For more information, visit http://www.worldbank.org/prospects July 14, 2017 Taking Stock U.S. producer and consumer price inflation slowed in June; retail sales fell. The U.S. producer price index (PPI) rose 2.0 percent (y/y) in June, reflecting higher food and services costs, less than the 2.4 percent increase in May. The core PPI— which excludes food and energy prices—increased by 1.9 percent in June, below the 2.1 percent recorded in May. The consumer price index (CPI) rose 1.6 percent (y/y) in June, less than the 1.9 percent increase in May and below the U.S. Federal Reserve’s 2 percent target, while the core CPI held steady at 1.7 percent (y/y) (Figure 1). Separately, U.S. retail sales fell 0.2 percent (m/m) in June, the second consecutive monthly decline, against expectations of a rebound. Excluding autos and gasoline, core retail sales declined 0.1 percent. For Q2 as a whole, retail sales rose 0.2 percent (q/q). Euro Area industrial production rose more than expected in May. Euro Area industrial output rose 1.3 percent (m/m, sa) in May, up from 0.3 percent in April (Figure 2), suggesting a strengthening in economic recovery. Year-on-year, industrial production accelerated from 1.2 percent in April to 4.0 percent in May, with the Euro Area’s largest economies—Germany, France, Italy and Spain—posting notable gains. The stronger-than-expected growth in industrial production was broad- based, and it reflected a large increase in the production of capital and consumer durable goods. Japan core machinery orders contracted further in May. Japan’s core machinery orders—which exclude orders from power utilities and shipping industries—fell 3.6 percent (m/m, sa) in May, the steepest monthly decline since August 2016, after contracting 3.1 percent in April. The May reading, which prompted the government to downgrade the outlook for machinery orders for the first time this year, reflected weaknesses in the service sector. Core orders from the service sector dropped 5.1 percent, due to reduced orders from transportation, telecommunications, and construction industries. China consumer price inflation held steady in June; external trade remained strong. China’s consumer price index (CPI) rose 1.5 percent (y/y) in June, in line with expectations and at the same pace as in May. The core CPI—which excludes food and energy prices—rose 2.2 percent, slightly above the 2.1 percent recorded in May. In U.S. dollar terms, export growth accelerated from 8.7 percent (y/y) in May to 11.3 percent in June. Import growth was higher than expected, picking up from 14.8 percent in May to 17.2 percent in June. Consequently, the trade surplus rose less than expected, from $40.8 billion in May to $42.8 billion in June. EMDE bond sales rose strongly in the first half of 2017. International bond issuance in emerging market and developing economies (EMDE) increased to $287 billion in the first half of this year, up 52 percent from the previous year. At this pace, EMDE bond sales are likely to exceed the record level of $363 billion reached in 2016. Investors’ appetite for EMDE debt seems to have remained firm despite rising U.S. interest rates. Figure 1 U.S. consumer price inflation remained soft in June. Figure 2 Euro Area industrial production picked up in May. U.S. inflation indicators Euro Area industrial production Change in U.S. consumer price index (percent, YoY) Euro Area industrial production (Index, 2010 = 100) 3 110 U.S. CPI 108 2.5 U.S. core CPI 106 2 104 102 1.5 100 1 98 96 0.5 Jan-16 Apr-16 May-16 Jun-16 Jul-16 Oct-16 Jan-17 Apr-17 May-17 Jun-17 Aug-16 Sep-16 Nov-16 Dec-16 Feb-16 Mar-16 Feb-17 Mar-17 94 Jan-10 Dec-10 Nov-11 Oct-12 Sep-13 Aug-14 Jul-15 Jun-16 May-17 Source: Bureau of Labor