Global Monthly January 2017 Overview Table of Contents • Global growth is estimated to have slowed in 2016 to a post Monthly Highlights .............................................. 2 -crisis low of 2.3 percent, as global trade stalled, investment Special Focus ....................................................... 6 Key Prospects Group Publications .......................... 8 decelerated, and policy uncertainty increased. Recent World Bank Working Papers...................... 8 • According to the World Bank’s January 2017 Global Recent World Bank Reports .................................. 8 Economic Prospects, global growth is projected to recover to 2.7 Table A: Major Data Releases ............................... 8 percent in 2017, mainly reflecting receding obstacles to Table B: Activity and Inflation.............................. 9 activity in commodity-exporting economies. Table C: Trade and Finance ................................. 9 Table D: Financial Markets ............................... 10 • Downside risks still dominate the outlook and are Table E: Commodity Prices ................................. 10 associated with heightened policy uncertainty, protectionist pressures, and potential financial market disruptions. Investment growth in EMDEs Chart of the Month • Investment growth in emerging market and developing economies (EMDEs) has slowed sharply since 2010, and was significantly below long-term averages in 2015-16. • This deceleration has been most pronounced in the largest emerging markets and commodity-exporting EMDEs, but has spread to the majority of EMDEs. • A protracted period of sluggish investment could further set back potential growth by slowing capital accumulation and Sources: Haver Analytics; World Bank. Note: Includes 28 EMDEs with available quarterly data. Long-term averages start in productivity. 1991 for EMDEs and are based on annual data. Last observation is for Q2 2016. Special Focus: The U.S. Economy in the World • Developments in the U.S. economy, the world’s largest, can have far-ranging global effects. • A surge in U.S. growth—whether due to expansionary fiscal policies or other factors—could provide a significant boost to the global economy. • In contrast, lingering uncertainty about the course of U.S. economic policies or more restrictive trade policies could have adverse effects for global activity. e Global Monthly is a publication of the Global Macroeconomics Team of the Prospects Group in the Development Economics Vice Presidency. is edition presents key messages of the January 2017 Global Economic Prospects, released on January 9. Prepared by Marc Stocker with research assistance from Peter Davis Williams. visit: http://www.worldbank.org/en/research/brief/economic-monitoring January 2017 Monthly Highlights FIGURE 1A Global growth post-crisis low. According to the Global growth in 2016: a post- World Bank’s January 2017 Global Economic Prospects (GEP), global growth in 2016 edged down to 2.3 percent in 2016—the weakest performance since the global nancial crisis—amid stalling global goods trade, weak investment, and heightened policy uncertainty (Figure 1.A). e deceleration in global activity re ected weakening growth in major advanced economies and continued stagnation among commodity-exporting emerging market and developing economies (EMDEs). During the second half of the year, commodity prices recovered, while global GDP and trade growth regained momentum. However, a rapid rise in U.S. bond yields and appreciation of U.S. dollar toward the end FIGURE 1B U.S. 10-year bond yields around 2016 of the year led to a notable tightening of nancing conditions for elections and mid- 2013 Taper Tantrum EMDEs—and, in some cases, substantial portfolio out ows. e increase in U.S. long-term interest rates since early November has closely mirrored that observed during the Taper Tantrum in mid- 2013 (Figure 1.B). Unlike the Taper Tantrum, however, the recent increase mostly re ected rising in ation expectations and prospects of strengthening growth in the United States, which could partially o set the detrimental impact of higher borrowing costs for EMDEs. Global growth in 2017: moderate recovery projected. Global growth is expected to increase to 2.7 percent in 2017, mainly supported by stronger growth in EMDEs, as headwinds in FIGURE 1C Growth in advanced economies commodity exporters gradually diminish and domestic demand in commodity importers remains