For more information, visit http://www.worldbank.org/prospects April 7, 2017 Taking Stock U.S. nonfarm job growth slowed in March; service PMI fell. U.S. non-farm payrolls expanded by 98,000 in March, well below market expectation (Figure 1). February’s non-farm payrolls were revised down to 219,000 from 235,000. The labor force participation rate remained unchanged at 63 percent. The unemployment rate fell from 4.7 percent in February to 4.5 percent in March, its lowest level since May 2007. Average hourly earnings rose 2.7 percent (y/y), compared with 2.8 percent in February. Separately, the U.S. Institute for Supply Management (ISM) service purchasing managers’ index (PMI) fell from 57.6 in February to 52.6 in March, pointing to a slowdown in the pace of growth in the service sector (a reading above 50 indicates expansion). The fall in the service PMI was partly attributed to uncertainty over future government policies. Euro Area unemployment fell to an eight-year low in February; composite PMI hit a six-year high in March. Unemployment in the Euro Area fell by 140,000 in February, pushing the unemployment rate down from 9.6 percent in January to 9.5 percent in February—the lowest since May 2009—with marked variations among member countries (Figure 2). Meanwhile, the final reading of the Euro Area’s composite PMI for March came in at 56.4, slightly below the flash estimate of 56.7, but still the highest reading since 2011, driven by higher employment and new orders. Japan wage growth remained sluggish in February; service PMI strengthened to a 19-month high in March. Labor cash earnings growth in Japan edged up from 0.3 percent (y/y) in January to 0.4 percent (y/y) in February. Real cash earnings growth—which takes inflation into account—came in at zero percent, raising doubts about the ability of the Japanese economy to hit the Bank of Japan’s 2 percent inflation target. Meanwhile, Japan’s service PMI rose from 51.3 in February to 52.9 in March—the highest since August 2015—suggesting that demand for services continued to firm. The Caixin China composite PMI pointed to a slowdown in Chinese business activity in March. The Caixin China composite PMI—an independent gauge of China’s private sector activity—fell from 52.6 in February to 52.2 in March, its weakest reading since September 2016. The fall in the Caixin composite PMI reflected softer growth in new orders, with service providers registering the slowest increase in new business. Employment expanded at a modest pace at service companies but continued to decline in manufacturing firms. South Africa’s sovereign credit rating was downgraded to “junk” status. S&P Global Ratings and Fitch downgraded South Africa’s foreign exchange sovereign credit rating to sub-investment level, amid heightened political risk. Fitch also cut the rating on local currency debt to sub-investment grade. The rating downgrades reflected concerns that a cabinet reshuffle, which saw the ousting of the respected