99340 For more information, visit http://www.worldbank.org/prospects Overview  The global economy appears to be on track for another year of modest growth. In the first quarter, activity was soft in the United States, partly for one-off reasons, whereas a broad-based strengthening is underway in the Euro Area. Growth in China is slowing as expected, with policy interventions cushioning activity. In other emerging and developing countries, growth has disappointed, especially in Russia, oil-exporting countries in Sub-Saharan Africa, and Brazil. Surveys suggest that global growth momentum is improving in the second quarter.  Interest rates remain at historically low levels in the Euro Area, partly because of the ECB’s quantitative easing (QE) program, which started in March. Sovereign bond yields in several countries have fallen below zero.  Developing countries’ international reserves have fallen as a result of valuation effects and interventions to stem depreciation pressures. Since mid-March, currency pressures have receded. This, combined with continued low interest rates and stabilizing oil prices, has contributed to rising asset price valuations.  Oil prices should remain low as expected in January, while forecasts for most other commodity prices for 2015 have been revised downwards on ample supplies, weak demand, and an appreciated U.S. dollar. Chart of the Month 3 Year Bond Yields The stalemate in discussions between Greece and its official Percent Percent creditors over reform commitments is preventing the release Greece (LHS) Germany Portugal Italy Spain 30 3 of external financial support, while the government’s cash flow position is rapidly deteriorating. Heightened default risks 20 2 have pushed three-year sovereign bond yields in Greece above 25 percent at the end of April. Contagion to other 10 1 periphery economies has been mitigated by the ECB’s QE program and better crisis management instruments. Foreign 0 0 bank exposures to Greek debt have declined sharply since 2010, but banking systems in some Eastern European and -10 -1 Jan-15 Apr-15 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Feb-15 Mar-15 Balkan countries remain vulnerable to spillovers through sizeable local subsidiaries of Greek banks. Source: World Bank, Haver Analytics Special Focus: Fiscal Policy Challenges in Developing Economies  During the Great Recession of 2008-09, fiscal deficits widened in emerging market and frontier market economies (EMEs and FMEs) and have yet to return to pre-crisis levels. Government debt has steadily increased, especially in FMEs.  Weakening fiscal positions have been accompanied by rising private sector debt. The balance sheet vulnerabilities associated with higher private debt constrain monetary policy room to support activity.  EMEs and FMEs need to rebuild fiscal space, which could allow them to buffer growth slowdowns with fiscal stimulus and increase the effectiveness of stimulus. Prepared by Marc Stocker with contributions from John Baffes, Raju Huidrom, Eung Ju Kim, Ekaterine T. Vashakmadze and data support from Trang Nguyen. DECPG - April, 2015. APRIL 2015 Monthly Highlights  Global economy on track for another year of modest growth. Soft activity in the United States and China, combined with contracting activity in Russia and Brazil, is likely to translate in weak global growth outcomes for the first quarter of 2015. However, the global composite Purchasing Managers Index (PMI) has continued to edge higher in recent months, consistent with a growth momentum of around 3 percent heading into the second quarter of 2015. This reinforces the view that slower growth in Q1 could be temporary, with better prospects ahead. The improvement in the global PMI in March was driven in particular by expanding services sector activity on the back of rising consumer spending, while manufacturing indices posted smaller gains and new export orders declined, in line with evidence of still subdued global import demand in Q1 (Figure 1). An encouraging U.S. composite PMI reading for March and strong outcomes in the Euro Area underscore the ongoing support of high-income countries. On the other hand, PMI surveys from developing countries have been less encouraging, with a steep deterioration in business conditions in Brazil weighing on March outcomes.  Gap in economic performance between U.S. and Euro Area narrowing. Since the beginning of 2015, data releases in the Euro Area have been consistently better than expected, while those for the United States have worsened. As a result, Euro Area growth in Q1 is currently tracking close to 2 percent, while activity came to a standstill in the United States over the same period, according to preliminary GDP estimates. A marked shift in the relative performance of these two economies in Q1 partly reflects the impact of a sharp appreciation of the U.S. dollar against the euro, but mostly relates to temporary one-off factors. In the United States, weak exports, manufacturing and construction data in Q1 reflected poor weather conditions in the East and port disruptions on the West Coast. Similarly, the significant slide in employment gains in March should be seen as an outlier in an otherwise robust labor market, with job openings and employment surveys in both manufacturing and services pointing upwards. Growth in the United States is expected to rebound significantly in Q2, and remain above potential until the end of the year. In this context, the U.S. unemployment rate is predicted to fall to 5.2 percent by end-2015, in line with estimates of structural unemployment by members of the Fed policy committee. In the Euro Area, recent economic indicators point to a strengthening of the recovery momentum. Consumer confidence was particularly strong in March, with a significant jump in major purchase intensions and a sharp drop in unemployment expectations, raising hopes of a further acceleration in private consumption ahead. In addition, the ECB’s quarterly bank lending survey showed that Euro Area banks have eased credit standards in Q1, and that about half of them see a positive effect of the ECB’s expanded asset purchase program on their market-financing conditions.  Prospects for developing countries revised further down. While growth prospects for high-income countries remain on the whole broadly unchanged from January 2015 forecasts, they have been further downgraded for major emerging and developing economies, according to regional economic updates released in April. While China is slowing mostly as expected, a deepening recession in Russia, contraction in Brazil and weakening activity among key oil exporters in Sub- Saharan Africa have cast a shadow over growth prospects for their respective regions. The windfalls from lower oil prices should help mitigate some headwinds in Turkey, South Africa and other major developing oil importers, while providing additional momentum to growth in India.  