Statistics. Source: IHS Markit. Produced by DECPG. Number 355 | July 14, 2017 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Friday, 7 July - Thursday, 13 July 2017 Upcoming releases: Friday, 14 July - Thursday, 20 July 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous China 7/9/17 CPI JUN 1.5 % 1.5 % 1.5 % Singapore 7/13/17 GDP Q2 2.7 % Norway 7/10/17 CPI JUN 1.9 % 1.7% 2.1 % Ireland 7/14/17 GDP Q1 7.2 % Hungary 7/11/17 CPI JUN 1.9 % 2.0% 2.1 % United States 7/14/17 CPI JUN 1.9 % Czech Republic 7/12/17 CPI JUN 2.3 % 2.3 % 2.4 % China 7/17/17 GDP Q2 6.9 % France 7/13/17 CPI JUN 0.7 % 0.7 % 0.8 % UK 7/18/17 CPI MAY 2.9 % Spain 7/13/17 CPI JUN 1.5 % 1.5 % 1.9 % South Africa 7/19/17 CPI JUN 5.4 % 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 1.9 2.2 2.4 2.8 5.4 3.6 2.1 1.8 2.4 2.1 2.2 3.3 3.7 3.1 3.5 4.0 3.9 4.2 Advanced Economies 0.2 0.2 0.4 1.7 3.9 1.5 -0.2 -0.4 0.6 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.5 3.0 Emerging Market and Developing Economies 3.5 4.2 4.3 3.9 6.8 5.9 4.3 4.0 4.2 3.8 4.2 4.6 4.9 5.2 4.8 5.8 5.3 5.5 Commodity-exporting EMDE 0.2 1.3 0.8 2.8 4.8 2.9 1.7 2.0 1.3 1.0 1.3 2.3 3.4 3.0 2.4 3.1 4.3 - Other EMDE 5.0 5.3 5.8 4.3 7.7 6.6 5.4 4.8 5.4 4.9 5.2 5.6 5.6 6.1 5.7 6.6 5.6 5.7 East Asia and Pacific 5.8 5.8 7.3 5.5 6.0 7.2 6.2 6.0 6.3 5.5 5.6 5.9 6.0 6.2 6.1 7.3 6.3 6.1 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 3.7 Europe and Central Asia 1.5 2.0 0.6 -2.1 9.8 5.7 2.0 0.2 1.8 0.6 1.5 2.8 2.7 4.4 1.4 4.4 4.4 6.2 Latin America and Caribbean -3.1 -2.8 0.0 0.7 -0.9 0.3 -2.4 -2.2 -2.8 -1.8 -2.6 -0.8 1.1 0.2 0.7 -0.8 -0.1 - 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 4.9 2.0 4.3 2.9 6.6 5.9 5.4 4.5 5.1 5.7 3.0 3.8 2.4 4.4 3.7 - Sub-Saharan Africa 0.1 0.8 6.3 -6.4 -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 -1.7 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 3.3 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 3.1 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 1.5 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 3.4 2.9 3.1 3.1 3.0 3.2 3.2 3.1 3.3 3.2 3.6 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 5.7 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 5.0 3.9 3.6 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 15.2 -0.4 7.9 20.4 -4.2 -6.9 2.8 -0.8 -3.1 5.0 4.0 11.0 7.6 12.9 3.7 9.6 Advanced Economies -11.3 -0.8 15.9 -0.4 4.5 19.1 -2.3 -5.5 5.5 1.4 -1.5 6.3 5.6 10.1 8.0 10.4 0.8 8.2 Emerging Market and Developing Economies -12.0 -6.5 13.9 -0.5 14.6 22.7 -7.1 -9.1 -1.7 -4.4 -5.6 3.0 1.6 12.7 6.9 17.6 9.5 12.5 Commodity-exporting EMDE -24.2 -9.3 16.6 5.2 27.6 48.8 -13.6 -15.1 -1.9 -1.7 -5.6 7.7 7.9 26.8 19.7 24.3 13.9 - Other EMDE -3.8 -4.6 12.9 -2.4 10.1 14.2 -3.1 -5.6 -1.0 -5.0 -5.1 1.8 -0.5 7.8 2.5 15.2 7.8 9.9 East Asia and Pacific -3.5 -6.1 13.6 -2.6 10.9 15.9 -5.4 -6.9 -1.7 -6.9 -6.0 1.7 -2.2 9.1 2.4 16.2 9.7 11.9 Europe and Central Asia -20.7 -6.1 21.8 -1.9 20.6 37.4 -4.2 -8.8 0.7 -1.1 -3.6 6.5 7.7 22.7 12.6 21.1 6.0 - Latin America and Caribbean -11.9 -2.4 9.7 6.7 13.3 31.2 -8.0 -7.5 2.6 2.9 -4.4 10.1 10.9 14.8 12.6 17.3 9.6 11.7 Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - South Asia -4.8 1.6 3.3 -17.6 31.8 6.8 5.1 -4.0 5.9 -3.2 10.7 3.3 0.2 2.9 0.0 11.3 8.3 - 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$, sa World -6.8 -5.2 17.6 -18.2 21.5 20.8 -4.4 -10.9 -6.8 -5.6 -9.6 3.7 -1.6 11.5 5.3 10.4 -6.1 26.1 Advanced Economies -12.5 -3.4 9.4 -2.8 2.4 21.1 -4.6 -8.2 1.7 -1.9 -4.9 2.5 1.4 9.5 3.2 9.0 1.7 8.3 Emerging Market and Developing Economies -3.3 -6.2 22.7 -26.3 34.8 20.7 -4.3 -12.4 -11.6 -7.8 -12.1 4.4 -3.2 12.8 6.6 11.2 -10.3 36.0 Commodity-exporting EMDE -0.9 -7.0 24.4 -32.6 39.6 14.6 -3.9 -12.7 -15.5 -9.8 -14.9 4.2 -5.2 12.0 