robust. In advanced economies, growth is projected to recover modestly to 1.8 percent in 2017 (from 1.6 percent in 2016), although the range of possible outcomes has notably widened after the electoral outcome in the United States and the United Kingdom’s decision to leave the European Union. Baseline forecasts for the United States point to a pickup in growth to 2.2 percent in 2017, from a disappointing 1.6 percent in 2016 (Figure 1.C). However, these projections do not incorporate the potential e ects of policy proposals by the new U.S. administration, as their scope is still highly uncertain. Sources: Bloomberg, World Bank. Fiscal stimulus, if implemented, could result in stronger U.S. A., C. Shaded area indicates forecasts. Aggregate growth rates calculated using constant 2010 U.S. dollars GDP weights. growth than currently predicted (See Special Focus). However, B. Day 0 refers to May 22, 2013 for the Taper Tantrum and November 8, 2016 for the U.S. elections. Last observation is January 24, 2016. some other policy changes, or persistent policy uncertainty, could 2 January 2017 dampen U.S. and international growth prospects. In the Euro FIGURE 2A Policy rate expectations Area and Japan, supportive monetary policy will continue to stimulate growth in 2017, which is expected to reach 1.5 percent and 0.9 percent, respectively. Growth in the United Kingdom is predicted to slow signi cantly this year to 1.2 percent, from 2.0 percent in 2016, as uncertainty negatively a ects investment and higher in ation curtails consumer spending. In January, Prime Minister May emphasized that the United Kingdom would likely exit the EU single market to regain control of immigration and trade policies. To smooth the exit process, the government will seek transitional arrangements beyond the two-year negotiating period. FIGURE 2B GDP growth in EMDEs Global trends in 2017: rising trade, interest rates, and commodity prices. Global trade growth is expected to recover moderately, from 2.5 percent in 2016 to 3.6 percent in 2017, supported by prospects of stronger import demand from large emerging markets and some advanced economies. However, the pace of trade growth remains constrained by weak global investment and stalled trade liberalization. Growing uncertainty about the direction of trade policies is of particular concern at present. Capital ows to EMDEs are projected to post a modest recovery in 2017, provided that growth prospects in commodity exporters improve and the normalization of U.S. monetary policy is very gradual, as expected (Figure 2.A). Oil prices are forecast to FIGURE 2C Share of EMDEs with investment stabilize at an average of $55 per barrel (bbl) in 2017, up from growth below its long-term average $43/bbl in 2016 - the lowest annual average level in 12 years. Metals and mineral prices are expected to rise by about 10 percent on an annual average basis in 2017, while agriculture prices are projected to remain broadly unchanged this year. EMDEs in 2017: narrowing divergences between commodity exporters and importers. EMDE growth is expected to accelerate to 4.2 percent in 2017 and to an average of 4.7 percent in 2018-19 (Figure 2.B). e divergence in growth performance between commodity exporters and importers is on track to narrow this year, although investment growth is expected to Sources: Bloomberg, Haver Analytics, International Monetary Fund, World Bank. remain subdued in both groups, following the trend of previous A. Market expectations are derived from overnight indexed swap rates. Historical policy rates are for the effective fed funds (United States), EONIA (Euro Area), and overnight call rate (Japan). Shaded area indicates forecast. Last observation years (Figure 2.C). In addition, the outlook for EMDE regions is January 24, 2016. B. Shaded area indicates forecasts. Aggregate growth rates and contributions with large numbers of commodity exporters remains mixed. calculated using constant 2010 U.S. dollars GDP weights. C. Long-term averages are country-specific for 1990-2008. 