For more information, visit http://www.worldbank.org/prospects July 21, 2017 Taking Stock U.S. jobless claims fell; import price declined. U.S. initial jobless claims fell 15,000 to 233,000 for the week ending July 15th. The decline was larger than expected, with jobless claims touching their lowest level in nearly five months, pointing to solid job growth. The 4-week moving average of initial claims fell 2,250 to 243,750. Separately, U.S. import prices declined 0.2 percent (m/m) in June, following a decrease of 0.1 percent in May. In particular, the prices for fuel imports fell for the fourth consecutive month, decreasing 2.1 percent (m/m) in June, while the prices for non-fuel imports ticked up 0.1 percent from no change in May. ECB kept policy unchanged; headline inflation softened in June. At its July meeting, the European Central Bank (ECB) kept interest rates on hold and maintained its current pace of bond purchases. The main refinancing rate was left at zero percent, the marginal lending facility at 0.25 percent, and the deposit rate at -0.4 percent (Figure 1). Asset purchases will continue at the monthly pace of €60 billion until the end of December 2017. Euro Area inflation was 1.3 percent (y/y) in June, below the 1.4 percent recorded in May, reflecting a decline in food and energy prices. Core inflation—which excludes energy, food, alcohol and tobacco— accelerated from 0.9 percent in May to 1.1 percent in June. Bank of Japan left policy on hold, but lowered its inflation forecast. The Bank of Japan (BOJ) kept its policy rate at minus 0.1 percent, and the target yield on 10-year Japanese government bonds at around zero percent, as expected. Meanwhile, the BOJ cut its inflation forecasts for fiscal years 2017/18 and 2018/19. The BOJ now expects inflation to be at 1.1 percent (y/y) in the current fiscal year, down from its previous projection of 1.4 percent. For fiscal year 2018/19, it expects inflation to hit 1.8 percent (y/y), less than the initial forecast of 1.9 percent and still below its 2 percent target. China’s Q2 GDP growth exceeded market expectations. China’s GDP grew 6.9 percent (y/y) in Q2, the same pace as in Q1 but faster than expected by market participants (Figure 2). A deceleration in consumption growth was offset by stronger- than-expected investment and net exports growth. Separately, high frequency data showed that activity picked up in June, with industrial production, fixed asset investment, and retail sales expanding at a fast pace. South Africa’s central bank cut its interest rates for first time in five years . The South African Reserve Bank (SARB) cut its policy rate by 25 basis point, to 6.75, percent to help stimulate the economy. In its policy statement, the SARB noted that the inflation outlook has improved markedly, with food price inflation moderating more quickly than expected. In June, inflation slowed to 5.1 percent (y/y), well within the central bank’s target range of 3-to-6 percent. Figure 1 The ECB kept policy