For more information, visit http://www.worldbank.org/prospects September 8, 2017 Taking Stock U.S. factory orders dropped in July; non-manufacturing activity rebounded in August. U.S. factory goods orders fell 3.3 percent (m/m) in July, the largest monthly drop since August 2014, following a 3.2 percent increase in June. The decline was in line with expectations and reflected a slump in demand for transport equipment. Orders for non-defense capital goods excluding aircrafts—a measure of business spending plans—rose 1 percent (m/m) in July, above earlier estimates. Meanwhile, the Institute for Supply Management (ISM) non-manufacturing Purchasing Managers’ Index (PMI) came in at 55.3 in August, reversing a decline to 53.9 in July (Figure 1; a reading above 50 indicates expansion). Most of the non- manufacturing industries surveyed reported growth, with employment and new business orders expanding at a fast pace. Euro Area GDP growth strengthened in Q2; ECB kept policy unchanged. Euro Area Q2 GDP growth was confirmed at 0.6 percent (q/q, sa), up from 0.5 percent in Q1 (Figure 2). The pickup in growth in Q2 mainly reflected an increase in household spending and gross fixed capital formation. Meanwhile, at its September meeting, the European Central Bank (ECB) kept interest rates and its bond-purchase program unchanged, in line with expectations. The main refinancing rate was left at zero percent, and the deposit rate at minus 0.4 percent. Bond purchases will continue at the pace of 60 billion Euros per month until the end of December 2017, but could be gradually phased out after that. The stronger-than-expected performance of the Euro Area economy combined with prospects of monetary policy normalization contributed to a significant appreciation of the Euro in recent months. Japan’s Q2 GDP growth was revised down; services PMI eased in August. Japan’s Q2 GDP growth was revised to 0.6 percent (q/q), below the preliminary estimate of 1 percent but up from the 0.4 percent growth in Q1. The downward revision was mostly attributed to lower-than-expected capital expenditures. Separately, Japan’ service sector PMI fell from 52 in July to 51.6 in August, amid a slowdown in new business orders and lower business confidence. China’s foreign reserves edged up in August; trade surplus fell as exports slowed. China's foreign exchange reserves increased by USD 11 billion to a ten-month high of USD 3.09 trillion at the end of August, slightly below market expectations of USD 3.10 trillion. Meanwhile, China's trade surplus fell to USD 41.99 billion in August from USD 48.60 billion in July. Exports grew 5.5 percent (y/y) in August, down from 7.2 percent in July, while imports grew 13.3 percent (y/y), down from 11 percent in the previous month. Nigeria and South Africa exited recession in Q2. South Africa’s GDP grew 2.5% (q/q, saar) in Q2, following a contraction of 0.6 percent in Q1. The higher-than-expected Q2 reading was mainly driven by strong growth in