenda, if implemented, could help smooth the transition towards

Disclosure: The economic and market forecasts presented herein have been generated by GSAM for informational purposes as of the date of this presentation. They are based on proprietary models and there can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Goldman Sachs Asset Management 3 November 2013

GSAM Macro Insights

% yoy 30 25 20 15 10 5 0 -5 -10 -15 -20 04

Exhibit 4 - Exports in Growth and EM should pick up on the back of stronger DM demand Export volume growth (LHS) IP growth (LHS) EM PMI (RHS)

Index 65 60 55 50 45 40

start reducing accommodation in the first half of 2014, by tapering its asset purchases. In addition, we expect the lowering of the unemployment threshold to break the link between QE and rate hikes and bring the current pace of the labour market improvement more in line with the Feds expectation for rate hikes. As Exhibit 5 shows, all else equal, job growth only needs to accelerate slightly above its current 6-month moving average for the current 6.5% threshold to be reached by the end of 2014. At the same time as the Fed is navigating its exit from the very accommodative policy, we believe the ECB will need to ease policy further, to combat disinflationary forces. We also think the BoJ will have to ease its policy once again. Interestingly, Japans current efforts to import inflation (through a weaker currency) mean that it is exporting disinflation to its trading partners, including Europe. While global inflation is still expected to remain subdued on average, mainly driven by below-target rates in DM, intensifying inflationary pressures in some Growth and EM will make policy trade-offs more difficult. As Exhibit 6 shows, Indonesia, Brazil, Russia and Turkey face the prospects of tighter monetary policy as a result of outputhere, unemploymentbeing close to potential. In an environment of rising US rates, these countries are likely to be more vulnerable, particularly if the overheating in domestic consumption is also fuelling current account deficits.

05

06

07

08

09

10

11

12

13

Source: Haver Analytics

slower growth but is unlikely to boost growth rate from current levels in our view. From a more cyclical perspective, the sluggish growth in the Growth and EM universe over the past couple of years has partly resulted from weak DM demand for their exports. As the US and Europe accelerate, those countries more tightly associated with DM consumer, such as Korea and Mexico, should be positioned to do well relative to their peers. As Exhibit 4 shows, the recent improvement in EM PMIs could be pointing to stronger exports ahead which have until now remained subdued. Domestically, credit growth, which has accounted in part for the weaker growth story recently, is showing signs of stabilisation in parts of Asia and Latin America.2 Moderately-paced growth in private sector credit should be a welcome support to the cycle.

Views across asset classes

The combination of accommodative central bank policies and an improving growth picture should support risky assets. We believe equities are best positioned to perform well in this stage of the cycle and remain overweight DM equities in our tactical multi-asset portfolios, as Table 2 shows. And while flows into DM equities have already been strong and valuations are starting to look stretched in
Exhibit 6 - Policy trade-offs in Growth Markets are becoming more visible Unemployment gap 5 Indonesia (trend vs current), % 4 Russia 3 Korea 2 Brazil Tighter policy Turkey
Inflation target miss %

as policy trade-offs become more visible

Our growth outlook, based on DM-driven acceleration with much variation across Growth and EM, points to greater divergence in monetary policy cycles. We expect the Fed to
Non-farm Exhibit 5 - The Fed's forecasts are more closely payrolls, aligned with a 6.0% unemployment threshold 000s Trajectory for non-farm payrolls to reach 350 the unemployment threshold 300 250 200 150 Month threshold reached 100 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16
Source: Atlanta Fed and GSAM
2

6.5% threshold 6.0% threshold current 6mma

Japan 1 Australia Canada 0 China -1 Mexico Looser policy -2 US UK -3 Euro area -4 -4 -2 0 2

Source: Haver Analytics and GSAM

Credit Cycles and Sustainability in Growth and Emerging Markets, GSAM Macro Insights, October 2013.

Disclosure: The economic and market forecasts presented herein have been generated by GSAM for informational purposes as of the date of this presentation. They are based on proprietary models and there can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Goldman Sachs Asset Management 4 November 2013

GSAM Macro Insights

Table 2 - Asset allocation views on a 1-yr horizon*

Less More Attractive Attractive
US Equity

Change -

Equity

European Equity Japanese Equity Growth Markets Equity EMD Local

for the cash bonds, higher sensitivity to the rise in US rates. In currencies, we expect broad USD strength, driven by wider interest rate differentials and the dollars relative cheapness against a broad basket of currencies. Divergence in monetary policy cycles discussed above should push the USD higher against the EUR and JPY in particular. We also expect further pressure in Growth and EM currencies, with Turkey being a notable example.

