General economic development

Considerable market risks –
New models offer opportunities

The global economy will experience recession in 2009. The sharp drop in demand for automobiles in almost all markets will also impact the Volkswagen Group’s business growth.

After presenting the significant risks to the Volkswagen Group’s operating activities in the previous chapter, in the following we will explain the opportunities arising from expected future developments. The potential identified by the Group is continually incorporated into its plans so that market opportunities can be leveraged as they arise. These emerge mainly as a result of our moving into new markets, developing new and additional products, and implementing technical innovations.

general economic development

Our plans assume that global economic growth in 2009 will be negative. Despite the worldwide support measures put in place for the financial sector and the real economy, a sustained recovery is not expected until 2010. The strongest growth is anticipated in the emerging nations in Asia, particularly China and India, whereas gross domestic product (GDP) growth in Latin America will decline slightly. In the major industrialized countries, recessionary trends will continue at least through mid-year.

We prepared our forecast taking into consideration the most recent assessments by external institutions, including economic research institutes, banks, multinational organizations and consulting firms.

North America

In the USA, GDP is expected to shrink in 2009 compared with the previous year. The same is true for the Canadian and Mexican economies.

South America/South Africa

We are expecting no more than slight economic growth for Brazil. After very rapid growth in previous years, the GDP growth rate in Argentina is likely to be negative. We are predicting slight economic growth in South Africa.

Asia-Pacific

Growth in China in 2009 is anticipated to be in the single digits, as in 2008. For Japan, a further sharp decline in macroeconomic activity is likely. India’s growth will weaken further.

Europe

GDP in Western Europe will decline in 2009 compared with 2008. In Central and Eastern Europe as well, we are expecting negative growth after the strong expansion of previous years.

Germany

The recessionary trend in the German economy will continue well into 2009. After hitting a record low in fall 2008, unemployment will rise again appreciably.

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