3 January 2017 Growth in Latin America and the Caribbean, and in Europe and FIGURE 3A Investment growth in China Central Asia, is expected to accelerate in 2017, mainly re ecting a bottoming out in activity in Brazil and Russia. Growth in the Middle East and North Africa will recover modestly, bene ting from higher oil prices. While growth should also pick up in Sub- Saharan Africa, the improvement is notably weaker than previously expected, as some commodity exporters struggle to adjust to past deterioration in their terms of trade. Growth forecasts for Nigeria and Angola, the two largest oil exporters in that region, have been signi cantly downgraded, re ecting both external and domestic headwinds. EMDE regions with substantial numbers of commodity-importing economies—East Asia and the Paci c, and South Asia—are projected to continue FIGURE 3B GDP growth in LICS to experience solid growth. In China, growth is projected to moderate to 6.5 percent in 2017, with investment growth slowing and increasingly supported by policy-induced infrastructure spending (Figure 3.A). Growth in India is expected to recover to 7.6 percent in scal year 2017/18, following a temporary slowdown associated with the withdrawal of a large volume of currency in circulation. Low- Low-income countries in 2017: adjusting. Growth in low- income countries (LICs) remained relatively subdued in 2016 at 4.7 percent. However, their external environment is expected to improve gradually, with commodity prices stabilizing and global FIGURE 3C Global policy uncertainty trade regaining some momentum. Growth in LICs is expected to recover to 5.6 percent in 2017. Growth will be substantially weaker in oil exporters than in metals exporters, while remaining strong in most commodity importers, partly supported by large public investment (Figure 3.B). However, fragile countries will see a less vigorous recovery over the forecast horizon, as political uncertainty and security challenges continue to hinder private investment. Risks to the forecast: still tilted to the downside. ere is substantial uncertainty around baseline projections for global Sources: Economic Policy Uncertainty, Haver Analytics, World Bank. growth. e main downside risks to the global outlook include A. State-owned and holding refers to either state-owned enterprises or enterprises whose shares are owned by both public and private sectors. prolonged periods of heightened policy uncertainty, which 2016YTD refers to November 2016 data. B. Grey shaded areas denote forecast period. already reached historical highs in 2016 (Figure 3.C), as well as C. Global policy uncertainty as measured in Davis (2016). Based on the frequency of articles in domestic newspapers mentioning economic policy uncertainty. 6-month moving average. Last observation is November 2016. potential nancial market disruptions amid tighter global 4 January 2017 nancing conditions and renewed U.S. dollar appreciation. A FIGURE 4A Impact of a 10-percent rise in U.S. number of events could trigger the realization of downside risks. EPU on EMDE investment ese include electoral outcomes in some large economies that further contribute to policy uncertainty, as well as monetary policy actions by major central banks that result in sharp swings in EMDE borrowing costs. A climate of mounting protectionist tendencies could undermine the expected recovery in global trade, while a prolonged period of elevated policy uncertainty in the United States or other large economies could weigh on investment growth, particularly in EMDEs (Figure 4.A). In turn, weak investment could adversely a ect productivity growth, which has slowed considerably since the global nancial crisis (Figure 4.B). However, scal stimulus in major economies— FIGURE 4B Labor productivity growth including in the United States—could lead to stronger near-term growth and thus represent an upside risk to the forecast. growth- Policy priorities: growth -enhancing mix. In advanced economies, low or negative real equilibrium interest rates constrain the e ectiveness of monetary policy and may warrant more supportive scal policies. In EMDEs, nding an appropriate balance between scal adjustment, measures to reduce vulnerabilities, and growth-oriented reforms aimed at raising human capital and physical infrastructure should be a priority. Policies that boost domestic sources of long-term growth—critically, long-term investment and productivity—need FIGURE 4C Global poverty rate with income per capita growth equal to 1990-2008 average to be pursued. Investing in human and physical capital will help narrow unmet investment gaps in skills and infrastructure. ese policies could be reinforced by e orts to further international integration, such as those that support growth in EMDE services trade and that create an environment to maximize the bene ts of foreign direct