Global economic development

Peter WesterheideHead of EconomicIntelligence

FrankfurtJune 8, 2017

Cautionary note regarding forward-looking statements

This presentation contains forward-looking statements. These forward-looking statements arebased on current estimates and projections of the Board of Executive Directors and on currentlyavailable information. These forward-looking statements are not guarantees of the futuredevelopments and results outlined therein. Rather, they depend on a number of factors, involvevarious risks and uncertainties, and are based on assumptions that may not prove to beaccurate. Such risk factors particularly include those discussed on pages 111 to 118 of the BASFReport 2016. The BASF Report is available online at basf.com/report. BASF does not assumeany obligation to update the forward-looking statements contained in this presentation.

2

Economic framework conditions to support growth in advanced and emerging economies

Commodity prices (e.g., for agricultural products, energy, non-ferrousmetals) are slowly rebalancing, benefitting commodity exporters(particularly emerging markets), while not threatening growth incommodity importing countries.

Global financing conditions remain favorable with low and only slowlyincreasing long-term interest rates.

Fiscal policies in key economies are on average slightly moreexpansionary than in the past five years.

3

.

1.9 1.3 1.5

2016 2017 2017-2019

-2.5

0.81.8

2016 2017 2017-2019

European Union

United States

South America

Emerging Asia

World

Expectations for GDP growthGDP growth in key regions% per year

1.6 2.0 2.0

2016 2017 2017-20196.0 5.6 5.7

2016 2017 2017-2019

2.3 2.3 2.6

2016 2017 2017-2019Source: BASF

2016 2017 2017-2019

4

.

0.4 0.5 1.0

2016 2017 2017-2019

-0.8

1.21.9

2016 2017 2017-2019

European Union

United States

South America

Emerging Asia

World

Expectations for chemical production growthChemical production1 growth in key regions% per year

0.6 1.8 2.7

2016 2017 2017-20196.3 5.8 5.7

2016 2017 2017-2019

3.4 3.4 3.6

2016 2017 2017-20191excluding pharma; Source: BASF

5

China: Strong Q1 due to government stimulus, slower growth expected for remainder of 2017

6

Source: Statistics China, Forecast Q2-Q4 2017; Consensus May 2017

7.3

7.06.9

6.86.7 6.7 6.7

6.86.9

6.56.4 6.4

5.8

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Source: National Bureau of Statistics China, BASF

FY 2016 3.2

Q1 2017 7.7

17.4

23.5

6.9

9.1

-7.7

14.8

10.4

10.0Solid retail sales of consumer goods

Recovery of private investments

Acceleratinginfrastructure investments

Strong real estateinvestments

Improving exports

Quarterly GDP growthyoy in %

Key drivers of strong Q1 growthyoy in %

FY 2016

Q1 2017

FY 2016

Q1 2017

FY 2016

Q1 2017

FY 2016

Q1 2017

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Production view: - Innovation-driven, knowledge-

based, more sustainable growth- Opportunities for specialties,

new materials, e-mobility, reduction of emissions

Expenditure view: - Consumption-driven growth- Opportunities for automotive,

consumer goods and packaging

China: Focus of reforms in the 13th 5-year plan points to business opportunities

High-speedRail

China: Debt is relatively high at current stage of development

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Austria

Australia

Belgium

Brazil

Canada

Switzerland

China

Czech Republic

Germany

Denmark

Spain

Finland

France

United KingdomGreece

Hong Kong

Hungary

Indonesia

Ireland

India

Italy

Japan

South Korea

Mexico

Malaysia

Netherlands

Norway

Poland

Portugal

Russia Saudi Arabia

SwedenSingapore

Thailand

Turkey

United StatesEurozone

South Africa

40

90

140

190

240

290

340

390

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Tota

l deb

t in

% o

f GD

P

GDP per capita 2016 (in US$ 2010)Source: IHS, UN, Bank for International Settlements, BASF

High level of debt in China compared to other emerging economies

Overall level of debt not unusualfor more advanced economies

Acceleration of debt: - Recognized as a key risk- Authorities aim at controlled

deleveraging

Total debt vs. GDP per capita

India: Improving macroeconomic environment

Better business environment and increased Foreign Direct Investment;Expected improvement of GDP growth by 1-2 percentage points

Modi party in majority in the Lower House

Improved position in theUpper House

Political stability

“Make in India” “Skill India”

Ambitious initiatives

Roads and railways Power Agriculture (e.g., irrigation, soil

health, warehousing, new technologies)

Infrastructure

Reforms Moderate inflation

Lower trade and fiscal deficit Increased Foreign Direct

Investment Reduced subsidies

Macroeconomics Labor laws Land acquisition Goods and Services Tax Education and skill development Digitalization of financial platforms