unchanged. Figure 2 Growth in China exceeded expectations. Policy interest rates GDP growth and contributions, year-to-year Percent Deposit rate Percentage points Percent 6 10 Net exports Investment 10 Marginal lending rate 5 Refinancing rate Consumption GDP (RHS) 8 8 4 6 6 3 4 4 2 2 2 1 0 0 0 -2 -2 -1 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Source: Bloomberg. Source: Haver Analytics. Produced by DECPG. Number 356 | July 21, 2017 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Friday, 14 July - Thursday, 20 July 2017 Upcoming releases: Friday, 21 July - Thursday, 27 July 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Singapore 7/13/17 GDP Q2 2.5% 2.6% 2.5% Canada 7/21/17 CPI JUN 1.3 % Ireland 7/14/17 GDP Q1 6.1 % 5.2 % 7.2 % Mexico 7/25/17 GDP Q2 SA 2.7 % United States 7/14/17 CPI JUN 1.6 % 1.8 % 1.9 % Australia 7/25/17 CPI Q2 2.1 % China 7/17/17 GDP Q2 6.9 % 6.8 % 6.9 % UK 7/26/17 GDP Q2 2.0 % UK 7/18/17 CPI MAY 2.6 % 2.9 % 2.9 % South Korea 7/26/17 GDP Q2 2.7 % South Africa 7/19/17 CPI JUN 5.1 % 5.4 % Austria 7/27/17 GDP Q2 2.0 % Activity and Inflation (Percent change y-o-y, except quarterly data on industrial production, which are percent change q-o-q, annualized) 2016 2017 2016 2017 2015 2016 Q2 Q3 Q4 Q1 June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May 1 Industrial Production, sa World 1.8 2.2 2.3 2.9 5.4 3.8 2.0 1.8 2.4 2.1 2.2 3.3 3.8 3.2 3.5 4.1 3.9 4.3 Advanced Economies 0.2 0.2 0.4 1.7 3.9 1.4 -0.2 -0.4 0.6 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.3 2.9 Emerging Market and Developing Economies 3.5 4.2 4.2 4.1 6.9 6.3 4.3 4.1 4.3 3.9 4.2 4.7 5.0 5.3 4.8 6.0 5.5 5.7 Commodity-exporting EMDE 0.2 1.3 0.6 3.0 5.3 3.8 1.7 2.1 1.4 1.1 1.4 2.5 3.6 3.3 2.7 3.6 4.9 5.4 Other EMDE 5.0 5.3 5.6 4.4 7.6 6.7 5.4 4.8 5.4 4.9 5.2 5.6 5.6 6.1 5.6 6.6 5.6 5.8 East Asia and Pacific 5.8 5.8 7.2 5.6 5.9 7.3 6.1 6.1 6.3 5.5 5.6 5.9 5.9 6.1 6.1 7.3 6.3 6.2 East Asia excl. China 3.5 4.5 8.6 3.5 3.1 4.5 6.8 6.8 5.9 2.2 2.5 4.3 6.1 4.7 4.7 5.3 4.7 3.8 Europe and Central Asia 1.5 2.0 0.4 -2.0 9.8 5.9 1.9 0.2 1.7 0.6 1.5 2.8 2.7 4.4 1.4 4.4 4.4 6.6 Latin America and Caribbean -3.1 -2.6 -0.2 1.1 0.2 2.3 -2.3 -2.0 -2.7 -1.6 -2.4 -0.3 1.7 0.9 1.4 0.2 1.2 2.1 Middle East and North Africa 2.8 - -2.9 8.3 - - 2.9 3.7 3.1 4.3 6.5 - - - - - - - South Asia 3.5 5.7 4.8 2.0 4.0 2.7 6.7 5.9 5.4 4.5 5.1 5.7 3.0 3.8 1.5 4.9 3.9 3.1 Sub-Saharan Africa 0.1 0.8 6.2 -6.3 -3.0 -3.0 4.4 1.5 0.1 0.0 -1.1 0.7 -0.8 0.1 -2.7 -2.2 -0.1 -1.6 Inflation, sa 2 World 1.4 1.3 1.6 1.3 1.6 2.4 1.6 1.5 1.3 1.4 1.5 1.6 1.8 2.3 2.5 2.5 2.2 2.1 Advanced Economies 0.1 0.4 0.2 0.4 0.8 1.6 0.4 0.4 0.4 0.5 0.6 0.7 1.1 1.5 1.8 1.6 1.9 1.5 Emerging Market and Developing Economies 2.5 2.3 2.9 2.8 2.5 3.4 2.6 2.8 2.7 2.9 2.4 2.4 2.7 3.1 3.4 3.5 3.5 3.4 Commodity-exporting EMDE 3.9 3.5 3.6 3.2 3.2 3.5 3.5 3.5 3.2 3.1 2.9 2.9 3.1 3.4 3.5 3.6 3.7 3.6 Other EMDE 1.0 1.1 2.0 1.7 1.7 3.1 1.8 1.8 1.5 1.6 1.5 1.6 1.8 2.6 3.3 3.5 3.2 3.1 East Asia and Pacific 1.2 1.6 1.9 2.1 2.3 3.1 