investment. Measures to support stronger growth and reduce income inequality will have to be undertaken jointly to overcome extreme poverty. If income per capita continued to grow at the weak pace observed in 2015, extreme poverty would remain signi cantly above the World Bank’s 3 percent target by 2030. In a scenario where growth stabilizes around its long-term Sources: Conference Board, World Bank. average (1990-08), the poverty reduction goal would only be A. Solid lines indicate the median impulse responses from a vector autoregression model. Dotted lines indicate 16-84 percent confidence intervals. attainable if there is a sustained reduction in income inequality B. Productivity measured as real GDP (in constant USD) per hour worked. C. Assumes overall income per capita growth equal to the 1990-2008 average in each country. In the “constant inequality” scenario, income per capita growth of (Figure 4.C). the bottom 40 percent is the same as that of the mean population. In “falling / rising inequality” scenarios, income of the bottom 40 percent is 2 percentage point higher / lower than that of the mean population. 5 January 2017 Special Focus: The U.S. Economy in the FIGURE 5A Size of major economies World e importance of the U.S. economy. Developments in the U.S. economy, because of its size and international linkages, are bound to have substantial implications for the global economy. A special focus section of the January 2017 Global Economic Prospects explores potential spillovers from changes in U.S. growth, monetary and scal policies, and persistent uncertainty in nancial markets and economic policies. e United States is the world’s single largest economy, accounting for 22 percent of global GDP, 12 percent of global trade, and 35 percent of global stock market capitalization (Figure 5.A). It is the largest export destination for one- fth of the world’s countries, and for more FIGURE 5B Export destinations of EMDE regions than half of EMDEs in Latin America and the Caribbean and South Asia. It is also the primary export market for several countries in other EMDE regions, especially in East Asia and Paci c (Figure 5.B). Baseline forecasts and risks. e outcome of the U.S. elections has made macroeconomic projections more uncertain. In the absence of concrete legislative proposals, current World Bank forecasts do not incorporate policy changes suggested by the new U.S. administration. As a result, U.S. growth is predicted to increase modestly to 2.2 percent in 2017, and to reach 2.1 percent in 2018. While the overall impact of U.S. policy changes cannot be assessed at the current juncture, the isolated e ect of some individual proposals can be analyzed. FIGURE 5C U.S. growth spillovers U.S. tax policy changes. Fiscal proposals put forward by the new U.S. administration include cuts in the statutory corporate income tax rate (from 35 to 15 percent), and personal income tax rates (by around 2.5 percentage points on average). If fully implemented, these measures could—without consideration of any other policy changes —raise U.S. GDP growth forecasts to 2.2-2.5 percent in 2017 and 2.5-2.9 percent in 2018. e upper bound of the range assumes that tax cuts are fully implemented in the second quarter of 2017, and monetary policy does not react to the change in scal policy. e lower bound of the range assumes both delayed implementation to the rst quarter of 2018 and a tightening of monetary policy in reaction to changes in scal policy. In the case where monetary policy reacts to a more Sources: Bank for International Settlements, Bloomberg, Federal Reserve Board of Governors, International Monetary Fund, World Bank. rapid closing of the output gap, interest rates are estimated to A. Liabilities are international investment positions. Trade is the sum of exports and imports of goods. Average share for 2010-15, except for liabilities (2010-14). increase by an additional 60 basis points after four quarters, and B. Percent of total exports of each EMDE region. “Other AEs” stands for other advanced economies. by up to 100 basis points after eight quarters. e revenue loss for C. Impulse responses from a vector autoregression for 22 advanced economies (AEs) and 19 EMDEs for 1998Q1-2016Q2. Bars represent medians, and error bars 16-84 percent confidence bands. 