>QE MARCH 2009 GDP GROWTH HIGHER THAN EXPECTATIONS (MORGAN STANLEY)

• GDP growth was at 5.8% in QE March 2009: The Central Statistical Organization (CSO) announced that GDP growth in the quarter ended March 2009 (QE March 2009) was at 5.8%. This compares with 5.8% registered in QE December 2008 (revised upwards from 5.3% earlier) and 7.7% (revised upwards from 7.6% earlier) in QE September 2008. The growth was above our and consensus expectation (as per Bloomberg survey) of 5%. The full-year F2009 (12 months ended March 2009) GDP growth stands at 6.7% YoY, compared to 9% growth registered in F2008.

• Agriculture growth rebounded; manufacturing segment contracted: The agriculture and allied activities segment accelerated 2.6% in QE March 2009 after declining 0.4% in the previous quarter. Within this, the agriculture sector rebounded 2.7% (vs. -0.8% earlier). Mining and quarrying, on the other hand, decelerated to 1.6% (vs. 4.9% earlier). The industry segment growth decelerated to 1.4% compared to 2.1% in the previous quarter. Within industry, while the
manufacturing segment declined 1.4% (the first time since the 1997-1998 crisis) vs. +0.9% earlier, growth in the electricity, gas & water supply, and construction segments accelerated to 3.6% and 6.8%, respectively, (vs. 3.5% and 4.2% earlier).

• Services segment growth decelerated: Growth in the services sector decelerated to 8.6% in QE March 2009, compared with 10.2% in the previous quarter. Within services, while growth in the community, social & personal services segment decelerated to 12.5% vs. 22.5% earlier, it remained strong, underpinned by fiscal stimulus measures undertaken by the government during QE March 2009. Growth in the other segments accelerated in QE March 2009 – financing, insurance, real estate & business services (9.5% vs. 8.3% earlier) and trade, hotels, transport & communication (6.3% vs. 5.9% earlier).

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