the agricultural sector. Meanwhile, the recovery in Nigeria was softer than expected. GDP grew by 0.6 percent (y/y) in Q2, following a contraction of 0.9 percent in Q1, helped by a recovery in the oil sector. Figure 1 U.S. non-manufacturing activity rebounded. Figure 2 Euro Area GDP growth strengthened in Q2. GDP growth U.S. ISM non-manufacturing PMI. Index, >50=expansion Percent, q/q sa 58 1.2 57 1.0 0.8 56 0.6 55 0.4 54 0.2 53 0.0 52 -0.2 -0.4 51 -0.6 Aug-16 Sep-16 Nov-16 Dec-16 Jan-17 May-17 Jun-17 Aug-17 Oct-16 Feb-17 Mar-17 Apr-17 Jul-17 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 Q1-14 Q3-14 Q1-15 Q3-15 Q1-16 Q3-16 Q1-17 Source: Institute for Supply Management Sources: Haver Analytics Produced by DECPG. Number 358 | September 8, 2017 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Friday, 1 September - Thursday, 7 September 2017 Upcoming releases: Friday, 8 September - Thursday, 14 September 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Actual Forecast Previous Brazil 9/1/17 GDP Q2 0.3 % -0.4 % China 9/8/17 CPI AUG 1.4 % Hungary 9/5/17 GDP Q2 3.2 % 3.2 % 4.2 % Turkey 9/11/17 GDP Q2 5.3 % 4.7 % South Africa 9/5/17 GDP Q2 1.1 % 1.0 % Czech Republic 9/11/17 CPI AUG 2.6 % 2.5 % Australia 9/5/17 GDP Q2 1.8 % 1.3% 1.7 % Poland 9/11/17 CPI AUG 2.6 % 1.7 % Eurozone 9/7/17 GDP Q2 2.3 % 2.2 % 1.9 % France 9/14/17 CPI AUG 0.7 % Japan 9/7/17 GDP Q2 2.5 % 0.85 % 1.0 % United States 9/14/17 CPI AUG 1.9 % 1.7 % 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 Q3 Q4 Q1 Q2 June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July 1 Industrial Production, sa World 1.8 2.2 3.0 5.4 3.9 5.5 2.0 1.8 2.4 2.1 2.2 3.3 3.8 3.2 3.5 4.2 4.1 4.7 4.5 4.3 Advanced Economies 0.2 0.2 1.8 3.8 1.5 4.2 -0.2 -0.4 0.6 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.4 3.1 2.9 3.0 Emerging Market and Developing Economies 3.5 4.2 4.2 7.1 6.4 6.6 4.2 4.0 4.2 3.8 4.1 4.7 5.0 5.3 4.8 6.0 5.8 6.3 6.1 - Commodity-exporting EMDE 0.2 1.4 3.2 5.4 4.0 6.5 1.6 2.1 1.4 1.1 1.4 2.5 3.6 3.3 2.7 3.7 4.8 6.1 3.4 - Other EMDE 5.0 5.3 4.5 7.8 6.9 6.5 5.3 4.8 5.3 4.9 5.2 5.6 5.6 6.1 5.6 6.7 6.1 6.4 6.8 6.1 East Asia and Pacific 5.8 5.8 5.7 6.1 7.4 6.6 6.2 6.0 6.3 5.5 5.6 5.9 6.0 6.1 6.1 7.3 6.3 6.4 6.6 5.6 East Asia excl. China 3.5 4.5 4.1 3.0 5.0 3.1 6.8 6.8 5.9 2.2 2.5 4.3 6.1 4.5 4.8 5.6 4.6 6.0 0.9 - Europe and Central Asia 1.5 2.1 -1.4 9.1 5.6 8.1 1.9 0.5 1.8 0.7 1.6 2.8 2.7 4.4 1.5 4.4 4.4 6.5 4.9 5.8 Latin America and Caribbean -3.1 -2.6 0.4 0.6 2.7 4.0 -2.4 -2.3 -2.7 -1.6 -2.4 -0.3 1.7 0.9 1.4 0.4 1.3 2.5 1.9 - Middle East and North Africa 2.8 - 8.8 - - - 2.9 3.7 3.1 4.3 6.5 - - - - - - - - - South Asia 3.5 5.3 1.7 4.8 5.0 2.7 6.0 5.3 4.6 3.9 4.4 5.2 2.8 4.2 1.8 5.4 4.5 3.8 2.3 - Sub-Saharan Africa 0.0 0.8 -4.9 -0.9 -4.4 3.8 4.4 1.5 0.1 -0.2 -0.9 0.9 -1.0 0.4 -2.8 -2.3 -0.5 -1.9 -2.6 - Inflation, sa 2 World 1.4 1.3 1.3 1.6 2.4 2.1 1.6 1.5 1.3 1.4 1.5 1.6 1.8 2.3 2.4 2.6 2.3 2.1 1.9 2.1 Advanced Economies 0.1 0.3 0.4 0.8 1.6 1.4 0.4 0.4 0.4 0.5 