For more information, visit http://www.worldbank.org/prospects September 29, 2017 Taking Stock U.S. Q2 GDP growth was revised up; core PCE inflation slowed in August. The final reading of U.S. Q2 GDP growth came in at 3.1 percent (q/q sa)— the fastest pace of expansion since Q1 2015 (Figure 1). This figure was above market expectations and the previous estimate of 3.0 percent, mainly reflecting a stronger-than-previously estimated increase in private inventory investment. Separately, the U.S. core personal consumption expenditures (PCE) price index rose 1.3 percent (y/y) in August, its slowest pace of increase since October 2015 and below the 1.4 percent rise recorded in July. Euro Area inflation remained stable in September; economic confidence is on the rise . The flash estimate of Euro Area consumer price inflation in September came in at 1.5 percent (y/y), the same as in August. Core inflation—excluding energy, food, alcohol, and tobacco—was estimated at 1.1 percent (y/y), down from 1.2 percent in August. Meanwhile, the Euro Area economic sentiment indicator rose more than expected in September, and reached its highest level since June 2007, with confidence rising among industrial, retail trade, and construction firms. Japan core CPI inflation picked up in August; manufacturing PMI improved in September. Japan’s core consumer price index, which excludes fresh food prices, rose 0.7 percent (y/y) in August, up from a 0.5 percent increase in July, reflecting a sharp increase in the cost of energy and medical care. Meanwhile, the Nikkei-Markit flash Japan manufacturing purchasing managers’ index (PMI) rose from 52.2 in August to 52.6 in September, its highest level since May, reflecting an acceleration in new orders, including new export orders (a reading above 50 indicates expansion). Brent crude oil prices hit a two-year high. Crude oil prices rose, partly due to geopolitical tensions. Brent crude prices, the international benchmark, hit a two-year high of $59.49 per barrel on Tuesday. U.S. crude oil prices also ticked up, following a surprise fall in U.S. domestic crude inventories. West Texas Instrument (WTI), the U.S. marker, increased 2.5 percent from last week, hitting a 5-month high of $52.8 per barrel on Thursday. Nigeria kept interest rates unchanged. The Central Bank of Nigeria (CBN) left its benchmark interest rate unchanged at 14 percent at its September meeting, in line with market expectations. However, in its policy statement, the CBN expressed concerns about the sustained pressure on food prices, noting risks posed by floods and insurgencies in various parts of the country on food production. Figure 1 U.S. GDP expanded at a fast pace in Q2. Figure 2 Brent crude prices hit a two-year high this week. Brent and WIT crude oil price. U.S. GDP growth. Percent, q-o-q annualized US$/bbl Million barrels 6 70 Brent 1.5 WTI 5 U.S. oil inventory (RHS) 60 4 1.4 3 50 2 1.3 1 40 0 1.2 30 -1 -2 20 1.1 Jan-15 Jan-16 Jan-17 Apr-15 Jul-15 Oct-15 Apr-16 Jul-16 Oct-16 Apr-17 Jul-17 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Note: Last observation is 2017Q2. Note: Last observation is September 28, 2017. Source: Bureau of Economic Analysis. Sources: Bloomberg, International Energy Agency. Produced by DECPG. Number 361 | September 29, 2017 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Friday, 22 September - Thursday, 28 September 2017 Upcoming releases: Friday, 29 September - Thursday, 5 October 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Netherland 9/22/17 GDP Q2 3.8 % 2.7% South Korea 10/1/17 CPI SEP 3.7 % France 9/22/17 GDP Q2 1.8 % 1.7 % 1.1 % Indonesia 10/2/17 CPI SEP 3.8% Canada 9/22/17 CPI AUG 1.4 % 1.5 % 1.2 % Thailand 10/3/17 CPI SEP 0.3% Singapore 9/25/17 CPI AUG 0.4 % 0.6% 0.6 % Turkey 10/3/17 CPI SEP 10.7% Spain 9/28/17 CPI SEP 1.8 % 2.2 % 1.6 % Philippines 10/4/17 CPI SEP 3.1 % Germany 9/28/17 CPI SEP 1.8 % 2.1% 1.8 % Netherland 10/5/17 CPI SEP 1.4 % 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 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 1 Industrial Production, sa World 1.8 2.2 2.9 5.5 4.0 5.3 2.0 2.2 3.3 3.8 3.2 3.6 4.2 4.1 4.7 4.4 4.5 - Advanced Economies 0.2 0.2 1.7 3.9 1.5 4.4 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.5 3.2 2.9 3.1 - Emerging Market and Developing Economies 3.5 4.1 4.0 7.1 6.6 6.3 3.8 4.1 4.6 5.0 5.3 5.0 6.1 5.8 6.2 6.0 5.9 - Commodity-exporting EMDE 0.2 1.3 3.3 5.1 5.0 4.8 1.1 1.4 2.2 3.7 3.3 3.5 3.8 4.7 5.7 3.2 4.3 - Other EMDE 5.0 5.3 4.2 8.0 6.8 6.5 4.9 5.2 5.6 5.6 6.1 5.6 6.7 6.1 6.4 6.6 6.3 5.5 East Asia and Pacific 5.8 5.8 5.8 6.1 7.3 6.4 5.5 5.6 5.9 6.0 6.1 6.1 7.3 6.2 6.4 6.5 5.8 5.5 East Asia excl. China 3.5 4.5 4.8 2.6 4.8 1.9 2.2 2.5 4.3 6.1 4.5 4.7 5.5 4.3 5.8 0.6 2.3 - Europe and Central Asia 1.5 1.9 -1.7 9.0 7.0 6.4 0.6 1.5 2.3 2.8 4.4 2.8 4.6 4.5 6.0 4.8 6.7 6.2 Latin America and Caribbean -3.1 -2.6 0.9 0.5 2.5 3.6 -1.6 -2.4 -0.3 1.8 0.9 1.4 0.4 1.3 2.6 1.8 2.3 - Middle East and North Africa 2.8 - 8.8 - - - 4.3 6.5 - - - - - - - - - - South Asia 3.5 5.2 -1.6 6.3 5.3 2.8 3.9 4.4 5.1 2.8 4.2 1.9 5.4 4.6 4.1 0.8 4.1 - Sub-Saharan Africa 0.0 0.8 -4.9 -0.8 -4.3 3.6 -0.2 -0.9 0.9 -1.0 0.4 -2.7 -2.2 -0.5 -1.9 -2.6 -0.2 - Inflation, sa 2 World 1.4 1.3 1.3 1.6 2.4 2.1 1.4 1.5 1.6 1.8 2.3 2.4 2.6 2.3 2.1 1.9 2.0 2.2 Advanced Economies 0.1 0.3 0.4 0.8 1.6 1.4 0.5 0.6 0.7 1.1 1.5 1.8 1.6 1.9 1.5 1.2 1.4 1.4 Emerging Market and Developing Economies 2.5 2.3 2.8 2.5 3.4 3.3 2.9 2.4 2.4 2.6 2.9 3.3 3.5 3.5 3.3 3.0 2.9 3.3 Commodity-exporting EMDE 3.9 3.5 3.2 3.2 3.4 3.4 3.1 2.9 2.9 3.0 3.3 3.4 3.5 3.7 3.6 3.3 3.3 3.7 Other EMDE 1.0 1.1 1.7 1.7 3.1 3.1 1.6 1.6 1.6 1.8 2.6 3.3 3.5 3.2 3.1 2.5 2.5 2.9 East Asia and Pacific 1.2 1.7 2.1 2.3 2.7 2.9 2.2 2.1 2.2 2.5 2.7 3.2 3.4 3.2 3.1 2.5 2.7 3.1 Europe and Central Asia 1.9 0.4 0.5 1.0 2.4 2.3 0.5 0.9 0.9 1.6 2.3 2.5 2.7 2.6 2.3 2.2 2.4 2.6 Latin America and Caribbean 2.7 2.4 3.0 3.2 3.4 3.1 3.1 3.0 3.2 3.2 3.1 3.3 3.2 3.5 3.0 2.7 2.8 3.3 Middle East and North Africa 1.9 2.2 2.3 2.0 2.5 1.8 2.5 1.9 2.0 1.8 2.2 2.5 2.9 2.0 2.0 1.5 1.3 2.0 South Asia 4.5 4.9 5.3 3.9 4.3 4.6 5.0 4.2 3.7 3.7 3.7 4.2 5.0 4.8 5.0 3.9 2.9 3.4 Sub-Saharan