Fixed Income

Corporate Credit High Yield DM Sovereign Debt

Risks to the outlook

We see the main risks to our views concentrated around three key areas: (1) US growth weakness; (2) tighter-thanexpected US monetary policy; (3) stress in Chinas financial system. Given that our outlook hinges on the story around a DM recovery for the most part, US growth weakness could probably pose the greatest downside risk to our baseline scenario. Significant deterioration in the US cycle would likely jeopardise recovery elsewhere, particularly in Growth and EM. Equity markets would probably see the most material sell-off, since they would be forced to digest not only the prospects of lower earnings but also the fact that their principal support so far, i.e. easy monetary policy, was failing to have the desired effects. In the event that US growth only weakly disappoints, we would expect our view on rates to be impaired, although equities could still perform in an environment of potentially even greater central bank support. Another important risk could come from tighter-thanexpected US monetary policy on the back of a policy shock rather than surprisingly stronger growth. This could be driven by a number of factors, e.g. if the Fed reaction function turns out to be different relative to the markets beliefs or if the slack in the labour market turns out to be lower than commonly perceived. If monetary policy ends up being materially tighter and liquidity is withdrawn faster than expected, we would expect an aggressive move higher in rates and a sell-off in equities, directionally similar to what happened in summer 2013. Such a re-pricing of monetary policy prospects could create an extremely difficult environment for investors as correlations between stock and bond returns could turn positive, leaving fewer places to take shelter. While the ongoing growth rebound on the back of the fiscal stimulus coupled with the latest reform agenda seem to have calmed the fears about Chinas growth story, the large amount of leverage in Chinas financial system remains a cause for concern. We will be watching for any potential signs of stress in the banking system as well as the real estate market as a precursor for broader financial stress. While the governments balance sheet is still in a strong position to head off a potential crisis, unintended tightening could be particularly bad for commodity producers as well as the broader Growth and EM universe.

Real Cash Assets

Commodities Cash

* Note that this does not account for liability-driven investment. Source: GSAM Global Portfolio Solutions. As of Nov 2013.

places, such as the US, we expect the next leg of the equity rally to be mostly driven by better corporate earnings, particularly in Europe and Japan. Within DM equities, Japan has the greatest potential upside. The prospect of further policy easing from the BoJ coupled with domestic asset allocation shifts into riskier assets could provide a strong impetus for the Japanese market.3 Once a broader growth pick-up becomes more evident, EM equities could be well positioned to deliver positive returns, particularly given attractive current valuations relative to DM. The theme of market differentiation based on domestic fundamentals that was visible in 2013 could become even more prominent. We remain neutral on EM equities for now but continue to look for macro catalysts to get exposure to certain markets with more solid fundamentals, such as Korea. In fixed income, we expect US rates to move higher overall, particularly for longer-dated instruments, with short rates remaining reasonably well-anchored. The lowering of the unemployment threshold, in line with our expectations, would make the long end of the curve most vulnerable as the market will need to price in a larger inflation premium. In Japan, we believe inflation could also serve as a powerful catalyst for JGB yields to finally move higher. Also, if Abes economic plan fails to impress investorssomething we should soon have better visibility on the market might have to price in a higher risk premium into Japanese rates. While equities are our favourite way of being exposed to Abenomics for now, the risk/reward may change in favour of shorting rates as the year progresses. In EMD local and external, we remain neutral for now despite relatively attractive valuations and spreads in places, since structural issues and higher DM rates should continue creating headwinds for the asset class as a whole for the time being. The benign environment for equities should also be supportive for corporate credit spreads, although the upside could be limited by already stretched valuations and,
3

For further discussion on Japans asset allocation shift, see The Great Rotation is Comingin Japan!, GSAM Macro Insights, June 2013. 5 November 2013

