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Quarterly Economic Bulletin 3rd Qtr 2011

What appeared to be a rocky recovery from the 2008/09 global downturn now has the potential to
develop into a serious global crisis, with a combination of continuing sovereign debt issues and major
political nervousness contributing to the mix.

Over the last quarter, business surveys suggested that the pace of global growth was slowing, as the
impact of the Japanese earthquake, Eurozone fiscal concerns and rising commodity prices continued to suppress activity in major economies. In addition to the supply chain disruptions caused by the
Japanese earthquake, the recent floods in Thailand are likely to have a similar impact on production.
Honda, the third largest Japanese car manufacturer, has just announced that profits fell by 56% in the
third quarter, following a slow recovery from the effects of the earthquake. Further to this, the Thai
floods have also disrupted supply chains and operations and Honda has cut production to
accommodate the parts shortages from affected factories in Thailand. There may also be further
impacts to Devon and UK businesses who are relying on components from factories in the affected
regions.