6 January 2017 the government would increase the budget de cit by around 2.4 FIGURE 6A U.S. policy uncertainty spillovers on percentage points of GDP after eight quarters. GDP growth Other U.S. policy changes. e new U.S. administration has also signaled measures to stimulate infrastructure investment, while suggesting sizable cuts in non-defense spending. Substantial federal spending cuts could o set the positive impact of corporate and personal income tax cuts reported above. Other policy proposals include changes to trade agreements, import tari s, and border tax adjustments. Should these proposals lead to higher import costs in the United States or retaliatory measures by trading partners, they could have detrimental e ects for both the United States and the global economy. U.S. growth and policy spillovers. Stronger U.S. growth— whether due to expansionary scal policies or other reasons— FIGURE 6B U.S. policy uncertainty spillovers on would support global activity. A 1-percentage-point increase in investment growth U.S. growth could, after one year, boost growth by 0.8 percentage point in other advanced economies, and by 0.6 percentage point in EMDEs (Figure 5.C). In contrast, a more rapid tightening of U.S. monetary policy could have signi cant cross-border e ects, including for EMDE currencies and capital ows. Further U.S. dollar appreciation could exacerbate nancial stability concerns in some economies with elevated U.S.-dollar denominated liabilities. U.S. uncertainty spillovers. Even in the absence of U.S. policy changes, heightened uncertainty driven by nancial market volatility or ambiguity about the direction and scope of policies could discourage investors that base their decisions about long- FIGURE 6C Role of foreign multinational corpora- term investments on stable nancing conditions and predictable tions in the United States policies. A sustained 10-percent increase in U.S. policy uncertainty could, after one year, reduce U.S. output growth by about 0.15 percentage point, EMDE output growth by 0.2 percentage point (Figure 6.A), and EMDE investment growth by 0.6 percentage point (Figure 6.B). Spillovers from the world to the United States. e U.S. economy is also a ected by its linkages with the rest of the world. Much global value chain activity is conducted through U.S. multinational corporations and their a liates abroad. U.S. multinationals account for a sizable share of U.S. output and labor productivity growth, and their presence in nancial markets is large. In turn, foreign multinationals operating in the United Sources: Bureau of Economic Analysis, World Bank. States provide a considerable share of U.S. sales, trade, and A.B. Impulse responses from a vector autoregression for 22 advanced economies (AEs) and 19 EMDEs for 1998Q1-2016Q2. Bars represent medians, employment (Figure 6.C). As a result, growth setbacks and error bars 16-84 percent confidence bands. C. Share of multinational corporations in U.S. sales, exports and imports of originating in other economies can reduce activity in the United goods and employment. “Sales” indicates sales of multinational corporations in gross output of U.S. private sector industries. Data covers 2010-2013. States. 7 January 2017 Key Prospects Group Publications Global Economic Prospects - January 2017: Weak Investment in Uncertain Times Commodity Markets Outlook - January 2017: Investment Weakness in Commodity Exporters Commodity Markets Outlook - October 2016: OPEC in Historical Context Commodity Markets Outlook - July 2016: From Energy Prices to Food Prices: Moving in Tandem Global Economic Prospects - June 2016: Divergences and Risks Recent World Bank Working Papers Are Automation and Trade Polarizing Developing Country Labor Markets, Too? A Difficult Relationship: Declining (but Productive) FDI Flows in Turkey Services in the European Union: What Kind of Regulatory Policies Enhance Productivity? Mining and Economic Development: Did China’s WTO Accession Affect African Local Economic Development? Sovereign Wealth Funds and Long-term Investments in Sub-Saharan Africa Pro-Growth Equity: A Policy Framework for the Twin Goals Demographic Change and Development: A Global Typology Grow, Invest, Insure: A Game Plan to End Extreme Poverty by 2030 Does Mobile Money Use Increase Firms’ Investment? Evidence from Enterprise Surveys in Kenya, Uganda, Tanzania Does Input Trade Liberalization Affect Firms’ Foreign Technology Choice? Recent World Bank Reports Doing Business 2017: Equal Opportunity for All TABLE A: Major Data Releases (Percent, y-o-y) (Percent y-o-y) Recent and