“Digital India” “Smart cities”

9

India with substantial growth potential

10

GDP nominal(US$ billion)

Population (million)

GDP per capita (US$ billion)

Germany 3,462 81 42,903

China 11,183 1,382 8,090

India 2,244 1,327 1,691

02468

10

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Rea

l gro

wth

in %

(GD

P p

er c

apita

)

Long-term development

Country comparison

Source: OECD, Consensus Economics, IMF, UN, BASF

7.37.7 7.9 7.7

8.4

7.3 7.2 7.2

6.46.9 6.9

7.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Quarterly GDP growthyoy in %

India: Introduction of unified Goods and Services Tax (GST) should support growth

Under the existing tax structure, at each point of sale, additional taxes are applied to the after-tax value of each good and service.

The GST will unify at least ten types of indirect taxes into one tax to be collected at the state/federal level.

The main purpose of the GST is to eliminate the compounding effect by fixing the final tax rate.

GST is scheduled for mid-2017

Long-term GDP impact: +3–4% p.a. 11

Source: Leemput/Wiencek, Board of Governors of the FED System 2017; BASF

Scenario Analysis: Impact GST of 16%

Brexit – key challenges

The UK has a significant share of the EU28 chemical market – both as a place ofproduction and destination of trade.

The UK chemical industry and important customer industries are deeply integratedinto European value chains.

Introduction of tariffs and increase of non-tariff trade costs would distort thesevalue chains and threaten competitiveness of UK industrial exports.

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UK: Importance for EU – some selected figures

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16% of GDP

12.8% of population

7.0% of exports, 6.8% of imports

8.7% of chemical sales(excluding pharma)

10% of cracker capacity

33% of wholesalefinancial services

7.9% of total EU budget

44% of tea consumption

14

0 100 200 300 400

ARGENTINABRAZIL

SAUDI ARABIAMEXICOCANADA

INDIASOUTH KOREA

NORWAYJAPAN

RUSSIATURKEY

SWITZERLANDCHINA

UNITED KINGDOMUNITED STATES

0 100 200 300 400

ARGENTINABRAZIL

SAUDI ARABIAMEXICOCANADA

INDIASOUTH KOREA

NORWAYJAPAN

RUSSIATURKEY

SWITZERLANDCHINA

UNITED KINGDOMUNITED STATES

The UK is the second most important trade partnerof EU27EU27 exports in 2016billion €

Source: Eurostat

EU27 imports in 2016billion €

Chemicals and pharma are the UK top exportersin trade of goods to EU27

15

0

5

10

15

20

25

UK exports to EU27 in 2016billion €

Source: Eurostat

Value-added shares of industry output – chemicals and automotive

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Chemicals Automotive

RoW: Rest of world; Source: WIOD 2014, BASF analysis of direct and indirect value-added contribution

77%

2%21%

0%

20%

40%

60%

80%

100%

Value creation for the EU 27chemical sector (%)

83%

2%15%

Value creation for the EU 27automotive sector (%)

62%

21%

18%

Value creation for the UK automotivesector (%)

64%

19%

17%

Value creation for the UK chemicalsector (%)

EU 27EU 27UK

UK

domestic

RoW

domestic

RoW

UKEU27 UKEU27

RoW

domestic

100%

80%

60%

40%

20%

0%

RoW

domestic

10

100

1,000

10,000

0%

20%

40%

60%

80%

100%

Agric

ultu

re

Ener

gy &

Res

ourc

es

Food

Text

ile e

t al.

Furn

iture

& W

ood

Pape

r

Che

mic

als

Phar

ma

Rub

ber

Min

eral

s &

Met

als

ICT

Elec

trica

l

Auto

mot

ive

Con

stru

ctio

n

Serv

ices

RoW IntermediateconsumptionEU27 Final consumption,(incl. invest + inventories)EU27 IntermediateconsumptionUK Final consumption, (incl.invest + inventories)UK IntermediateconsumptionTotal production (RHS)

High export share for UK chemicals (~50%), mostly intermediate use

17Source: WIOD 2014, BASF analysis of direct intermediate demand and final use

Intermediate consumption

Final use

UK

EU27

RoW

Where is UK production used?UK usage by sector (lhs); sector production in US$ billion (rhs)

All major economies are expected to grow in the next years.

China is rebalancing its economic model toward sustainable innovation and consumption.

Major growth drivers are the emerging economies, especially in Asia.

In India, improving economic framework conditions and the introduction of the Goods and Services Tax have the potential to accelerate growth.

In the Brexit negotiation/implementation, closely interlinked value chains need to be considered.

Summary: Economic framework conditions to support growth

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BASF Investor Day 2015 – Keynote speech 19