Goldman Sachs Asset Management

GSAM Macro Insights

Appendix: GSAM Growth Forecasts and Asset Valuation

GDP Growth Forecasts: GSAM vs Consensus
2011 US UK Euro area Japan Brazil China India Russia Mexico Korea Indonesia Turkey Advanced BRIC Growth Markets World 1.8 1.1 1.5 -0.6 2.7 9.3 6.3 4.3 4.0 3.7 6.5 8.8 1.4 7.3 6.9 3.8 2012 2.8 0.2 -0.6 2.0 0.9 7.7 3.2 3.4 3.6 2.0 6.2 2.2 1.4 5.5 5.1 3.0 2013 GSAM 1.8 1.3 -0.5 2.0 2.0 7.5 4.5 1.8 2.0 3.0 6.0 3.8 1.1 5.7 5.2 2.9 Consensus* 1.7 1.4 -0.4 1.9 2.4 7.6 4.6 1.6 1.2 2.7 5.6 3.5 1.0 5.8 5.2 2.9 GSAM 3.0 2.5 0.9 1.5 3.0 7.4 5.2 2.0 3.5 3.7 5.0 3.0 2.1 5.9 5.5 3.7 2014 Consensus* 2.6 2.3 1.0 1.6 2.4 7.5 5.6 2.5 3.2 3.5 5.6 3.7 1.9 6.0 5.6 3.6 GSAM 3.0 2.7 1.5 1.2 3.2 7.2 6.0 2.5 3.8 4.0 6.0 4.0 2.3 6.1 5.7 3.9 2015 Consensus* 3.0 2.3 1.4 1.2 2.9 7.2 5.3 2.8 3.9 3.5 6.0 4.5 2.2 5.9 5.6 3.8

*As of November 2013. Source: GSAM, Bloomberg and Consensus Economics

Equity Valuation Across Advanced and Growth Markets

CAPE* Level % time cheaper*** Level FY1 PE % time cheaper*** Price/Book Level % time cheaper*** Dividend Yield Level % time cheaper*** Earnings Momentum** % change in 1y fwd EPS

Japan 31.9 48% 14.0 13% 1.3 14% 1.8 38% 1.0 US 21.9 71% 15.0 58% 2.6 65% 2.0 71% -0.6 Mexico 23.1 79% 17.2 97% 2.9 81% 1.4 81% -0.1 Indonesia 15.8 31% 13.9 70% 3.5 73% 2.5 44% -4.1 India 16.1 31% 14.3 64% 2.7 40% 1.4 58% 1.1 Germany 16.3 57% 12.2 30% 1.7 54% 3.0 62% -1.6 France 15.2 47% 12.9 50% 1.5 47% 3.2 64% -2.9 UK 13.6 50% 12.5 47% 2.0 60% 3.5 70% -2.6 Korea 14.3 35% 9.0 29% 1.1 30% 1.0 94% -2.5 China 12.7 29% 8.8 12% 1.5 31% 3.2 16% 0.2 Turkey 10.7 30% 10.3 78% 1.7 22% 2.3 61% -1.1 Brazil 10.0 27% 11.0 89% 1.5 60% 3.8 41% -3.3 Italy 10.9 26% 12.1 30% 1.0 28% 3.3 37% -3.1 Spain 10.3 16% 13.9 73% 1.4 57% 4.5 41% -3.0 Russia 6.5 14% 5.0 21% 0.8 16% 3.4 10% 3.7 * Cyclically-adjusted PE ratio (5-yr rolling window). ** % change in 1-yr fwd EPS over last 3 months. *** Current percentile relative to full history As of November 2013. All data based on MSCI country indices. Source: Datastream, GSAM calculations

% 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 05 06 07

US Equity Risk Premium US ERP 200 day m.a.

% 12 10 8 6 4 2 0 -2

Equity Risk Premium for the BRICs Brazil China India Russia

08

09

10

11

12

13

07

08

09

10

11

12

13

14

Source: GSAM calculations

Goldman Sachs Asset Management 6

Source: GSAM calculations

November 2013

GSAM Macro Insights

Appendix: Key Macro and Markets Indicators

Index 35 30 25 20 15 10 5 0 -5 -10 -15 05 06 07 08 09 10 11 12 13
Source: Institute for Supply Management, Haver Analytics

US ISM: New Orders Inventories ISM Manufacturing: [New Orders - Inventories]

Index 65 60 55 50 45 40 35 30 05 06 07 08

Global PMI Global PMI: Manufacturing Output Global PMI: Services Business Activity