2.3 8.8 -15.3 - Other EMDE -11.5 -3.3 16.6 0.8 19.8 43.2 -5.7 -11.3 3.5 -0.3 -0.3 5.3 3.7 15.3 22.2 19.9 11.2 17.7 East Asia and Pacific -13.1 -3.6 21.2 3.9 21.8 52.6 -6.7 -10.8 5.6 0.0 -0.7 5.9 5.6 17.1 33.5 20.7 12.6 18.3 Europe and Central Asia -20.7 -1.4 13.2 -3.9 7.3 46.0 0.3 -9.7 8.8 1.4 0.8 5.8 6.3 21.9 8.3 13.3 7.1 - Latin America and Caribbean -9.8 -7.4 6.3 3.0 5.2 27.5 -9.1 -15.5 1.5 -3.3 -8.4 1.6 3.9 11.3 5.3 13.9 -1.2 14.6 Middle East and North Africa 1.5 - - - - - - - - - - - - - - - - - South Asia -13.2 -5.3 5.5 8.8 58.7 34.0 -6.5 -14.9 -9.4 0.4 9.4 11.9 2.7 14.8 21.5 40.4 41.4 29.4 Sub-Saharan Africa -7.6 - - - - - - - - - - - - - - - - - International Reserves, US$ 1 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 1.2 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 355 | July 14, 2017 Financial Markets 1 2016 2017 2016 2017 MRV 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 2.36 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 0.55 Spreads (basis points) JP Morgan Emerging Markets 415 410 372 369 340 325 387 367 361 357 380 370 354 338 329 331 320 325 328 Asia 224 221 197 197 175 169 210 190 191 192 201 198 185 173 166 173 167 166 166 Europe 348 302 282 283 261 242 290 282 273 274 294 282 272 258 253 250 237 240 246 Latin America & Caribbean 540 537 477 475 445 427 496 473 463 453 491 481 463 442 431 431 420 430 433 Middle East 456 517 508 467 396 362 540 492 493 487 475 438 416 396 377 350 353 382 385 Africa 415 518 461 436 389 386 494 448 440 441 444 422 401 387 380 400 376 383 400 Stock Indices (end of period) Global (MSCI) 399 424 418 424 449 465 414 417 418 413 413 424 433 445 449 455 464 465 465 Advanced Economies ($ Index) 1663 1761 1726 1761 1854 1916 1713 1720 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1916 United States (S&P 500) 2044 2258 2168 2258 2363 2423 2170 2171 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2426 Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1376 1390 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1533 Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16556 16887 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 20140 Emerging Market and Developing Economies (MSCI) 794 861 903 861 958 1011 879 894 903 908 863 861 909 936 958 978 1005 1011 1018 EM Asia 404 419 448 419 474 512 431 442 448 444 426 419 443 459 474 484 505 512 515 EM Europe 244 295 273 295 301 304 264 269 273 274 273 295 302 296 301 313 308 304 305 EM Europe & Middle East 211 248 233 248 252 251 227 232 233 232 230 248 253 249 252 259 255 251 252 EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2359 2402 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2615 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 0.88 Japan 121.00 108.80 102.36 109.63 113.63 111.10 104.09 101.31 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 114.23 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 3.26 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 6.80 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 17.88 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 64.53 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 60.25 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 13.45 Memo: U.S. nominal effective rate (index) 114.7 119.7 118.4 122.5 123.4 120.7 118.9 117.8 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 118.9 1 MRV = Most Recent Value. Commodity Prices 1 2016 2017 2016 2017 MRV 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 73 Memo items: Crude oil, average ($/bbl) 51 43 45 49 53 50 44 45 45 49 45 53 54 54 51 52 50 46 46 Gold ($/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 979 861 820 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 355 | July 14, 2017