upcoming releases: Dec 23, 2016– Jan 24, 2017 Upcoming releases: Jan 24, 2017 - Feb 23, 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Netherland 12/23/16 GDP Q3 2.4 % 2.4 % 1.8 % South Korea 1/24/17 GDP Q4 2.6 % France 12/23/16 GDP Q3 1.0 % 1.1 % 1.1% Philippines 1/25/17 GDP Q4 7.1 % UK 12/23/16 GDP Q3 2.4 % 2.3 % 2.1 % UK 1/26/17 GDP Q4 2.4 % Japan 12/26/16 CPI NOV 0.5 % 0.4% 0.1 % United States 1/27/17 GDP Q4 1.7 % South Korea 12/29/16 CPI DEC 1.3 % 1.2 % 1.3 % Spain 1/30/17 GDP Q4 3.2 % Indonesia 1/2/17 CPI DEC 3.0% 3.1% 3.6% Belgium 1/30/17 GDP Q4 1.3 % Thailand 1/4/17 CPI DEC 1.1 % 1% 0.6 % France 1/31/17 GDP Q4 1.0 % Netherland 1/6/17 CPI DEC 1.0 % 0.6 % Mexico 1/31/17 GDP Q4 2.0 % China 1/9/17 CPI DEC 2.1 % 2.3 % 2.3 % Indonesia 2/6/17 GDP Q4 5.0% Mexico 1/9/17 CPI DEC 3.4% 3.4% 3.3% Japan 2/12/17 GDP Q4 1.3 % Czech Republic 1/10/17 CPI DEC 2.0 % 1.5 % Poland 2/13/17 GDP Q4 2.2 % Greece 1/11/17 CPI DEC 0.0 % -0.9% Italy 2/14/17 GDP Q4 1.0 % Brazil 1/11/17 CPI DEC 6.3% 6.3% 7.0% Austria 2/14/17 GDP Q4 1.3 % France 1/12/17 CPI DEC 0.6 % 0.7 % 0.5 % Germany 2/14/17 GDP Q4 1.5 % Sweden 1/12/17 CPI DEC 1.7 % 1.6% 1.4 % Czech Republic 2/14/17 GDP Q4 1.9 % Romania 1/13/17 GDP Q3 4.5 % 5.8% Eurozone 2/14/17 GDP Q4 1.7 % UK 1/17/17 CPI DEC 1.6 % 1.42 % 1.2 % Greece 2/14/17 GDP Q4 1.8 % Germany 1/18/17 CPI DEC 1.7 % 1.7 % 0.8 % Malaysia 2/14/17 GDP Q4 4.3 % South Africa 1/18/17 CPI DEC 6.8 % 6.5% 6.6 % Thailand 2/16/17 GDP Q4 3.2 % China 1/19/201 GDP Q4 6.8 % 6.7 % 6.7 % Netherland 2/16/17 GDP Q4 2.4 % Australia 1/24/17 CPI Q4 1.6% 1.3 % Germany 2/23/17 GDP Q4 1.5 % 8 January 2017 TABLE B: Activity and Inflation (Percent change y-o-y, except quarterly data on industrial production, which are percent change q-o-q, annualized) 2015 2016 2016 2014 2015 Q4 Q1 Q2 Q3 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Industrial Production, sa 1 World 3.2 2.0 1.5 1.3 2.2 2.7 1.8 1.4 1.3 1.5 1.6 1.9 1.5 2.3 1.9 1.7 2.8 - Advanced Economies 2.0 0.5 -1.5 0.2 -0.1 2.1 0.2 -1.1 -1.0 0.0 -0.4 -0.2 -0.4 0.6 0.3 0.1 1.6 - Emerging Market and 4.5 3.4 4.5 2.4 4.4 3.2 3.4 3.9 3.6 3.0 3.6 4.1 3.5 3.9 3.5 3.4 4.1 - Developing Economies Commodity-exporting EMDE 0.0 -0.3 1.6 0.7 1.3 -0.1 0.3 1.8 -0.6 -1.0 0.4 1.7 2.1 0.5 0.0 -1.2 - - Other EMDE 6.8 5.1 5.6 3.0 5.7 3.6 4.7 4.6 5.4 4.7 5.0 5.0 3.9 5.0 4.5 4.6 5.5 - East Asia and Pacific 7.5 5.8 7.8 3.4 7.2 5.5 5.5 5.5 6.3 5.5 6.0 6.2 6.0 6.4 5.5 5.4 5.6 - East Asia excl. China 3.0 3.6 7.1 4.1 4.2 4.6 5.4 5.6 3.2 1.9 5.8 6.5 6.2 6.5 2.3 1.0 2.1 - Europe and Central Asia 2.7 0.7 3.4 0.7 1.9 -3.8 1.5 2.9 1.0 2.4 2.0 1.9 -0.1 1.3 0.3 1.1 2.1 - Latin America and Caribbean -0.7 -3.2 -6.4 -2.5 -0.4 -0.6 -4.1 -5.0 -4.0 -4.8 -3.7 -2.2 -2.2 -3.2 -2.2 -2.8 -1.5 - Middle East and North Africa 0.8 2.6 9.2 2.5 -3.2 - 6.6 7.0 2.6 1.9 2.3 3.2 4.4 - - - - - South Asia 2.5 4.1 -6.8 4.1 5.5 -3.2 0.0 3.3 2.3 -0.5 1.6 2.9 -2.1 0.9 0.5 -1.3 4.9 - Sub-Saharan Africa -0.1 0.1 -0.4 1.0 8.0 -6.4 -0.9 1.5 -1.2 2.4 4.1 4.2 1.4 -0.1 -0.1 -1.2 0.1 - Inflation, sa 2 World 2.2 1.4 1.5 1.3 1.6 1.3 1.5 1.4 1.2 1.6 1.6 1.3 1.4 1.2 1.4 1.5 1.6 1.8 Advanced Economies 0.5 0.1 0.1 0.3 0.2 0.4 0.5 0.3 0.1 0.2 0.1 0.3 0.4 0.3 0.5 0.6 0.7 1.2 Emerging Market and 3.3 2.4 2.2 2.5 2.7 2.8 2.5 2.7 2.4 2.8 2.6 2.6 2.8 2.6 2.8 2.6 2.6 3.0 Developing Economies Commodity-exporting EMDE 3.9 3.8 3.4 3.4 3.6 3.5 3.4 3.4 3.3 3.6 3.5 3.5 3.8 3.3 3.1 3.4 3.5 3.6 Other EMDE 2.6 1.0 1.1 1.1 2.0 0.9 1.0 1.3 1.0 1.9 1.6 1.2 1.2 0.9 1.0 1.4 1.6 1.8 East Asia and Pacific 3.2 1.0 1.0 1.1 1.6 2.1 1.1 1.3 1.4 1.6 2.1 1.8 1.9 1.7 2.3 2.4 2.4 2.4 Europe and Central Asia 1.6 1.7 1.4 0.7 0.3 0.5 1.5 0.4 0.3 0.3 0.1 0.1 1.2 0.5 0.5 0.9 0.9 1.6 Latin America and Caribbean 3.4 2.7 2.3 2.7 3.5 3.0 2.6 2.6 2.5 3.6 3.4 3.3 2.9 2.9 3.0 2.9 3.2 3.2 Middle East and North Africa 2.7 1.9 1.8 2.5 2.3 2.3 2.4 2.6 2.6 2.4 2.2 2.4 2.3 2.1 2.5 1.9 2.0 1.8 South Asia 6.8 3.5 3.0 3.5 4.8 4.8 3.3 3.6 4.0 4.4 5.0 5.6 5.4 4.5 4.4 4.2 3.8 3.7 Sub-Saharan Africa 4.4 3.9 4.2 4.5 4.9 6.0 4.4 4.5 4.7 4.6 3.7 4.5 6.0 6.1 6.3 6.5 6.7 6.8 1Industrial production is total production (may exclude construction). When data are unavailable, "industrial production, manufacturing" and "industrial production, manufacturing, non-durable manufacturing, petroleum and coal products, crude petroleum products" are used as proxies. 