Global Construction Outlook: Laura Hanlon Product Manager, Global Construction Outlook May 21, 2009

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1 Global Construction Outlook: Short-term term Pain, Long-term Gain Laura Hanlon Product Manager, Global Construction Outlook May 21, 2009

2 What This Means for You The world is set to be hit this year with the steepest decline in global construction spending in at least 20 years The bright spot in the outlook comes from numerous fiscal stimulus packages with infrastructure spending at their core Modest recovery in 2010 will be followed by a stronger rebound in 2011

3 Global Construction Outlook: Total Construction Billions of 2005 $US, Left-axis Percent change, Right-axis 8% 6% 4% 2% 0% -2% -4% %

4 Total Construction Regional Review Non-Japan Asia dominates the construction outlook North America worst hit in 2009 Western Europe lags in recovery (Index, 2008=100) Asia MidEast and Africa South America Non-Japan Asia Eastern Europe North Am erica Western Europe

5 Regional Focus: North America North America experiences the largest decline of all regions in 2009, contracting by 11.4%, mostly a result of the decline in the U.S. residential construction market Billions of 2005 $US, Left-axis 1,600 Percent change, Right-axis 15% 1,400 10% 1,200 1,000 5% Mexico % -5% -10% -15% Canada United States North America (right-axis)

6 Regional Focus: Western Europe The Western European construction market is mostly comprised of five major economies Western European Construction Spend, 2008 (Percent) France United Kingdom Germany Spain Italy Netherlands Rest of Region* *Rest of Region includes Austria, Belgium, Denmark, Finland, Greece, Ireland, Norway, Portugal, Sweden, Switzerland, and Turkey -- each which make up 2-3% of Western European total construction

7 Regional Focus: Western Europe Western Europe will endure the second-worst market conditions this year and is expected to experience the worst recovery going forward (Percent) United Kingdom Construction Growth by Country Spain France Netherlands Italy Germany

8 Regional Focus: Eastern Europe Eastern European construction markets will be hit in the near-term because of their economic dependence on Western Europe (Percent) Construction Growth By Country -10 Ukraine Russia Hungary Romania Czech Republic Slovakia Bulgaria Poland

9 Regional Focus: Middle East Middle East economies have been hurt by the bust in oil prices; the nonresidential construction sector will be most affected (Percent) 15 Construction Growth By Country ` Iran Bahrain United Arab Emirates Saudi Arabia Qatar Kuwait

10 Regional Focus: Asia Asia, lead by China and India, is the only region that will not see declines in total construction spending in 2009 (Billions of 2005 $US) Indonesia Australia Korea India Japan China

11 Asia Is Gaining Share from Developed Countries Western Europe 34% Eastern Europe 5% Asia 34% Middle East & Africa 4% North America 19% South America 4% Western Europe 27% South America North 3% America 20% Middle East & Africa 4% Asia 41% Eastern Europe 5%

12 China to Lead World in Construction Spend by 2016 Total Construction Spending (Billions of 2005 $US) 1,600 1,400 1,200 1, United States China Japan Spain United Kingdom Germany India

13 Total Construction Outlook Regional Comparison World 2.3% Non-Japan Asia 7.1% Asia 4.9% Middle East & Africa South America 3.5% 3.2% Eastern Europe North America 2.0% 2.5% Western Europe -0.5% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Compound Annual Growth (Percent)

14 Residential Construction Outlook Regional Comparison World North America Non-Japan Asia Asia Middle East & Africa South America Eastern Europe -0.5% 1.1% 2.6% 2.2% 1.9% 5.1% 6.9% Western Europe-3.3% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Compound Annual Growth (Percent)

15 Structures Construction Outlook Regional Comparison World 1.1% Non-Japan Asia Asia South America 3.0% Middle East & Africa 2.3% Eastern Europe 1.3% 5.0% 6.6% Western Europe North America -2.7% -1.3% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Compound Annual Growth (Percent)

16 Infrastructure Construction Outlook Regional Comparison World 5.2% Non-Japan Asia 8.9% Asia Eastern Europe Middle East & Africa Western Europe 6.4% 6.1% 5.4% 5.3% South America 4.2% North America 1.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Compound Annual Growth (Percent)

17 Infrastructure Leads Growth Across All Regions in % Percent Change Year Ago (%) 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% World North Latin Western Eastern Asia Middle East America Total Residential America Nonresidential Europe Europe Structures Infrastructure

18 Infrastructure to Lead Global Construction Compound Annual Growth (Percent) 8% 7% 6% 5% 4% 3% 2% 1% % Total Nonresidential Structures Infrastructure Residential

19 Infrastructure Gains Share of World Construction Infrastructure 29% Residential 35% Structures 33% Infrastructure 33% 36% Structures 34% Residential

20 Stimulus Packages Around the World *All currency in US$ Total Stimulus Australia $26.5 billion $14 billion Stimulus for Construction Canada $33 billion $16.5 billion China $585 billion $350 billion France $34.5 billion $20 billion Germany $65 billion $30 billion India $4 billion $4 billion Italy $114 billion $6.5 billion Malaysia $16.3 billion $6 billion South Korea $11 billion $10 billion Spain $14.5 billion $10.5 billion United Kingdom $31 billion $4.6 billion United States $787 billion $134.8 billion