Finance Minister, will result in a change in the direction of economic policy. Figure 1 U.S. non-farm job growth slowed in March. Figure 2 The Euro Area unemployment rate was 9.5 percent in February, with significant variations among member countries. Labor market indicators Euro Area unemployment rates Percent 1-month net change, Percent thousands 30 23.1 5.6 Nonfarm payroll employment… 400 18.0 Unemployment rate (LHS) 350 20 5.2 300 12.9 11.5 10.0 10.0 250 9.5 9.3 8.7 8.6 8.3 7.8 4.8 200 7.0 6.6 10 6.1 5.8 5.7 5.3 4.1 3.9 150 4.4 100 50 0 Euro Area Latvia Ireland Malta Cyprus Italy Netherlands Germany Portugal Belgium Greece Spain France Finland Slovakia Lithuania Slovenia Luxembourg Estonia Austria 4 0 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Source: U.S. Deaprtment of Commerce. Source: Dealogic, World Bank staff estimates. 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Number 341 | April 7, 2017 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Fri, 31 March - Thu, 6 April 2017 Upcoming releases: Fri, 7 April - Thu, 13 April 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Indonesia 4/3/17 CPI MAR 3.6% 4% 3.8% Denmark 4/10/17 CPI MAR 1.0 % Turkey 4/3/17 CPI MAR 11.3% 10.1% Hungary 4/11/17 CPI MAR 2.9 % South Korea 4/3/17 CPI MAR 2.2 % 1.8 % 1.9 % UK 4/11/17 CPI MAR 2.3 % Philippines 4/4/17 CPI MAR 3.4 % 3.1 % 3.3 % Poland 4/11/17 CPI MAR 2.2 % Thailand 4/4/17 CPI MAR 0.8 % 1.5 % 1.4 % China 4/11/17 CPI MAR 0.8 % Netherland 4/6/17 CPI MAR 1.1 % 1.8 % Germany 4/13/17 CPI MAR 2.2 % Activity and Inflation (Percent change y-o-y, except quarterly data on industrial production, which are percent change q-o-q, annualized) 2016 2016 2017 2015 2016 Q1 Q2 Q3 Q4 Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb 1 Industrial Production, sa World 1.9 2.0 1.8 2.2 2.7 5.2 1.3 1.5 1.7 1.9 1.6 2.2 1.9 2.0 3.3 3.6 3.0 - Advanced Economies 0.2 0.1 0.3 0.2 1.7 4.0 -1.1 -0.2 -0.4 -0.3 -0.5 0.5 0.2 0.2 1.9 2.5 1.2 - Emerging Market and Developing Economies 3.6 3.9 3.2 4.2 3.7 6.4 3.7 3.2 3.7 4.0 3.6 3.9 3.5 3.8 4.6 4.7 4.9 - Commodity-exporting EMDE 0.2 1.2 0.7 1.5 2.4 4.4 -0.4 -0.7 0.6 1.7 2.1 1.3 0.9 1.3 2.1 3.3 3.0 - Other EMDE 5.1 4.9 4.2 5.2 4.1 7.2 5.4 4.8 5.0 4.9 4.2 4.9 4.5 4.7 5.6 5.2 5.6 5.6 East Asia and Pacific 5.8 5.9 4.9 7.0 5.5 6.0 6.3 5.6 6.0 6.2 6.1 6.3 5.5 5.6 5.9 6.0 6.1 6.3 East Asia excl. China 3.5 4.8 4.8 6.1 3.9 2.8 3.3 2.9 6.0 7.0 7.0 6.1 2.3 2.6 4.3 6.3 4.3 - Europe and Central Asia 1.5 2.0 1.2 1.8 -2.9 9.2 1.6 2.7 2.6 2.1 0.2 1.8 0.5 1.5 2.6 2.6 4.2 0.9 Latin America and Caribbean -3.1 -2.9 -3.2 0.0 0.6 -0.9 -4.1 -4.7 -3.9 -2.3 -2.1 -2.8 -2.0 -2.7 -0.9 1.1 0.1 - Middle East and North Africa 2.8 - 3.2 -3.4 8.4 - 2.7 2.0 2.4 2.9 3.7 3.1 4.3 6.5 - - - - South Asia 4.1 1.1 3.3 3.8 0.0 0.3 2.0 -0.4 1.5 1.0 -0.5 0.7 0.4 -0.5 5.6 0.6 3.1 - Sub-Saharan Africa 0.1 0.9 0.2 8.0 -6.1 -3.0 -1.3 2.5 4.1 4.3 1.5 0.0 -0.1 -1.0 0.6 -0.7 1.2 - Inflation, sa 2 World 1.4 1.3 1.4 1.6 1.4 1.6 1.3 1.7 1.7 1.6 1.6 1.4 1.4 1.5 1.6 