2Median inflation rate for each grouping. TABLE C: 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) 2015 2016 2016 2014 2015 Q4 Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Exports, Nominal, US$, sa World 1.1 -11.6 -6.2 -12.5 15.0 -0.7 -12.3 -9.2 -3.7 -2.6 -3.0 -4.0 -6.5 2.8 -0.9 -3.8 4.1 - Advanced Economies 1.3 -11.3 -6.5 -5.4 16.4 -0.9 -9.4 -4.1 -3.5 0.0 -0.5 -2.2 -5.1 5.6 1.3 -2.3 5.2 - Emerging Market and Developing Economies 0.8 -12.0 -5.7 -23.2 12.3 -0.3 -16.6 -16.7 -4.2 -7.0 -7.1 -6.8 -8.9 -1.7 -4.7 -6.2 2.3 - Commodity-exporting EMDE -4.5 -24.1 -12.7 -24.5 17.5 -0.4 -24.6 -13.3 -15.2 -12.8 -10.5 -12.4 -14.2 -1.7 -2.4 -7.5 6.0 - Other EMDE 4.9 -3.8 -1.8 -21.1 10.5 -0.3 -12.2 -17.9 3.7 -3.2 -4.5 -3.1 -5.6 -1.0 -5.0 -5.2 1.7 - East Asia and Pacific 4.6 -3.5 -2.5 -25.2 11.6 0.1 -14.4 -21.4 5.1 -4.8 -6.0 -5.2 -6.7 -1.5 -6.7 -5.7 1.9 -1.5 Europe and Central Asia -0.8 -20.7 -7.4 -19.9 19.7 -0.7 -22.1 -13.0 -13.1 -8.0 -10.4 -4.2 -8.8 1.0 -1.3 -3.6 6.2 - Latin America and Caribbean -1.0 -11.9 -10.2 -5.4 4.5 6.8 -11.6 -3.9 -9.2 -5.3 -2.1 -8.2 -7.5 2.1 1.9 -5.3 9.8 - Middle East and North Africa -5.1 -26.3 -7.3 - - - -23.2 - - - - - - - - - - - South Asia 4.0 -4.8 9.1 6.7 4.0 -18.4 -2.9 4.2 -0.2 1.3 -0.3 5.3 -3.9 5.8 -3.0 5.3 -0.1 - Sub-Saharan Africa -6.1 -27.9 -19.9 -34.0 - - -27.6 -23.0 -19.8 -10.9 - - - - - - - - Imports, Nominal, US$, sa World 1.2 -12.6 -7.6 -12.9 10.4 -2.5 -12.2 -5.4 -7.4 -5.8 -2.4 -5.2 -9.8 1.7 -2.2 -4.3 2.7 - Advanced Economies 2.1 -12.5 -7.0 -8.9 8.8 -4.1 -10.4 -2.8 -6.5 -3.9 -1.9 -4.6 -8.3 1.5 -2.3 -5.1 1.8 - Emerging Market and Developing Economies -0.4 -12.8 -8.5 -19.3 13.8 0.9 -15.2 -9.7 -8.7 -9.1 -3.0 -5.9 -12.2 2.3 -1.9 -2.4 4.7 - Commodity-exporting EMDE -2.3 -14.9 -12.7 -17.2 -0.3 -1.1 -18.1 -15.3 -13.7 -13.7 -9.2 -8.7 -16.0 -1.6 -6.7 -7.4 - - Other EMDE 0.8 -11.5 -6.1 -21.7 19.1 1.7 -13.4 -6.9 -6.4 -7.5 -0.6 -5.3 -11.4 3.8 -0.4 -0.9 5.5 3.9 East Asia and Pacific -0.5 -13.1 -5.3 -25.5 22.8 5.6 -16.9 -11.1 -5.4 -8.1 0.8 -6.6 -11.0 5.6 -0.4 -0.9 5.9 5.0 Europe and Central Asia -3.7 -20.7 -9.5 4.1 12.6 -5.2 -14.8 -5.0 -3.6 -3.1 -1.0 1.2 -9.9 8.6 2.0 -0.2 7.1 - Latin America and Caribbean -0.7 -9.9 -13.3 -16.4 3.9 2.9 -16.3 -9.9 -14.6 -9.9 -6.3 -8.9 -16.0 1.4 -3.4 -8.8 1.0 - Middle East and North Africa 2.9 -6.3 -8.1 - - - -13.0 - - - - - - - - - - - South Asia 1.1 -13.2 -15.2 -26.2 5.3 6.1 -6.5 -3.1 -18.1 -18.1 -8.6 -5.8 -14.6 -9.7 -0.7 7.8 10.3 3.2 Sub-Saharan Africa 2.0 -7.4 -7.0 - - - -18.7 - - - - - - - - - - - International Reserves, US$1 World -1.3 -5.8 -2.7 0.7 1.0 0.6 -0.9 0.5 1.0 0.7 -0.7 0.9 0.3 0.0 0.3 -1.0 -1.4 - Advanced Economies 0.1 0.6 -1.1 3.7 1.8 1.6 0.9 1.3 1.5 1.0 -0.6 1.4 0.5 0.1 1.0 -0.8 -0.8 - Emerging Market and Developing Economies -2.1 -9.9 -3.6 -1.1 0.4 -0.2 -1.9 0.1 0.8 0.6 -0.8 0.6 0.2 -0.1 -0.2 -1.2 -1.7 - Commodity-exporting EMDE -6.9 -11.0 -2.0 -0.9 0.0 - -1.6 0.2 0.6 0.3 -0.8 0.4 0.5 - - - - - Other EMDE 0.6 -9.1 -4.4 -1.2 0.7 -0.5 -2.1 0.0 0.8 0.7 -0.8 0.7 0.1 -0.2 -0.3 -1.1 -2.0 -1.1 East Asia and Pacific 0.2 -11.3 -4.4 -1.8 0.3 -0.8 -2.5 0.0 0.7 0.5 -1.0 0.9 0.0 -0.4 -0.4 -1.3 -2.3 -1.2 Europe and Central Asia -16.7 -6.3 -3.7 4.0 2.8 1.1 0.6 1.9 1.4 1.6 -0.1 1.4 0.4 0.5 0.2 -0.8 -1.7 -0.7 Latin America and Caribbean 0.1 -5.3 -1.5 0.1 0.6 1.4 -0.6 0.1 0.7 0.8 -0.2 -0.1 1.6 -0.1 -0.1 -0.5 -0.5 0.0 Middle East and North Africa -2.7 -16.9 -3.7 -3.4 - - -2.7 -0.6 -0.2 -0.5 - - - - - - - - South Asia 11.3 11.7 1.3 1.0 2.0 3.5 -1.1 -0.2 2.3 2.0 -0.8 0.8 1.5 0.6 1.3 -0.9 -0.7 -1.1 Sub-Saharan Africa -9.6 -11.9 -0.1 -2.0 - - -1.5 -1.4 1.0 0.5 -1.6 - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. 9 January 2017 TABLE D: Financial Markets (Percent change y-o-y, except quarterly trade data, which are percent change q-o-q, annualized, and international reserves data, which are percent change over the previous period ) 2016 2016 MRV 1 2015 2016 Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.13 0.40 0.37 0.37 0.39 0.45 0.36 0.37 0.37 0.37 0.36 0.38 0.39 0.40 0.40 0.41 0.41 0.55 0.66 ECB repo 0.05 0.00 0.00 0.00 0.00 0.00 0.05 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.32 0.74 0.62 0.64 0.79 0.92 0.62 0.62 0.63 0.63 0.65 0.65 0.70 0.81 0.85 0.88 0.91 0.98 1.04 EURIBOR 3 -months -0.02 -0.26 -0.19 -0.26 -0.30 -0.31 -0.15 -0.18 -0.23 -0.25 -0.26 -0.27 -0.29 -0.30 -0.30 -0.31 -0.31 -0.32 -0.33 US 10-yr Treasury yield 2.12 1.84 1.92 1.75 1.56 2.12 2.11 1.77 1.88 1.79 1.80 1.64 1.48 1.56 1.63 1.74 2.12 2.50 2.43 German Bund, 10 yr 0.54 0.14 0.32 0.12 -0.07 0.18 0.51 0.23 0.21 0.17 0.16 0.01 -0.09 -0.07 -0.05 0.03 0.22 0.30 0.42 Spreads (basis