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India’s industrial production falls unexpectedly

Financial Markets
Borrowing costs for the Chinese yuan in Hong Kong SAR, China posted record jumps across tenors
ranging up to a year, as suspected intervention from the Chinese central bank drained liquidity in the
offshore yuan market. The overnight yuan Hong Kong Interbank Offered Rate soared 53 percent to 66.82
percent on Tuesday, more than 5 times the previous high reached on Monday, while the one-week rate
tripled to 33.79 percent. The yuan gained as much as 0.7 percent against the dollar in Hong Kong, briefly
erasing its discount to the onshore rate for the first time since October.

Developing-country equities advanced as Russian stocks bounced back from the largest sell-off in nearly
2 years and Chinese financial markets stabilized. The MSCI Emerging Market Index rose 0.4 percent,
after swinging between a decline of as much as 0.6 percent and a rise of 0.5 percent. Russia’s Micex
Index climbed 1 percent after tumbling 3.8 percent yesterday, while China’s Shanghai Composite Index
closed up 0.2 percent after plunging more than 5 percent on Monday.


Advanced Markets
Quantitative easing in the Euro Area continues, with the European Central Bank buying a further €8.7
billion in bonds last week under its public sector purchase program. The Bank’s balance sheet has now
reached almost €2.8 trillion.

Industrial and manufacturing production in the U.K. fell sharply in November, substantially below
expectations. Manufacturing was 0.4 percent lower in November (m/m) in part due to the strength of the
pound, while industrial output was 0.7 percent down (m/m), led by lower oil production in a context of
sliding prices.

Consumer confidence in Japan rose slightly in December, according to an index compiled by the Cabinet
Office. At 42.7, the index remains in pessimistic territory, but was at its highest level since November
2013. The last time the index was above 50 was in February 2006.


Emerging and Frontier Economies
Europe and Central Asia

Consumer prices in Russia increased by 12.9 percent (y/y) in December, less than expected, following a
15.0 percent jump in November. It was the lowest reading since December 2014.


South Asia

Industrial production in India fell 3.2 percent (y/y) in November, the first drop since October 2014 and
badly missing economists’ expectations of a 2.3 percent rise. The manufacturing sector shrank 4.4
percent, while mining output rose 2.3 percent and electricity production went up 0.7 percent.


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Accelerating for the fifth straight month and reaching the highest since September 2014, India’s consumer
prices rose 5.6 percent (y/y) in December, matching expectations. Food inflation was 6.4 percent, up from
6.1 percent in November.


Sub-Saharan Africa

Inflation rate in Ivory Coast rose to 1.3 percent (y/y) in December from 0.8 percent in November. Food
and soft drink cost rose 5.8 percent while housing and utility prices declined 0.2 percent and transport
costs dropped 1.1 percent.




January 12, 2016



The Global Daily is an informal briefing on global economic and financial developments compiled by the
World Bank’s Development Economics Prospects Group. Recent issues, together with analysis of a
variety of macroeconomic topics, covered by the Group, may be found at:
 http://www.worldbank.org/prospects.

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