Africa 3.6 5.3 5.7 5.5 6.7 6.6 5.8 5.8 4.9 6.5 6.7 6.7 6.8 6.7 6.5 6.5 5.6 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 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Exports, Nominal, US$, sa World -11.6 -3.0 1.4 7.2 20.8 1.2 -0.8 -3.2 5.0 4.0 11.1 7.7 13.0 3.6 11.0 7.5 10.0 - Advanced Economies -11.4 -0.8 0.9 3.8 20.1 -1.4 1.4 -1.6 6.3 5.6 10.3 8.1 10.7 0.8 9.8 6.1 9.4 - Emerging Market and Developing Economies -12.0 -6.6 2.1 13.6 22.0 6.3 -4.3 -5.6 3.0 1.6 12.6 6.9 17.4 9.0 13.1 10.2 11.2 - Commodity-exporting EMDE -24.2 -9.3 7.5 26.1 47.1 -11.5 -1.6 -5.5 7.6 7.8 26.6 19.7 24.4 14.0 20.6 11.3 17.5 - Other EMDE -3.7 -4.6 0.3 9.3 13.5 13.9 -4.9 -5.1 1.8 -0.5 7.7 2.3 14.8 7.2 10.4 9.7 8.9 7.4 East Asia and Pacific -3.5 -6.1 -0.3 10.2 14.6 15.9 -6.8 -5.9 1.8 -2.2 8.9 2.3 15.7 9.0 11.4 9.4 10.6 8.6 Europe and Central Asia -20.7 -6.1 3.8 18.1 36.3 -5.9 -1.1 -3.6 6.5 7.6 22.4 12.3 20.7 5.7 19.5 11.0 11.4 - Latin America and Caribbean -11.9 -2.4 7.8 13.2 29.9 -4.0 2.8 -4.4 10.0 10.9 14.8 12.5 17.3 9.7 11.4 12.2 10.3 - Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - South Asia -4.8 1.6 -18.6 31.6 6.9 -2.1 -3.2 10.6 3.3 0.2 2.9 -0.1 11.3 6.6 -1.7 3.9 17.2 - Sub-Saharan Africa -26.9 -14.8 -2.1 28.7 47.4 -15.7 -2.7 -9.5 0.8 3.3 22.4 25.6 19.8 8.3 14.1 13.4 - - Imports, Nominal, US$, sa World -6.9 -5.2 -20.7 24.3 21.2 15.0 -5.6 -9.7 3.6 -1.6 11.5 5.4 10.4 -6.2 25.4 7.1 20.7 - Advanced Economies -12.6 -3.3 -1.0 1.5 22.2 1.6 -1.7 -4.9 2.6 1.4 9.7 3.5 9.3 1.9 10.2 4.9 10.0 - Emerging Market and Developing Economies -3.3 -6.3 -30.6 40.4 20.6 23.4 -7.8 -12.2 4.2 -3.3 12.6 6.6 11.0 -10.4 34.7 8.5 27.4 - Commodity-exporting EMDE -0.9 -7.1 -38.0 47.0 15.1 32.8 -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 3.0 20.3 40.9 -3.9 0.0 -0.2 5.3 4.3 15.0 22.8 18.8 11.1 17.9 12.5 14.2 11.9 East Asia and Pacific -13.1 -3.6 5.3 22.7 51.5 -11.4 0.1 -0.6 6.0 5.7 17.1 33.7 20.5 12.6 18.0 13.6 15.7 13.4 Europe and Central Asia -20.7 -1.2 -1.5 9.9 42.3 11.2 2.2 1.2 5.9 8.5 20.7 10.0 14.3 7.5 22.7 13.2 25.0 - Latin America and Caribbean -9.9 -7.4 5.3 4.0 27.1 -10.1 -3.3 -8.3 1.6 3.9 11.2 5.3 13.6 -1.3 12.4 6.2 7.3 - Middle East and North Africa 1.4 - - - - - - - - - - - - - - - - - South Asia -13.2 -5.3 14.8 55.5 34.4 9.9 0.4 9.5 11.9 2.7 14.8 21.5 40.5 41.6 30.2 12.4 15.6 16.8 Sub-Saharan Africa -7.6 -13.9 -12.4 -8.4 - - -12.5 -18.0 -9.2 -12.1 - - - - - - - - 1 International Reserves, US$ World -5.9 -1.2 0.4 -3.4 1.7 2.2 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 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 -0.2 -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 - - - -0.1 -1.7 -1.1 - - - - - - - - - Other EMDE -9.3 -5.8 -0.4 -4.6 0.6 2.0 -0.3 -1.2 -2.2 -1.2 0.0 0.3 0.2 0.6 0.9 0.5 0.9 0.6 East Asia and Pacific -11.3 -7.3 -0.7 -4.9 0.4 1.6 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 0.1 0.8 0.8 0.1 0.9 0.5 Europe and Central Asia -6.8 3.7 1.1 -4.3 2.9 3.2 0.1 -0.9 -1.8 -1.7 1.9 0.7 0.3 -0.1 1.3 2.0 1.0 1.2 Latin America and Caribbean -5.3 1.1 1.6 -0.9 0.8 1.4 -0.1 -0.6 -0.6 0.1 0.5 0.4 0.0 0.9 0.1 0.3 0.8 