points) JP Morgan Emerging Markets 415 410 478 419 372 369 485 507 443 421 418 418 387 367 361 357 380 370 357 Asia 224 221 264 227 197 197 268 282 243 224 223 233 210 190 191 192 201 198 183 Europe 348 302 339 305 282 283 338 359 319 308 305 303 290 282 273 274 294 282 275 Latin America & Caribbean 540 537 645 551 477 475 662 687 588 559 552 541 496 473 463 453 491 481 469 Middle East 456 517 555 538 508 467 542 580 545 539 530 545 540 492 493 487 475 438 417 Africa 415 518 626 548 461 436 644 661 573 546 552 546 494 448 440 441 444 422 399 Stock Indices (end of period) Global (MSCI) 399 424 395 399 418 424 375 372 395 403 403 399 414 417 418 413 413 424 430 Advanced Economies ($ Index) 1663 1761 1638 1653 1726 1761 1562 1547 1638 1671 1675 1653 1713 1720 1726 1697 1712 1761 1781 United States (S&P 500) 2044 2258 2051 2099 2168 2258 1940 1932 2051 2065 2097 2099 2170 2171 2168 2139 2199 2258 2265 Europe (S&P Euro 350) 1474 1475 1352 1339 1388 1475 1381 1347 1352 1379 1399 1339 1376 1390 1388 1377 1388 1475 1467 Japan (Nikkei 225) 18817 19302 16555 15576 16450 19302 17518 15989 16555 16407 17235 15576 16556 16887 16450 17050 18604 19302 18842 Emerging Market and 794 861 821 834 903 861 742 740 821 840 807 834 879 894 903 908 863 861 902 Developing Economies (MSCI) EM Asia 404 419 404 407 448 419 374 369 404 405 400 407 431 442 448 444 426 419 439 EM Europe 244 295 272 265 273 295 237 241 272 288 268 265 264 269 273 274 273 295 296 EM Europe & Middle East 211 248 230 225 233 248 202 208 230 243 225 225 227 232 233 232 230 248 250 EM Latin America & Caribbean 1830 2341 2121 2269 2381 2341 1744 1804 2121 2292 2038 2269 2359 2402 2381 2608 2330 2341 2518 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.90 0.90 0.91 0.89 0.90 0.93 0.92 0.90 0.90 0.88 0.89 0.89 0.90 0.89 0.89 0.91 0.93 0.95 0.93 Japan 121.00 108.80 115.23 107.96 102.36 109.63 118.37 114.44 112.87 109.57 108.97 105.34 104.09 101.31 101.69 103.72 108.90 116.28 114.62 Emerging and Developing Economies Brazil 3.33 3.49 3.91 3.51 3.25 3.28 4.06 3.97 3.70 3.56 3.54 3.42 3.28 3.21 3.25 3.18 3.33 3.35 3.17 China 6.29 6.65 6.54 6.53 6.67 6.84 6.57 6.55 6.51 6.48 6.53 6.59 6.68 6.65 6.67 6.74 6.85 6.92 6.88 Egypt 7.70 10.12 8.04 8.87 8.87 14.71 7.83 7.82 8.47 8.87 8.86 8.87 8.87 8.87 8.88 9.25 16.34 18.56 18.75 India 64.14 67.19 67.50 66.91 66.94 67.39 67.31 68.22 66.95 66.49 66.93 67.29 67.18 66.91 66.74 66.73 67.60 67.86 68.18 Russia 61.34 67.06 74.84 65.84 64.61 62.95 77.36 77.23 69.93 66.54 65.96 65.01 64.43 64.93 64.48 62.57 64.25 62.03 59.61 South Africa 12.77 14.71 15.83 15.01 14.07 13.92 16.30 15.79 15.39 14.62 15.36 15.05 14.40 13.79 14.01 13.92 13.96 13.88 13.60 Memo: U.S. nominal effective rate 114.7 119.7 120.3 117.5 118.4 122.5 121.8 120.7 118.4 116.5 117.8 118.2 118.9 117.8 118.6 119.7 122.9 124.9 124.6 (index) 1 MRV = Most Recent Value. Table E: Commodity Prices 2016 2016 MRV 1 2015 2016 Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Energy 2 65 55 43 56 57 64 40 41 47 51 57 59 57 58 58 64 59 68 77 Non -energy 2 82 80 76 81 82 83 75 76 78 80 81 83 82 82 81 81 84 84 83 Agriculture 2 89 89 85 91 91 90 84 84 86 88 91 94 92 91 90 90 90 89 89 Metals and minerals 2 68 64 59 62 65 71 56 59 62 63 61 61 65 65 64 65 73 75 74 Memo items: Crude oil, average ($/bbl) 51 43 33 45 45 49 30 31 37 41 46 48 44 45 45 49 45 53 53 Gold ($/toz) 1161 1249 1181 1260 1334 1221 1098 1200 1245 1242 1261 1276 1337 1340 1327 1267 1238 1157 1102 Baltic Dry Index 711 676 363 613 736 994 391 307 390 608 623 608 707 675 826 870 1080 1031 914 Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg. 1MRV = Most Recent Value. 2Indexes, 2010 = 100. © 2016 International Bank for Reconstruction and Development / e World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved is work is a product of the sta of e World Bank with external contributions. e ndings, interpretations, and conclusions expressed in this work do not necessarily re ect the views of e World Bank, its Board of Executive Directors, or the governments they represent. e maps were produced by the Map Design Unit of e World Bank. e World Bank does not guarantee the accuracy of the data included in this work. e boundaries, colors, denominations, and other information shown on these maps do not imply, on the part of e World Bank Group, any judgment on the legal status of any territory, or any endorse- ment or acceptance of such boundaries. 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