1.8 2.3 2.4 Advanced Economies 0.1 0.4 0.3 0.2 0.4 0.8 0.1 0.2 0.1 0.4 0.4 0.4 0.5 0.6 0.7 1.1 1.5 1.8 Emerging Market and Developing Economies 2.3 2.3 2.6 2.9 2.8 2.5 2.6 3.1 2.8 2.6 2.9 2.8 2.9 2.5 2.4 2.7 2.9 3.4 Commodity-exporting EMDE 3.8 3.5 3.9 3.6 3.4 3.3 4.3 4.0 3.5 3.8 3.7 3.3 3.1 2.9 3.0 3.2 3.5 3.8 Other EMDE 1.0 1.1 1.0 1.8 1.6 1.7 0.9 1.8 1.7 1.5 1.8 1.5 1.4 1.5 1.6 1.7 2.5 3.2 East Asia and Pacific 1.0 1.6 1.1 1.8 2.4 2.4 1.4 1.9 1.8 1.9 2.0 1.9 2.4 2.3 2.4 2.4 3.0 3.5 Europe and Central Asia 1.7 0.4 0.5 0.1 0.3 0.8 0.2 0.1 0.1 0.1 0.6 0.3 0.3 0.6 0.7 1.4 2.2 2.4 Latin America and Caribbean 2.7 2.4 2.7 3.5 3.0 3.1 2.5 3.6 3.4 3.3 2.9 3.2 3.1 2.9 3.2 3.2 2.9 3.4 Middle East and North Africa 1.9 2.2 2.5 2.3 2.3 1.9 2.6 2.4 2.2 2.4 2.3 2.1 2.5 1.9 2.0 1.8 2.2 2.6 South Asia 4.5 4.9 3.8 5.3 5.3 3.9 4.0 4.6 5.2 5.6 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 Sub-Saharan Africa 3.7 5.3 5.2 5.2 5.7 5.9 4.7 5.3 4.8 5.6 5.5 5.9 5.9 5.7 6.2 6.7 6.9 6.7 1Industrial 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 2016 2017 2015 2016 Q1 Q2 Q3 Q4 Mar Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Exports, Nominal, US$, sa World -11.5 -3.0 -12.0 13.8 0.1 7.3 -3.9 -2.7 -3.0 -4.1 -6.7 2.9 -0.7 -3.3 4.9 4.0 10.4 - Advanced Economies -11.3 -0.8 -5.1 15.3 0.2 3.9 -3.7 -0.1 -0.5 -2.4 -5.3 5.6 1.5 -1.8 6.1 5.7 9.3 - Emerging Market and Developing Economies -12.0 -6.4 -22.3 11.1 0.1 14.0 -4.3 -7.1 -7.2 -6.9 -8.9 -1.6 -4.4 -5.6 2.9 1.6 12.6 6.4 Commodity-exporting EMDE -24.3 -8.6 -24.5 16.5 2.2 26.8 -15.8 -13.1 -10.9 -12.8 -14.5 -1.5 -1.6 -5.6 7.8 8.1 26.6 - Other EMDE -3.7 -4.6 -19.9 9.2 -0.6 9.7 3.7 -3.2 -4.5 -3.1 -5.6 -1.0 -4.9 -4.9 1.8 -0.4 8.0 2.5 East Asia and Pacific -3.5 -6.1 -23.7 9.8 -0.7 10.4 5.0 -4.9 -6.1 -5.4 -6.9 -1.7 -6.8 -5.8 1.8 -2.1 9.4 3.1 Europe and Central Asia -20.7 -6.2 -19.7 19.2 -0.6 18.8 -13.2 -8.0 -10.6 -4.2 -8.6 0.6 -1.3 -3.9 6.1 7.2 21.6 - Latin America and Caribbean -11.9 -2.4 -5.5 5.9 7.7 14.9 -9.4 -5.5 -2.0 -8.1 -7.6 2.6 2.8 -4.5 10.3 11.0 14.5 11.8 Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - South Asia -4.8 1.7 6.3 4.3 -18.3 32.7 -0.2 1.2 -0.3 5.1 -4.0 5.8 -3.2 10.8 3.4 0.2 2.4 - Sub-Saharan Africa -27.6 - -37.9 - - - -21.4 -13.1 - - - - - - - - - - Imports, Nominal, US$, sa World -12.6 -4.1 -12.9 9.3 -0.9 6.9 -7.5 -6.0 -2.4 -5.3 -9.6 1.8 -1.9 -4.1 2.9 1.9 11.3 - Advanced Economies -12.5 -3.4 -8.8 7.9 -2.4 1.8 -6.6 -4.0 -1.9 -4.6 -8.1 1.7 -1.9 -5.0 2.3 1.1 9.3 - Emerging Market and Developing Economies -12.7 -5.1 -20.2 12.2 2.2 17.7 -9.1 -9.5 -3.3 -6.3 -12.1 2.0 -2.0 -2.3 4.3 3.7 15.3 23.2 Commodity-exporting EMDE -14.9 -8.9 -18.4 0.7 1.1 15.0 -13.8 -13.8 -9.1 -8.4 -15.4 -1.1 -6.3 -7.1 1.7 2.2 15.1 - Other EMDE -11.5 -3.5 -21.4 16.4 2.6 18.6 -6.5 -7.7 -0.6 -5.7 -11.2 3.5 -0.3 -0.5 5.1 3.5 15.5 25.4 East Asia and Pacific -13.1 -3.8 -24.8 18.8 5.9 21.5 -5.6 -8.4 0.5 -6.7 -10.9 5.7 -0.3 -0.7 6.0 5.2 17.2 34.3 Europe and Central Asia -20.8 -1.3 1.6 12.5 -2.9 6.8 -3.7 -3.6 -0.7 0.3 -9.6 8.9 