09

10

11

12

13

Source: JP Morgan, Haver Analytics

ISM is a key industrial US survey. The new orders less inventories component is one of the main leading indicators for the US and the global industrial cycle.
China Lead Indicator Index 1996=100 106 CEMAC-GS Leading Indicator 105 104 103 102 101 100 99 98 97 96 97 99 01 03 05 07 09
Source: GS Global ECS Research

The Global Purchasing Managers Index (PMI) is a PPPweighted average of different countries PMI headlines. The PMI headline gives a snapshot of economic activity.
%yoy 50 40 30 20 10 0 -10 -20 -30 Korean Exports %yoy change in exports (USD, 3mma)

11

13

03

04

05

06

07

08

09

10

11

12

13

Source: Haver Analytics

The CEMAS-GS Leading indicator was designed to provide a more accurate and timely view on Chinas growth momentum than official data.
Index Jan06=100 105 104 103 102 101 100 99 98 97 06 07 08 09 10 11 12 13
Source: GS Global ECS Research, Haver Analytics, GSAM calculations Easier Conditions

Korean exports are a key leading indicator for world trade and the global industrial cycle. This is the first trade statistic to be published at the beginning of every month.
% GDP 5 4 3 2 1 0 02 03 04 05 06 07 08 09 10 11 12 13
Source: GS Global ECS Research

G3 Financial Conditions USA Euro area Japan

China Total Social Financing New TSF as share of GDP, 3mma

GS FCIs measure effects of monetary policy on growth by combining real short- and long-end interest rates, tradeweighted exchange rate and equity market cap/GDP.
Goldman Sachs Asset Management 7

China TSF is a broad measure of liquidity and credit supply which includes both bank loans and non-bank loan credit to non-financial entities.
November 2013

GSAM Macro Insights

Anna Stupnytska +44(20)7774-5061 anna.stupnytska@gs.com

James Wrisdale +44(20)7774-5282 james.wrisdale@gs.com

Disclaimers
For professional investors onlynot for distribution to the general public. The views and opinions expressed herein are those of Goldman Sachs Asset Management ( GSAM) and are current as of this date. These views and opinions are subject to change at any time and should not be construed as research, investment advice and/or trade recommendations. Individual groups within GSAM may, from time to time, deviate from these views and opinions, as could Goldman Sachs Global Investment Research or other departments and divisions of Goldman Sachs and its affiliates. These views and opinions should not form the basis for any investment decisions, please consult with a financial advisor before investing. Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur. There may be conflicts of interest relating to GSAM and its service providers, including Goldman Sachs and its affiliates, who are engaged in businesses and have interests other than that of managing, distributing and otherwise providing services to GSAM. These activities and interests include potential multiple advisory, transactional and financial and other interests in securities and instruments that may be purchased or sold by GSAM, or in other investment vehicles that may purchase or sell such securities and instruments. These are considerations of which investors should be aware. Additional information relating to these conflicts is set forth in GSAMs Conflicts of Interest Policy. Any references to indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources. Economic and market forecasts presented herein reflect our judgment as of the date of this material and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only and are not actual results. If any assumptions used do not prove to be true, results may vary substantially. Please note that neither Goldman Sachs Asset Management International nor any other entities involved in the Goldman Sachs Asset Management (GSAM) business maintain any licenses, authorisations or registrations in Asia (other than Japan), except that it conducts businesses (subject to applicable local regulations) in and from the following jurisdictions: Hong Kong, Singapore, Malaysia, Korea, and India. This material has been issued or approved by Goldman Sachs Canada, in connection with its distribution in Canada; in the United States by Goldman, Sachs & Co. This material has been issued for use in or from Hong Kong by Goldman Sachs (Asia) L.L.C, in or from Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W), and in or from Korea by Goldman Sachs Asset Management Korea Co. Ltd. This material has been issued or approved in Japan for the use of professional investors defined in Article 2 paragraph (31) of the Financial Instruments and Exchange Law by Goldman Sachs Asset Management Co., Ltd. This material has been approved by Goldman Sachs Asset Management International, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority. No part of this material may, without GSAMs prior written consent, be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient. 2013 Goldman Sachs. All rights reserved. Date of First Use: 29/11/2013 Compliance code: 115691.STR.MED.OTU

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November 2013