1.8 2.0 1.8 2.2 2.0 2.1 2.4 3.0 3.5 3.5 3.2 3.1 Europe and Central Asia 1.9 0.4 0.3 0.5 1.0 2.4 0.4 1.2 0.5 0.5 0.9 0.9 1.6 2.3 2.5 2.7 2.6 2.3 Latin America and Caribbean 2.7 2.4 3.5 3.0 3.2 3.4 3.3 2.9 3.1 3.1 3.0 3.2 3.2 3.1 3.3 3.2 3.5 3.1 Middle East and North Africa 1.9 2.2 2.3 2.3 1.9 2.5 2.4 2.3 2.1 2.5 1.9 2.0 1.8 2.2 2.5 2.9 2.0 2.0 South Asia 4.5 4.9 5.3 5.3 3.9 4.3 5.6 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 5.0 4.8 5.0 Sub-Saharan Africa 3.6 5.3 5.0 5.7 5.5 6.7 5.4 4.9 5.9 5.8 5.8 4.9 6.5 6.7 6.7 6.8 6.7 6.5 1 Industrial production is total production (may exclude construction). When data are unavailable, "industral production, manufacturing" and "industrial production, manufacturing, non-durable manufacturing, petroleum and coal products, crude petrolem products" are used as proxies 2 Median inflation rate for each grouping. Trade and Finance (Percent change y-o-y, except quarterly trade data, which are percent change q-o-q, annualized, and international reserves data, which are percent change over the previous period) 2016 2017 2016 2017 2015 2016 Q2 Q3 Q4 Q1 June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Exports, Nominal, US$, sa World -11.5 -3.0 15.0 -0.3 7.9 20.4 -4.2 -6.8 2.8 -0.8 -3.1 5.0 4.0 11.0 7.6 12.8 3.7 10.6 Advanced Economies -11.3 -0.8 15.8 -0.4 4.4 19.2 -2.3 -5.5 5.5 1.4 -1.5 6.3 5.6 10.1 8.0 10.4 0.7 9.3 Emerging Market and Developing Economies -12.0 -6.5 13.4 0.0 14.6 22.5 -7.3 -9.1 -1.7 -4.4 -5.6 3.0 1.6 12.7 6.9 17.5 9.4 13.0 Commodity-exporting EMDE -24.2 -9.3 16.8 5.2 27.5 47.5 -13.6 -15.1 -1.9 -1.7 -5.6 7.7 7.7 26.7 19.5 24.0 13.6 21.0 Other EMDE -3.7 -4.6 12.2 -1.8 10.0 14.2 -3.4 -5.6 -0.9 -4.9 -5.0 1.8 -0.5 7.8 2.5 15.2 7.8 10.1 East Asia and Pacific -3.5 -6.1 12.8 -1.9 11.0 15.8 -5.7 -6.8 -1.6 -6.9 -5.9 1.8 -2.2 9.1 2.5 16.2 9.7 11.7 Europe and Central Asia -20.7 -6.1 21.8 -1.8 20.4 36.4 -4.2 -8.8 0.7 -1.1 -3.5 6.5 7.6 22.5 12.4 20.7 5.7 17.9 Latin America and Caribbean -11.9 -2.4 9.7 6.7 13.3 31.3 -8.0 -7.5 2.6 2.9 -4.5 10.0 10.9 14.7 12.5 17.4 9.7 11.3 Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - South Asia -4.8 1.6 3.7 -17.8 32.3 6.1 5.0 -4.1 5.9 -3.2 10.6 3.3 0.2 2.9 -0.1 11.3 8.0 -1.0 Sub-Saharan Africa -26.9 -14.7 21.6 -3.8 31.1 47.3 -18.6 -22.5 -13.0 -2.7 -9.5 1.0 3.5 22.6 25.7 19.8 - - Imports, Nominal, US$, sa World -6.8 -5.2 19.2 -19.2 21.7 20.6 -4.4 -10.9 -6.8 -5.6 -9.6 3.7 -1.6 11.5 5.3 10.4 -6.2 25.7 Advanced Economies -12.5 -3.4 9.2 -2.7 2.3 21.3 -4.6 -8.2 1.7 -1.9 -4.9 2.5 1.3 9.5 3.2 9.0 1.7 9.6 Emerging Market and Developing Economies -3.3 -6.2 25.4 -27.8 35.1 20.2 -4.3 -12.4 -11.5 -7.8 -12.1 4.4 -3.2 12.7 6.6 11.3 -10.4 35.4 Commodity-exporting EMDE -0.9 -7.0 28.1 -34.6 40.2 14.2 -3.9 -12.7 -15.4 -9.8 -14.9 4.1 -5.2 12.0 2.3 8.9 -15.4 - Other EMDE -11.5 -3.3 16.3 1.6 19.3 42.6 -5.9 -11.3 3.5 -0.3 -0.3 5.3 3.8 15.3 22.1 19.8 11.1 18.1 East Asia and Pacific -13.1 -3.6 20.8 5.2 21.3 51.9 -6.9 -10.8 5.7 0.0 -0.7 6.0 5.6 17.1 33.5 20.7 12.6 18.0 Europe and Central Asia -20.7 -1.4 12.4 -3.4 7.2 48.7 0.2 -9.7 8.9 1.4 0.8 5.8 6.3 21.9 8.3 14.5 5.8 22.7 Latin America and Caribbean -9.8 -7.4 6.2 3.0 5.2 26.9 -9.1 -15.5 1.5 -3.3 -8.4 1.6 3.9 11.1 5.2 13.6 -1.4 14.3 Middle East and North Africa 1.5 - - - - - - - - - - - - - - - - - South Asia -13.2 -5.3 6.9 7.3 58.9 33.9 -6.5 -14.9 -9.4 0.4 9.4 11.9 2.7 14.8 21.5 40.4 41.3 29.4 Sub-Saharan Africa -7.6 - - - - - - - - - - - - - - - - - 1 International Reserves, US$ World -5.9 -1.1 0.8 0.4 -3.3 1.7 0.8 0.3 -0.1 0.2 -1.1 -1.7 -0.6 0.7 0.3 0.7 0.8 0.8 Advanced Economies 0.6 4.4 1.7 1.4 -2.5 3.4 1.4 0.5 0.1 0.9 -0.7 -1.5 -0.2 1.5 0.4 1.5 1.2 1.0 Emerging Market and Developing Economies -9.9 -4.8 0.2 -0.2 -3.9 0.5 0.5 0.2 -0.2 -0.2 -1.4 -1.8 -0.9 0.1 0.2 0.1 0.5 0.7 Commodity-exporting EMDE -11.1 - -0.7 -0.2 - - 0.0 0.4 -0.5 -0.1 -1.7 -1.1 - - - - - - Other EMDE -9.1 -5.7 0.7 -0.3 -4.5 0.5 0.7 0.1 -0.1 -0.2 -1.2 -2.1 -1.2 0.0 0.2 0.3 0.6 0.8 East Asia and Pacific -11.3 -7.3 0.3 -0.7 -4.9 0.4 0.9 0.0 -0.3 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 0.1 0.8 0.8 Europe and Central Asia -6.3 4.4 2.7 1.2 -3.8 2.7 1.4 0.5 0.5 0.3 -0.8 -1.7 -1.4 2.1 0.4 0.2 0.0 1.1 Latin America and Caribbean -5.3 1.1 0.7 1.6 -0.9 0.8 0.1 1.6 0.0 -0.1 -0.6 -0.6 0.1 0.5 0.4 0.0 0.9 0.1 Middle East and North Africa -17.1 - -2.6 -2.0 - - -1.3 -0.7 -0.8 -0.5 -2.6 - - - - - - - South Asia 11.6 3.5 2.0 3.3 -2.8 1.7 0.8 1.4 0.6 1.4 -1.0 -0.9 -0.9 -0.1 0.5 1.3 0.6 1.8 Sub-Saharan Africa -12.0 - -1.9 - - - - - - - - - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. Produced by DECPG. Number 356 | July 21, 2017 Financial Markets 2016 2017 2016 2017 MRV 1 2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.13 0.40 0.39 0.45 0.70 0.95 0.39 0.40 0.40 0.41 0.41 0.55 0.66 0.66 0.79 0.91 0.90 1.04 1.16 ECB repo 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.32 0.74 0.79 0.92 1.07 1.20 0.70 0.81 0.85 0.88 0.91 0.98 1.03 1.04 1.13 1.16 1.19 1.26 1.30 EURIBOR 3-months -0.02 -0.26 -0.30 -0.31 -0.33 -0.33 -0.29 -0.30 -0.30 -0.31 -0.31 -0.32 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 US 10-yr Treasury yield 2.12 1.84 1.56 2.12 2.44 2.25 1.48 1.56 1.63 1.74 2.12 2.50 2.44 2.42 2.47 2.29 2.29 2.18 2.32 German Bund, 10 yr 0.54 0.14 -0.07 0.18 0.35 0.30 -0.09 -0.07 -0.05 0.03 0.22 0.30 0.34 0.32 0.39 0.25 0.36 0.28 0.58 Spreads (basis points) JP Morgan Emerging Markets 415 410 372 369 340 325 387 367 361 357 380 370 354 338 329 331 320 325 326 Asia 224 221 197 197 175 169 210 190 191 192 201 198 185 173 166 173 167 166 164 Europe 348 302 282 283 261 242 290 282 273 274 294 282 272 258 253 250 237 240 243 Latin America & Caribbean 540 537 477 475 445 427 496 473 463 453 491 481 463 442 431 431 420 430 430 Middle East 456 517 508 467 396 362 540 492 493 487 475 438 416 396 377 350 353 382 384 Africa 415 518 461 436 389 386 494 448 440 441 444 422 401 387 380 400 376 383 398 Stock Indices (end of period) Global (MSCI) 399 424 418 424 449 465 414 417 418 413 413 424 433 445 449 455 464 465 471 Advanced