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 Daily Economic News – April 24, 2014


AUTHORS                 Derek Chen (x-81602)                      Eung Ju Kim (x-85804)
                        Gerard Kambou (x-32386)



Growing Ukraine worries weigh on European stocks…European
Central Bank hints at bond-buying program if needed…Turkey’s
central bank keeps key interest rates unchanged


Financial Markets

European stocks fell for a second day on Thursday amid signs of escalating tensions in Ukraine, with
German stocks leading the pull back. The Stoxx Europe 600 Index edged down 0.4% in afternoon
trading, erasing earlier gains of as much as 0.8%, with Germany’s DAX index and Austria’s ATX index
falling by 1.2% and 0.9% respectively. National benchmark stock gauges declined in 14 of 17 western-
European markets that opened today (Ireland’s market was closed for a national holiday). German and
Austrian companies are among the most exposed in Western Europe to geopolitical conflicts between
Russia and Ukraine.

Hungary’s currency weakened and the country’s government bond rallied after the central bank pleaded
to reduce the country’s high reliance on foreign financing. The forint depreciated as much as 0.7%
against the dollar, while the yield on the benchmark 3-year local government debt fell 18 basis points to
4.33%, the lowest level since February 4. Foreign ownership of Hungary’s domestic debt reached a
record 5.2 trillion forint in July 2013 and stood at 4.76 trillion forint as of April 18, according to the Debt
Management Agency.

High Income Economies
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In the week ended April 19 , U.S. first time jobless claims climbed more-than-expected to 329,000, an
increase of 24,000 from the previous week's revised figure of 305,000. The 4-week moving average was
316,750, an increase of 4,750 from the previous week's unrevised average of 312,000. Continuing
claims, a reading on the number of people receiving ongoing unemployment assistance, fell to 2.68
                                  th
million in the week ended April 12 from the previous week's revised level of 2.74 million.

European Central Bank President Mario Draghi announced that any worsening of the euro area inflation
outlook may prompt the bank to conduct a broad-based asset buying scheme. Other policy tools
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considered include further lowering of the interest rate corridor, including a negative deposit rate as well
as a further extension of the fixed-rate full allotment procedure, and new liquidity injections via its liquidity
operations.

According to the advanced estimate, South Korea's GDP expanded 3.9% (y/y) in Q1 2014, unchanged
from Q4 2013. Private consumption grew 3.6%, while government spending and investment increased
2.7% and 6.2%, respectively. In addition, exports surged 4.6%, while imports grew 3.8%. On a quarterly
annualized basis, GDP increased 3.8% (q/q saar) in Q1, following Q4 2013 ’s increase of 3.6%.

Developing Economies

East Asia and Pacific
China’s leading economic index continued to rise in March, moving up 1.2% (m/m) following a 0.9%
(m/m) increase in February and a 0.3% (m/m) gain in January. The coincident index was also up, rising
1.1% after remaining flat in February and declining 1.3% in January.

Europe and Central Asia
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At its meeting of April 24 2014, Turkey’s central bank decided to keep the one-week repo rate, its key
policy rate, unchanged at 10.0% for the third consecutive meeting, and reiterated that it would maintain
the tight monetary policy stance until the inflation outlook improves significantly. The central bank also left
unchanged the overnight lending rate at 12.0% and the overnight borrowing rate at 8.0%; while the late
liquidity lending rate was lowered to 13.5% from 15.0%.

Sub-Saharan Africa
South Africa’s producer price inflation rose for the fourth consecutive month and at a fast pace in March,
accelerating to 8.2% (y/y) from 7.7% (y/y) in February, the fastest increase since 2013. Month-on-month,
producer prices rose 1.3% compared to February, higher than the expected 0.9% increase.




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