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U.S. GDP contracts in first quarter


Financial Markets

Oil prices rose on Friday after U.S. crude inventories dropped for a fourth consecutive week. Wildfires in
Canada, which knocked out 10 percent of its oil sands output, also supported prices. Oil saw sharp falls
earlier this week amid a strengthening dollar. Brent crude, the global benchmark, was up $1.87 cents (or
nearly 3 percent) to $64.45 a barrel, while U.S. crude, also known as West Texas Intermediate (WTI),
rose $1.60 (or 2.8 percent) to $59.28.

U.S. Treasury Secretary Jack Lew said that Greece and its creditors need to quickly strike a broad deal
now to address the Greek debt crisis and then worked out the details later. He warned a possible
accident for the global economy without a speedy deal on Greek bailout. Greece is due to pay back
nearly €1.6 billion to the International Monetary Fund in June with the first payment of €300 million due
next Friday. On June 30, Greece’s bailout expires, signifying the country wont’ be able to call on funding
currently available to it.



High Income Economies

U.S. economic activity contracted for the first time in a year in Q1 2015, according to revised data
released by the Commerce Department on Friday. GDP fell by 0.7 percent in Q1 compared to the
previously reported 0.2 percent uptick. The drop came on the heels of a 2.2 percent increase in Q4. The
revised decrease in GDP was still slightly smaller than the 0.8 percent drop expected by economists. A
weaker performance from U.S. exporters due to the stronger dollar, as well as a slower stockpiling of
inventories by companies than first estimated, was largely responsible for the downward revision.

The Canadian economy shrank 0.1 percent (q/q) in Q1, compared to a 0.6 percent growth in Q4. This
was the first contraction since Q2 2011 as domestic demand, business investments and exports declined.

The Greek economy fell into recession in Q1 as the lingering political crisis dampened fragile recovery.
 GDP fell 0.2 percent (q/q sa), after dropping 0.4 percent in Q4, final data from the Hellenic Statistical
Authority showed Friday. The decline was in line with preliminary data published on May 13. It was the
second consecutive quarter of economic contraction, which implies a technical recession.



Developing Economies

Latin America and the Caribbean

Brazil's economy contracted for the first time in three quarters during January to March, preliminary
figures from the statistical office IBGE revealed Friday. Gross domestic product fell by a slower-than-
expected 0.2 percent (q/q) in Q1, after expanding 0.3 percent in Q4, due to contractions in industrial and

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services output. An unexpected surge in agricultural output lifted the total GDP figure above economists'
expectations of a 0.5 percent contraction.

South Asia

India's economic growth improved strongly in Q1, preliminary data from the Central Statistics Office
revealed Friday. Gross domestic product rose 7.5 percent (y/y), exceeding economists' consensus for
7.3 percent expansion. The growth figure for Q4 2014 was also revised down to 6.6 percent from 7.5
percent. For the full year 2014-15 that ended on March 31, growth was 7.3 percent, slightly less than the
7.4 percent estimated in February after a new calculation methodology was introduced.

Sub-Saharan Africa
Tanzania plans to spend 4.4 trillion shillings (US$2 billion) to build new roads and a bus rapid transit
system to unclog traffic in its commercial capital, Dar es Salaam, a senior official said on Wednesday.
 Dar es Salaam, with a population of over 4 million, is one of the fastest-growing cities in sub-Saharan
Africa, but it faces a crippling traffic problem. Plans to ease road congestion in the city include the
construction of fly-overs and bridges, using budgetary allocations from next fiscal year that begins in July.


May 29, 2015



The Global Daily is an informal briefing on global economic and financial developments compiled by the
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variety of macroeconomic topics, covered by the Group, may be found at:
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