1.5 0.8 5.9 6.3 20.9 - Latin America and Caribbean -9.8 -7.4 -15.6 4.7 4.1 4.1 -14.7 -9.7 -6.2 -8.8 -15.5 1.6 -3.3 -8.5 1.5 3.8 11.2 4.4 Middle East and North Africa -6.0 - - - - - - - - - - - - - - - - - South Asia -13.2 -5.4 -26.2 4.1 11.5 50.6 -18.1 -17.9 -8.5 -5.9 -13.8 -9.1 1.1 7.9 10.2 2.2 14.8 23.1 Sub-Saharan Africa -7.4 - - - - - - - - - - - - - - - - - 1 International Reserves, US$ World -5.9 -1.1 0.7 0.8 0.4 -3.3 1.0 0.7 -0.7 0.8 0.3 -0.1 0.2 -1.1 -1.7 -0.6 0.7 0.2 Advanced Economies 0.6 4.4 3.7 1.7 1.4 -2.5 1.5 1.0 -0.6 1.4 0.5 0.1 0.9 -0.7 -1.5 -0.2 1.5 0.1 Emerging Market and Developing Economies -9.9 -4.8 -1.2 0.2 -0.2 -3.9 0.8 0.5 -0.8 0.5 0.2 -0.2 -0.2 -1.4 -1.8 -0.9 0.1 0.3 Commodity-exporting EMDE -11.1 - -1.0 -0.7 -0.2 - 0.6 0.3 -0.9 0.0 0.4 -0.5 -0.1 -1.7 -1.1 - - - Other EMDE -9.1 -5.7 -1.2 0.7 -0.3 -4.5 0.9 0.7 -0.8 0.7 0.1 -0.1 -0.2 -1.2 -2.1 -1.2 0.0 0.3 East Asia and Pacific -11.3 -7.3 -1.8 0.3 -0.7 -4.9 0.7 0.5 -1.0 0.9 0.0 -0.3 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 Europe and Central Asia -6.3 4.4 4.1 2.7 1.2 -3.9 1.6 1.5 -0.2 1.4 0.5 0.5 0.3 -0.8 -1.7 -1.4 2.1 0.7 Latin America and Caribbean -5.3 1.1 0.1 0.7 1.6 -0.9 0.7 0.8 -0.2 0.1 1.6 0.0 -0.1 -0.6 -0.6 0.1 0.5 0.4 Middle East and North Africa -17.1 - -3.6 -2.6 -2.0 - -0.1 -0.5 -0.8 -1.3 -0.7 -0.8 -0.5 -2.6 - - - - South Asia 11.6 3.5 1.0 2.0 3.3 -2.8 2.3 1.9 -0.8 0.8 1.4 0.6 1.4 -1.0 -0.9 -0.9 -0.1 0.5 Sub-Saharan Africa -12.0 - -2.0 -1.9 - - 0.9 0.4 -1.7 - - - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. 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Number 341 | April 7, 2017 Financial Markets 1 2016 2016 2017 MRV 2015 2016 Q1 Q2 Q3 Q4 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.13 0.40 0.37 0.37 0.39 0.45 0.37 0.36 0.38 0.39 0.40 0.40 0.41 0.41 0.55 0.66 0.66 0.79 0.91 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 0.62 0.64 0.79 0.92 0.63 0.65 0.65 0.70 0.81 0.85 0.88 0.91 0.98 1.03 1.04 1.13 1.16 EURIBOR 3-months -0.02 -0.26 -0.19 -0.26 -0.30 -0.31 -0.25 -0.26 -0.27 -0.29 -0.30 -0.30 -0.31 -0.31 -0.32 -0.33 -0.33 -0.33 -0.33 US 10-yr Treasury yield 2.12 1.84 1.92 1.75 1.56 2.12 1.79 1.80 1.64 1.48 1.56 1.63 1.74 2.12 2.50 2.44 2.42 2.47 2.36 German Bund, 10 yr 0.54 0.14 0.32 0.12 -0.07 0.18 0.17 0.16 0.01 -0.09 -0.07 -0.05 0.03 0.22 0.30 0.34 0.32 0.39 0.26 Spreads (basis points) JP Morgan Emerging Markets 415 410 478 419 372 369 421 418 418 387 367 361 357 380 370 354 338 329 332 Asia 224 221 264 227 197 197 224 223 233 210 190 191 192 201 198 185 173 166 171 Europe 348 302 339 305 282 283 308 305 303 290 282 273 274 294 282 272 258 253 248 Latin America & Caribbean 540 537 645 551 477 475 559 552 541 496 473 463 453 491 481 463 442 431 435 Middle East 456 517 555 538 508 467 539 530 545 540 492 493 487 475 438 416 396 377 345 Africa 415 518 626 548 461 436 546 552 546 494 448 440 441 444 422 401 387 380 395 Stock Indices (end of period) Global (MSCI) 399 424 395 399 418 424 403 403 399 414 417 418 413 413 