0.6 0.7 1.1 1.5 1.8 1.6 1.9 1.5 1.2 1.4 Emerging Market and Developing Economies 2.5 2.3 2.8 2.5 3.4 3.3 2.6 2.8 2.7 2.9 2.4 2.4 2.6 2.9 3.4 3.5 3.5 3.3 3.0 3.0 Commodity-exporting EMDE 3.9 3.5 3.2 3.2 3.4 3.4 3.6 3.5 3.2 3.1 2.9 2.9 3.0 3.3 3.4 3.5 3.7 3.6 3.3 3.4 Other EMDE 1.0 1.1 1.7 1.7 3.1 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 2.5 2.5 East Asia and Pacific 1.2 1.7 2.1 2.3 2.7 2.9 1.8 2.0 1.9 2.2 2.1 2.2 2.5 2.7 3.2 3.4 3.2 3.1 2.5 2.7 Europe and Central Asia 1.9 0.4 0.5 1.0 2.4 2.3 0.4 1.2 0.5 0.5 0.9 0.9 1.5 2.3 2.5 2.7 2.6 2.3 2.2 2.4 Latin America and Caribbean 2.7 2.4 3.0 3.2 3.4 3.1 3.3 2.9 3.1 3.1 3.0 3.2 3.2 3.1 3.3 3.2 3.6 3.0 2.7 2.9 Middle East and North Africa 1.9 2.2 2.3 1.9 2.5 1.8 2.3 2.3 2.1 2.5 1.9 2.0 1.8 2.2 2.5 2.9 2.0 2.0 1.5 1.4 South Asia 4.5 4.9 5.3 3.9 4.3 4.6 5.6 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 5.0 4.8 5.0 3.9 2.9 Sub-Saharan Africa 3.6 5.3 5.7 5.5 6.7 6.6 5.3 4.9 5.9 5.8 5.8 4.9 6.5 6.7 6.7 6.8 6.7 6.5 6.5 5.6 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 Q3 Q4 Q1 Q2 June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July Exports, Nominal, US$, sa World -11.6 -3.0 1.0 7.4 20.8 1.5 -4.4 -6.7 2.8 -0.7 -3.2 5.0 4.0 11.1 7.7 13.0 3.7 11.0 7.5 10.7 Advanced Economies -11.4 -0.8 0.5 4.1 20.0 -1.4 -2.5 -5.4 5.5 1.4 -1.6 6.3 5.6 10.2 8.1 10.7 0.8 9.7 6.0 - Emerging Market and Developing Economies -12.0 -6.6 1.8 13.8 22.4 6.9 -7.5 -8.8 -1.7 -4.4 -5.6 3.0 1.6 12.6 6.9 17.5 9.2 13.3 10.4 12.4 Commodity-exporting EMDE -24.2 -9.3 6.5 27.0 47.5 -11.7 -13.7 -14.8 -2.0 -1.6 -5.5 7.6 7.8 26.7 19.7 24.4 13.9 20.7 11.2 - Other EMDE -3.7 -4.6 0.2 9.2 13.9 14.9 -3.6 -5.3 -0.9 -5.0 -5.1 1.8 -0.5 7.7 2.4 15.0 7.5 10.6 10.0 9.3 East Asia and Pacific -3.5 -6.1 0.1 9.8 15.2 16.4 -5.8 -6.5 -1.7 -6.9 -6.0 1.8 -2.2 9.0 2.3 15.9 9.3 11.6 9.7 10.8 Europe and Central Asia -20.7 -6.1 1.1 20.2 36.4 -4.7 -4.6 -8.8 0.8 -1.1 -3.6 6.5 7.6 22.5 12.3 20.7 5.8 19.6 11.1 - Latin America and Caribbean -11.9 -2.4 7.4 13.4 30.0 -3.6 -8.2 -7.3 2.5 2.8 -4.4 10.0 10.9 14.7 12.5 17.4 9.7 11.5 12.3 10.7 Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - - - South Asia -4.8 1.6 -18.1 30.9 6.5 -1.9 5.0 -3.9 5.8 -3.2 10.6 3.3 0.2 2.9 -0.1 11.3 6.6 -1.7 3.8 - Sub-Saharan Africa -26.9 -14.9 -1.8 27.2 48.7 -15.9 -19.2 -22.3 -12.9 -2.7 -9.7 0.5 3.1 22.4 25.6 19.8 8.3 14.0 13.1 - Imports, Nominal, US$, sa World -6.9 -5.2 -19.7 23.9 21.4 13.4 -4.5 -10.8 -6.9 -5.6 -9.6 3.6 -1.6 11.5 5.4 10.4 -6.2 25.3 7.1 22.8 Advanced Economies -12.6 -3.3 -1.5 2.0 21.9 1.5 -4.8 -8.0 1.7 -1.8 -4.9 2.6 1.4 9.7 3.4 9.3 1.8 10.0 5.0 - Emerging Market and Developing Economies -3.3 -6.3 -29.0 39.3 21.2 21.0 -4.4 -12.4 -11.7 -7.9 -12.2 4.2 -3.3 12.6 6.6 11.0 -10.3 34.7 8.4 28.5 Commodity-exporting EMDE -0.9 -7.2 -36.3 45.7 15.8 29.8 -4.0 -12.9 -15.6 -10.0 -15.1 3.9 -5.4 11.9 2.2 8.8 -15.4 39.7 7.3 - Other EMDE -11.5 -3.2 3.8 19.6 41.1 -4.4 -5.9 -10.8 3.2 -0.1 -0.2 5.3 4.3 15.0 22.6 18.8 11.0 17.9 12.4 13.8 East Asia and Pacific -13.1 -3.6 6.8 21.2 51.6 -11.8 -7.2 -10.6 5.7 0.0 -0.7 6.0 5.7 17.2 33.5 20.5 12.6 18.0 13.6 15.8 Europe and Central Asia -20.7 -1.1 -3.0 10.9 42.0 11.1 0.8 -8.7 7.6 2.2 1.2 6.0 8.5 20.6 9.9 14.2 7.5 22.5 12.7 - Latin America and Caribbean -9.9 -7.4 4.5 4.5 27.0 -9.9 -9.3 -14.9 1.1 -3.3 -8.3 1.7 3.9 11.2 5.3 13.6 -1.4 12.4 6.2 7.9 Middle East and North Africa 1.4 - - - - - - - - - - - - - - - - - - - South Asia -13.2 -5.3 14.6 55.6 36.1 8.7 -6.5 -14.2 -9.4 0.3 9.4 11.9 2.7 14.8 21.6 40.5 41.7 30.2 12.3 14.9 Sub-Saharan Africa -7.6 -13.9 -12.0 -8.3 - - -13.3 -14.7 -11.6 -12.5 -18.0 -9.1 -12.1 - - - - - - - 1 International Reserves, US$ World -5.9 -1.2 0.4 -3.4 1.7 2.2 0.9 0.3 -0.1 0.2 -1.1 -1.7 -0.6 0.7 0.3 0.7 0.8 1.0 0.5 0.8 Advanced Economies 0.6 4.4 1.4 -2.5 3.4 2.9 1.4 0.5 0.1 0.9 -0.7 -1.5 -0.2 1.4 0.4 1.5 1.2 1.2 0.5 0.7 Emerging Market and Developing Economies -10.0 -4.9 -0.3 -4.0 0.5 1.7 0.6 0.1 -0.2 -0.2 -1.4 -1.8 -0.9 0.1 0.3 0.1 0.5 0.8 0.5 0.8 Commodity-exporting EMDE -11.1 - -0.2 - - - 0.0 0.4 -0.5 -0.1 -1.7 -1.1 - - - - - - - - Other EMDE -9.3 -5.8 -0.4 -4.6 0.6 2.0 0.9 0.0 -0.1 -0.3 -1.2 -2.2 -1.2 0.0 0.3 0.2 0.6 0.9 0.5 0.9 East Asia and Pacific -11.3 -7.3 -0.7 -4.9 0.4 1.6 0.9 0.0 -0.3 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 0.1 0.8 0.8 0.1 0.9 Europe and Central Asia -6.8 3.7 1.1 -4.3 2.9 3.2 2.0 0.1 0.9 0.1 -0.9 -1.8 -1.7 1.9 0.7 0.3 -0.1 1.3 2.0 1.0 Latin America and Caribbean -5.3 1.1 1.6 -0.9 0.8 1.4 0.1 1.6 0.0 -0.1 -0.6 -0.6 0.1 0.5 0.4 0.0 0.9 0.1 0.3 0.8 Middle East and North Africa -17.1 - -2.0 - - - -1.3 -0.7 -0.8 -0.5 -2.6 - - - - - - - - - South Asia 10.9 3.5 2.7 -3.1 2.1 4.8 1.1 1.0 0.3 1.4 -1.2 -1.6 -0.3 0.6 0.5 1.0 0.8 2.0 1.9 1.4 Sub-Saharan Africa -12.0 - - - - - - - - - - - - - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. Produced by DECPG. Number 358 | September 8, 2017 Financial Markets 1 2016 2017 2016 2017 MRV 2015 2016 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.13 0.40 0.39 0.45 0.70 0.95 0.40 0.41 0.41 0.55 0.66 0.66 0.79 0.91 0.90 1.04 1.15 1.15 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 0.85 0.88 0.91 0.98 1.03 1.04 1.13 1.16 1.19 1.26 1.31 1.31 1.32 EURIBOR 3-months -0.02 -0.26 -0.30 -0.31 -0.33 -0.33 -0.30 -0.31 -0.31 -0.32 -0.33 -0.33 -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 1.63 1.74 2.12 2.50 2.44 2.42 2.47 2.29 2.29 2.18 2.32 2.21 2.04 German Bund, 10 yr 0.54 0.14 -0.07 0.18 0.35 0.30 -0.05 0.03 0.22 0.30 0.34 0.32 0.39 0.25 0.36 0.28 0.55 0.42 0.31 Spreads (basis points) JP Morgan Emerging Markets 415 410 372 369 340 325 361 357 380 370 354 338 329 331 320 325 327 325 319 Asia 224 221 197 197 175 169 191 192 201 198 185 173 166 173 167 166 163 163 165 Europe 348 302 282 283 261 242 273 274 294 282 272 258 253 250 237 240 243 234 228 Latin America & Caribbean 540 537 477 475 445 427 463 453 491 481 463 442 431 431 420 430 435 435 422 Middle East 456 517 508 467 396 362 493 487 475 438 416 396 377 350 353 382 382 382 388 Africa 415 