21 Leading Countries for Infrastructure Investment China Panama Singapore United Kingdom South Africa Malaysia India Australia Russia 9.5% 9.0% 8.8% 8.8% 8.5% 8.0% 7.7% 10.9% 12.0% 0% 2% 4% 6% 8% 10% 12% 14% CAGR

22 Balancing Opportunity with Risk Total Construction Spending Growth, Real 2000 US Dollars (CAGR %, ) 10% 8% 6% 4% 2% 0% -2% United States Japan Australia Median Construction Risk South Korea Canada Germany Italy Netherlands France China India Brazil Average Global Construction G th Russia Mexico -4% United Kingdom Spain Construction Risk Score - 5 Year Circle Size = Total Nominal Construction Spending in 2008

23 BRIC Outlook China and India continue to lead construction growth in the outlook Russia makes up for slowdown in the second-half of forecast Compound Annual Growth 16% 14% 12% 10% 8% 6% 4% 2% 0% China India Russia Brazil

24 BRIC Construction Shares China Infrastructure 27% Residential 21% India Infrastructure 32% Residential 19% Russia Structures 52% Brazil Structures 49% Infrastructure 26% Residential 22% Residential 27% Infrastructure 52% Structures 52% Structures 21%

25 BRIC Country Nonresidential Structures Construction Shares China Office, 8% Commercial, 7% India Office, 11% Institutional, 6% Industrial, 49% Commercial, 25% Industrial, 79% Institutional, 15% Russia Office, 10% Brazil Office, 17% Industrial, 48% Commercial, 29% Industrial, 44% Commercial, 13% Institutional, 13% Institutional, 25%

26 Top 15 Countries by Construction Spend Total Construction Spending 2005 US$ Billions 2009 Total Real Construction Spending Growth 2005 US$ Growth % Growth % Growth, CAGR % United States (-13.0%) (-2.3%) +2.2% China % +9.8% +9.5% Japan (-5.4%) (-3.3%) (-0.8%) Spain (-10.6%) (-3.3%) (-2.1%) France (-4.8%) (-1.5%) (-0.3%) Great Britain (-12.3%) (-8.0%) (-2.8%) Germany (-2.5%) (-1.7%) (-0.1%) Italy (-3.3%) (-0.8%) +0.2% India % +7.0% +7.2% South Korea % +4.3% +2.3% Australia % +4.9% +5.1% Russia (-6.8%) (-0.1%) +1.8% Canada (-3.3%) (-1.8%) +1.0% Brazil 92.0 (-0.2%) +3.2% +3.7% Netherlands 90.4 (-3.6%) (-1.3%) (-0.3%) Mexico 89.1 (-3.8%) +1.6% +1.0% 69 Country Total 5,565.0 (-3.7%) +0.7% +2.3%

27 Top 15 Countries by Construction Growth Total Construction Spending 2005 US$ Billions Total Real Construction Spending Growth 2005 US$ 2009 Growth % Growth % Growth, CAGR % China % +9.8% +9.5% Australia % +4.9% +5.1% Indonesia % +6.7% +5.5% India % +7.0% +7.2% Bangladesh % +5.3% +5.8% Qatar % +0.2% +3.4% South Africa % +5.9% +5.6% Panama % +6.6% +7.1% Vietnam % +3.6% +4.5% Thailand % +4.4% +4.5% Saudi Arabia % +5.2% +5.3% Kenya % +4.7% +5.2% South Korea % +4.3% +2.3% Poland % +2.2% +3.4% Sweden % +2.4% +3.4% 69 Country Total 5,565.0 (-3.7%) +0.7% +2.3%

28 Top 15 Riskiest Countries Total Construction Spending Total Real Construction Spending Growth 2005 US$ Construction Risk 2005 US$ Billions Growth % Growth % Growth, CAGR % Venezuela % +2.9% +4.6% Ecuador (-1.9%) +1.9% +1.8% Iran (-5.2%) +0.7% +1.1% Bolivia (-0.1%) +2.1% +2.2% Argentina (-2.4%) +2.8% +2.3% Russia (-6.8%) (-0.1%) +1.8% China % +9.8% +9.5% Pakistan (-0.4%) +1.7% +2.8% Kenya % +4.7% +5.2% Ukraine (-9.6%) (-5.3%) (-0.6%) Turkey (-0.6%) +2.2% +4.0% Bangladesh % +5.3% +5.8% South Africa % +5.9% +5.6% Indonesia % +6.7% +5.5% Colombia (-1.3%) +3.3% +2.3% 69 Country Total ,565.0 (-3.7%) +0.7% +2.3%

29 Implications for Your Business While this is the worst year for the world construction market in two decades, there are still industries and regions where we can find potential The infrastructure construction industry remains strong this year and in the outlook, in part due to strong and supportive country-specific stimulus packages Non-Japan Asia, lead by China and India, is the only region with a growing construction market this year and is expected to expand exponentially in the outlook A modest recovery expected in 2010, but strong pick-up in the global construction market in 2011 be ready for the rush!

30 Thank you Laura Hanlon Product Manager, Global Construction Outlook