424 433 445 449 448 Advanced Economies ($ Index) 1663 1761 1638 1653 1726 1761 1671 1675 1653 1713 1720 1726 1697 1712 1761 1792 1839 1854 1847 United States (S&P 500) 2044 2258 2051 2099 2168 2258 2065 2097 2099 2170 2171 2168 2139 2199 2258 2279 2364 2363 2357 Europe (S&P Euro 350) 1474 1475 1352 1339 1388 1475 1379 1399 1339 1376 1390 1388 1377 1388 1475 1463 1501 1547 1543 Japan (Nikkei 225) 18817 19302 16555 15576 16450 19302 16407 17235 15576 16556 16887 16450 17050 18604 19302 19035 19342 18909 18597 Emerging Market and Developing Economies (MSCI) 794 861 821 834 903 861 840 807 834 879 894 903 908 863 861 909 936 958 963 EM Asia 404 419 404 407 448 419 405 400 407 431 442 448 444 426 419 443 459 474 476 EM Europe 244 295 272 265 273 295 288 268 265 264 269 273 274 273 295 302 296 301 308 EM Europe & Middle East 211 248 230 225 233 248 243 225 225 227 232 233 232 230 248 253 249 252 257 EM Latin America & Caribbean 1830 2341 2121 2269 2381 2341 2292 2038 2269 2359 2402 2381 2608 2330 2341 2516 2600 2611 2639 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.90 0.90 0.91 0.89 0.90 0.93 0.88 0.89 0.89 0.90 0.89 0.89 0.91 0.93 0.95 0.94 0.94 0.94 0.94 Japan 121.00 108.80 115.23 107.96 102.36 109.63 109.57 108.97 105.34 104.09 101.31 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.42 Emerging and Developing Economies Brazil 3.33 3.49 3.91 3.51 3.25 3.28 3.56 3.54 3.42 3.28 3.21 3.25 3.18 3.33 3.35 3.20 3.10 3.13 3.12 China 6.29 6.65 6.54 6.53 6.67 6.84 6.48 6.53 6.59 6.68 6.65 6.67 6.74 6.85 6.92 6.89 6.87 6.90 6.90 Egypt 7.70 10.12 8.04 8.87 8.87 14.71 8.87 8.86 8.87 8.87 8.87 8.88 9.25 16.34 18.56 18.68 17.01 17.76 18.06 India 64.14 67.19 67.50 66.91 66.94 67.39 66.49 66.93 67.29 67.18 66.91 66.74 66.73 67.60 67.86 68.06 67.01 65.83 64.88 Russia 61.34 67.06 74.84 65.84 64.61 62.95 66.54 65.96 65.01 64.43 64.93 64.48 62.57 64.25 62.03 59.76 58.42 57.83 56.44 South Africa 12.77 14.71 15.83 15.01 14.07 13.92 14.62 15.36 15.05 14.40 13.79 14.01 13.92 13.96 13.88 13.60 13.17 12.95 13.79 Memo: U.S. nominal effective rate (index) 114.7 119.7 120.3 117.5 118.4 122.5 116.5 117.8 118.2 118.9 117.8 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.8 1 MRV = Most Recent Value. Commodity Prices 1 2016 2016 2017 MRV 2015 2016 Q1 Q2 Q3 Q4 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Energy 2 65 55 43 56 57 64 51 57 59 57 58 58 64 59 68 69 69 65 65 Non-energy 2 82 80 76 81 82 83 80 81 83 82 82 81 81 83 84 85 87 85 85 2 Agriculture 89 89 85 91 91 90 88 91 94 92 91 90 90 90 89 91 91 89 89 2 Metals and minerals 68 64 59 62 64 71 63 61 61 64 65 64 65 73 75 76 79 79 75 Memo items: Crude oil, average ($/bbl) 51 43 33 45 45 49 41 46 48 44 45 45 49 45 53 54 54 51 52 Gold ($/toz) 1161 1249 1181 1260 1334 1221 1242 1261 1276 1337 1340 1327 1267 1238 1157 1192 1234 1231 1231 Baltic Dry Index 711 676 363 613 736 994 608 623 608 707 675 826 870 1080 1031 913 760 1142 1223 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 341 | April 7, 2017