518 461 436 389 386 440 441 444 422 401 387 380 400 376 383 394 378 368 Stock Indices (end of period) Global (MSCI) 399 424 418 424 449 465 418 413 413 424 433 445 449 455 464 465 478 478 480 Advanced Economies ($ Index) 1663 1761 1726 1761 1854 1916 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1961 1960 1965 United States (S&P 500) 2044 2258 2168 2258 2363 2423 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2470 2472 2465 Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1526 1512 1515 Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 19974 19720 19331 Emerging Market and Developing Economies (MSCI) 794 861 903 861 958 1011 903 908 863 861 909 936 958 978 1005 1011 1066 1088 1090 EM Asia 404 419 448 419 474 512 448 444 426 419 443 459 474 484 505 512 538 544 543 EM Europe 244 295 273 295 301 304 273 274 273 295 302 296 301 313 308 304 315 336 338 EM Europe & Middle East 211 248 233 248 252 251 233 232 230 248 253 249 252 259 255 251 261 274 275 EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2752 2873 2953 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.90 0.90 0.90 0.93 0.94 0.91 0.89 0.91 0.93 0.95 0.94 0.94 0.94 0.93 0.91 0.89 0.87 0.85 0.83 Japan 121.00 108.80 102.36 109.63 113.63 111.10 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 112.31 109.78 108.33 Emerging and Developing Economies Brazil 3.33 3.49 3.25 3.28 3.14 3.21 3.25 3.18 3.33 3.35 3.20 3.10 3.13 3.14 3.20 3.30 3.20 3.15 3.10 China 6.29 6.65 6.67 6.84 6.89 6.86 6.67 6.74 6.85 6.92 6.89 6.87 6.90 6.89 6.88 6.81 6.77 6.67 6.49 Egypt 7.70 10.12 8.87 14.71 17.82 18.10 8.88 9.25 16.34 18.56 18.68 17.01 17.76 18.09 18.10 18.11 17.92 17.75 17.67 India 64.14 67.19 66.94 67.39 66.97 64.48 66.74 66.73 67.60 67.86 68.06 67.01 65.83 64.52 64.46 64.45 64.44 63.97 64.05 Russia 61.34 67.06 64.61 62.95 58.67 57.17 64.48 62.57 64.25 62.03 59.76 58.42 57.83 56.53 56.88 58.10 59.72 59.42 56.95 South Africa 12.77 14.71 14.07 13.92 13.24 13.21 14.01 13.92 13.96 13.88 13.60 13.17 12.95 13.46 13.25 12.91 13.15 13.25 12.80 Memo: U.S. nominal effective rate (index) 114.7 119.7 118.4 122.5 123.4 120.7 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 117.9 116.4 114.9 1 MRV = Most Recent Value. Commodity Prices 1 2016 2017 2016 2017 MRV 2015 2016 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2 Energy 65 55 57 64 68 64 58 64 59 68 69 69 65 67 64 60 62 65 65 2 Non-energy 82 80 82 83 86 82 81 81 83 84 85 87 85 83 83 82 83 84 84 2 Agriculture 89 89 91 90 91 88 90 90 90 89 91 91 89 88 89 87 88 87 87 2 Metals and minerals 68 64 64 71 78 74 64 65 73 75 76 79 79 75 73 72 76 83 82 Memo items: Crude oil, average ($/bbl) 51 43 45 49 53 50 45 49 45 53 54 54 51 52 50 46 48 50 52 Gold ($/toz) 1161 1249 1334 1221 1219 1258 1327 1267 1238 1157 1192 1234 1231 1267 1246 1260 1237 1283 1283 Baltic Dry Index 711 676 736 994 938 1023 826 870 1080 1031 913 760 1142 1229 979 861 906 1144 1250 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 358 | September 8, 2017