Economies ($ Index) 1663 1761 1726 1761 1854 1916 1713 1720 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1937 United States (S&P 500) 2044 2258 2168 2258 2363 2423 2170 2171 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2448 Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1376 1390 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1562 Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16556 16887 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 20138 Emerging Market and Developing Economies (MSCI) 794 861 903 861 958 1011 879 894 903 908 863 861 909 936 958 978 1005 1011 1041 EM Asia 404 419 448 419 474 512 431 442 448 444 426 419 443 459 474 484 505 512 525 EM Europe 244 295 273 295 301 304 264 269 273 274 273 295 302 296 301 313 308 304 312 EM Europe & Middle East 211 248 233 248 252 251 227 232 233 232 230 248 253 249 252 259 255 251 258 EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2359 2402 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2688 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.90 0.90 0.90 0.93 0.94 0.91 0.90 0.89 0.89 0.91 0.93 0.95 0.94 0.94 0.94 0.93 0.91 0.89 0.87 Japan 121.00 108.80 102.36 109.63 113.63 111.10 104.09 101.31 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 113.37 Emerging and Developing Economies Brazil 3.33 3.49 3.25 3.28 3.14 3.21 3.28 3.21 3.25 3.18 3.33 3.35 3.20 3.10 3.13 3.14 3.20 3.30 3.21 China 6.29 6.65 6.67 6.84 6.89 6.86 6.68 6.65 6.67 6.74 6.85 6.92 6.89 6.87 6.90 6.89 6.88 6.81 6.79 Egypt 7.70 10.12 8.87 14.71 17.82 18.10 8.87 8.87 8.88 9.25 16.34 18.56 18.68 17.01 17.76 18.09 18.10 18.11 17.95 India 64.14 67.19 66.94 67.39 66.97 64.48 67.18 66.91 66.74 66.73 67.60 67.86 68.06 67.01 65.83 64.52 64.46 64.45 64.54 Russia 61.34 67.06 64.61 62.95 58.67 57.17 64.43 64.93 64.48 62.57 64.25 62.03 59.76 58.42 57.83 56.53 56.88 58.10 59.97 South Africa 12.77 14.71 14.07 13.92 13.24 13.21 14.40 13.79 14.01 13.92 13.96 13.88 13.60 13.17 12.95 13.46 13.25 12.91 13.25 Memo: U.S. nominal effective rate (index) 114.7 119.7 118.4 122.5 123.4 120.7 118.9 117.8 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 117.7 1 MRV = Most Recent Value. Commodity Prices 2016 2017 2016 2017 MRV 1 2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Energy 2 65 55 57 64 68 64 57 58 58 64 59 68 69 69 65 67 64 60 60 Non-energy 2 82 80 82 83 86 83 82 82 81 81 83 84 85 87 85 83 83 82 82 2 Agriculture 89 89 91 90 91 88 92 91 90 90 90 89 91 91 89 88 89 88 88 2 Metals and minerals 68 64 64 71 78 74 64 65 64 65 73 75 76 79 79 75 73 72 74 Memo items: Crude oil, average ($/bbl) 51 43 45 49 53 50 44 45 45 49 45 53 54 54 51 52 50 46 47 Gold ($/toz) 1161 1249 1334 1221 1219 1258 1337 1340 1327 1267 1238 1157 1192 1234 1231 1267 1246 1260 1260 Baltic Dry Index 711 676 736 994 938 1023 707 675 826 870 1080 1031 913 760 1142 1229 979 861 859 Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg 1 MRV = Most Recent Value. 2 Indexes, 2010 = 100. Produced by DECPG. Number 356 | July 21, 2017