0.5 Middle East and North Africa -17.1 - -2.0 - - - -0.5 -2.6 - - - - - - - - - - South Asia 10.9 3.5 2.7 -3.1 2.1 4.8 1.4 -1.2 -1.6 -0.3 0.6 0.5 1.0 0.8 2.0 1.9 1.3 0.6 Sub-Saharan Africa -12.0 - - - - - - - - - - - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. Produced by DECPG. Number 361 | September 29, 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 1.34 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 2.24 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 0.41 Spreads (basis points) JP Morgan Emerging Markets 415 410 372 369 340 325 361 357 380 370 354 338 329 331 320 325 327 325 314 Asia 224 221 197 197 175 169 191 192 201 198 185 173 166 173 167 166 163 163 157 Europe 348 302 282 283 261 242 273 274 294 282 272 258 253 250 237 240 243 234 230 Latin America & Caribbean 540 537 477 475 445 427 463 453 491 481 463 442 431 431 420 430 435 435 412 Middle East 456 517 508 467 396 362 493 487 475 438 416 396 377 350 353 382 382 382 386 Africa 415 518 461 436 389 386 440 441 444 422 401 387 380 400 376 383 394 378 374 Stock Indices (end of period) Global (MSCI) 399 424 418 424 449 465 418 413 413 424 433 445 449 455 464 465 478 478 485 Advanced Economies ($ Index) 1663 1761 1726 1761 1854 1916 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1961 1960 1992 United States (S&P 500) 2044 2258 2168 2258 2363 2423 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2470 2472 2510 Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1526 1512 1564 Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 19974 19720 20334 Emerging Market and Developing Economies (MSCI) 794 861 903 861 958 1011 903 908 863 861 909 936 958 978 1005 1011 1066 1088 1072 EM Asia 404 419 448 419 474 512 448 444 426 419 443 459 474 484 505 512 538 544 538 EM Europe 244 295 273 295 301 304 273 274 273 295 302 296 301 313 308 304 315 336 328 EM Europe & Middle East 211 248 233 248 252 251 233 232 230 248 253 249 252 259 255 251 261 274 267 EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2752 2873 2884 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 0.85 Japan 121.00 108.80 102.36 109.63 113.63 111.10 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 112.31 109.78 112.57 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 3.18 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 6.66 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 17.64 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 65.51 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 57.92 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 13.52 Memo: U.S. nominal effective rate (index) 114.7 119.7 118.4 122.5 123.4 120.7 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 117.9 116.4 116.0 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 Non-energy 2 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 79 Memo items: Crude oil, average ($/bbl) 51 43 45 49 53 50 45 49 45 53 54 54 51 52 50 46 48 50 55 Gold ($/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 1476 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 361 | September 29, 2017