Steven Trypsteen

Economist, ING Bank

Keynote Presentation: Economic Forces Impacting the European Cold Chain

64

Science will win, simply because it works

Imposing new US tariffs on steel and aluminum will improve Americans’ welfare

65

0% 0% 0% 0%

30%

70%

No Opinion Strongly Agree Agree Uncertain Disagree StronglyDisagree

Another year of strong growth?

Steven TrypsteenEconomist ING Belgie March 2018

Empowering people to stay ahead in life and in business

Market correction, but largely recovered

67

What do you consider the biggest “tail risk”?

68

0 5 10 15 20 25 30 35 40 45 50

Inflation and Bond Crash

Fed/ECB policy mistake

Market structure

Geopolitical tensions

Chinese debt crisis

US-China trade war

Tech bubble

Other

February 2018 January 2018

It was a different story a few months ago

69

0 5 10 15 20 25 30 35

EU disintegration risk

Delay in US corporate tax reform

Trade war

Crash in global bond markets

Chinese credit tightening

Other

Liquidity/funding risk

April 2017 March 2017

But the political uncertainty was not translated into higher market volatility

70

Political uncertainty

Market volatility

IMF increased its growth forecast for the first time in a long time

71

Source: Thomson Reuters Datastream, ING Economic Research

2010 2011 2012 2013 2014 2015 2016 2017 2018-10

-5

0

5

10

151.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

NEW HOUSE PRICES (%YOY, 70 MEDIUM &LARGE CITIES) : China (RH Scale)China 5yr yield, 1yr lead (inverted scale)

Chinese real estate market cools down

72

Interest rate 5 year1 year lead

Price growth new homes

Source: Thomson Reuters Datastream, ING Economic Research

2012 2013 2014 2015 2016 2017

1.0

1.5

2.0

2.5

3.0

3.5

4.0

45

50

55

60

65

70

ISM SURVEY: NEW ORDERS INDEX : United States (3m lead)1Y % change of GDP (AR) : United States (RH Scale)

73

The US economy still has momentum

GDP growth YOY%New orders3 month lead

GDP growth 2017: 2,3%GDP growth 2018: 3,0%GDP growth 2019: 2,6%

…and Trumps tax plan supports 2018 even further

74

Source: Thomson Reuters Datastream, ING Economic Research

00 02 04 06 08 10 12 14 16 180.5

1.0

1.5

2.0

2.5

3.0

30

35

40

45

50

55

60

65

19M lead of ISM PURCHASING MANAGERS INDEX (MFG SURVEY) : United States1Y % change of CPI - ALL ITEMS LESS FOOD & ENERGY (CORE) : United States (RH Scale)

75

US inflation is at a turning point

Core inflation

Business cyclebarometer

Fed will continue to tighten its monetary policy

76

The long term rate already rose

77

0.6

0.3

0.5

0.6 0.6

0.7 0.7

0.8

Eurozone Italy Belgium Germany France Portugal Spain Netherlands

QoQ GDP growth

Nice growth in the Eurozone in 4Q

78

The crisis is history for most countries…

79

70

75

80

85

90

95

100

105

110

115

Germany Belgium Netherlands France Italy Spain Portugal Greece

GDP level in Q1 2018 = 100

Filled order books point to strong growth

80

Source: Thomson Reuters Datastream, ING Economic Research

00 02 04 06 08 10 12 14 16 18-6

-4

-2

0

2

4

6

-80

-60

-40

-20

0

20

INDUSTRY SURVEY: ORDER-BOOK LEVELS (EA) : Euro Zone1Y % change of GDP (EA19)(WDA)(ESA2010) : Euro Zone (RH Scale)

Order books

GDP growth YoY %

GDP growth 2017: 2,3%GDP growth 2018: 2,4%GDP growth 2019: 1,8%

Source: Thomson Reuters Datastream, ING Economic Research

08 09 10 11 12 13 14 15 16 17 180.5

1.0

1.5

2.0

2.57

8

9

10

11

12

13

Eurozone werkloosheidsgraad (1 jr vooroplopend) Kerninflatie (RS)

81

Core inflation will increase very gradually

Core inflation

Unemployment rate1 year lead

Monetary policy will remain loose

82

Source: Thomson Reuters Datastream, ING Economic Research

2006 2008 2010 2012 2014 2016-1

0

1

2

3

4

5

6

Main refinancing rateEURIBOR 3MDeposit facility

QE programme keeps long term rates low

83

Impact QE

Theoretical rate on 10Y German government bond

Market rate on 10Y German government bond

The euro could strengthen even further

84

Source: Thomson Reuters Datastream, ING Economic Research

1975 1980 1985 1990 1995 2000 2005 2010 20150.4

0.6

0.8

1.0

1.2

1.4

1.6

0.4

0.6

0.8

1.0

1.2

1.4

1.6

EUR/USD

PPP

What are the political events of 2018?

85

What are the political events of 2018?

86

What are the political events of 2018?

87

What are the political events of 2018?

88

Democrats

Republicans

Structural downward trend of real rates

89

Source: Rachel and Smith (2014)

… and it looks like they will remain low

90

Source: Rachel and Smith (2014)

United States• Expansion is not over yet• Fed will continue to hike in coming months

Eurozone• Momentum continues, but inflation remains too low• ECB will keep its loose monetary policy

China• Cooling down of real estate market and deleveraging could

lead to a slow down.

Key messages

91