Activity in China soft, buttressed by policy support. According to preliminary estimates, China’s GDP growth decelerated to 7.0 percent in year-on-year terms and to 5.3 percent in quarter-on-quarter annualized terms in the first quarter of 2015. The slowdown reflected weakening activity in industry and construction due to ongoing adjustments in sectors with excess capacity and in real estate. The decomposition of GDP by expenditure component has not been released yet, but available indicators suggest that investment weakened further while private consumption growth appears sustained. In recent years, targeted stimulus measures were implemented after weak quarterly growth results, leading to acceleration activity in subsequent quarters. With ample room for policy accommodation, the central bank is expected to continue lowering both benchmark interest rates and reserve requirement ratios, while the central government suggested a more gradual implementation of the new local government debt framework, with transitional arrangements to support ongoing infrastructure projects and help refinance maturing debts. Liquidity conditions remain tight, mainly due to a moderation of deposit growth, capital outflows and sharp deceleration in non-bank credit.  Interest rates remain at historic lows. The impact of the ECB’s QE program that began in March, combined with disappointing growth outcomes in the United States and a dovish turn in Fed communication, has contributed to global interest rates remaining at historically low levels in April. U.S. 10-year Treasury yields continued to hover around 2 percent, while Japan’s 10 -year yields were stable at 0.3 percent and Germany’s declined to as low as 0.05 percent, before recovering to 0.25 by the end of April (Figure 2). Record low interest rates in core Euro Area countries partly reflect the impact of ECB’s QE program. Sovereign bond purchases by the ECB are expected to significantly outpace net debt issuance by Euro Area governments this year, putting downward pressure on yields. A growing number of bonds trade with negative yields that approach the lower limit for eligibility under ECB’s QE program (-20bp). Spreads for periphery countries’ credit markets remain exceptionally low despite renewed concerns about Greece in April. The search for higher yields has led to a significant acceleration of net portfolio outflows from the Euro Area and increasing demand for long- APRIL 2015 term debt securities in the United States. This reallocation is putting downward pressure on the Euro and contributing to low long-term U.S. Treasury yields. In parallel, investors continued to revise down the expected path of U.S. policy rates over the medium term.  Rising emerging market asset prices. Low global interest rates amidst expectations of a slower normalization of U.S. monetary policy, receding currency pressures, a stabilization of oil prices and some moderation in capital outflows have led to robust increases in emerging market asset valuations since mid-March. Stock market indices have been particularly buoyant, especially in China and India. In credit markets, hard currency bonds have outperformed local currency ones since the start of the year, both being supported by expectations of a more gradual increase in U.S. policy rates. Bond portfolio inflows remained positive in April and international bond issuance still sustained reflecting continued demand for higher yielding debt. Emerging market currency indices (measured against the U.S. dollar) are still significantly down from the start of the year, but have rebounded from their lows in mid-March.  China’s securities regulators seek to cap soaring stock markets . Regulatory authorities warned small investors, who have contributed to a 30 percent rally in equity prices since the start of the year, not to borrow money or sell property to buy stocks. The regulator banned a type of financing called “umbrella trusts” that provided cash for margin trading, the practice of borrowing against the value of common shares, and placed limits on margin trading for highly risky small stocks that trade over the counter rather than on exchanges. In an attempt to cool rising equity prices, regulators also announced that fund managers would be allowed to lend shares for short selling (betting against stocks), while stock exchanges would push for an increase in the supply of available shares for lending.  Decline in emerging market currency reserves driven by strong dollar. Foreign-currency reserves in emerging markets declined by 6 percent in U.S. dollar terms since the second quarter of 2014, following a period of uninterrupted accumulation since the early 2000s. The decline appears driven by two factors: valuation adjustments linked to a rapid appreciation of the U.S. dollar and capital outflows in some economies. For China, reserve holdings have fallen by 7 percent since June 2014, to $3.78 trn in March 2015 (36.2 percent of GDP), largely driven by exchange rate valuation effects and to a lesser extent by pressure stemming from capital outflows. The impact of sharply lower oil prices on Russia and other oil exporting countries also contributed to falling foreign currency reserves in emerging markets since mid-2014. Reserves in Russia fell to $309 billion in the first quarter of 2015, a $150 billion decline versus the fourth quarter of 2014, while Malaysia has seen since mid-2014 its steepest loss in reserves since the 1997 Asian crisis. Looking ahead, a shift in capital flows associated with prospects of U.S. monetary policy tightening and lower commodity prices will make the accumulation of foreign reserves in emerging markets more challenging, but current levels appear largely adequate in most cases.  Remittance flows to developing countries slowing. Remittances remain a key source of funding for developing countries, far exceeding official development assistance. Remittances are generally a stable source of finance for developing countries but they are currently affected by important cross-currents, with a positive impact of a robust recovery in the United States being offset by the negative impact of lower oil prices on Russia and other oil exporting countries, a strengthening U.S. dollar, and tighter immigration controls. According to the latest Migration and Development Brief, remittance flows are projected to decline in all developing regions this year (in percent of recipient country GDP), with the exception of Latin America and the Caribbean, where a job-rich U.S. recovery and strong U.S. dollar are expected to provide significant support. In contrast, Russia’s deepening recession and the sharp depreciation of the ruble will reduce remittances to the region. Central Asian countries will continue to feel the negative impact hardest because of their heavy dependency of remittance inflows from Russia.  All main commodity price indices are expected to decline in 2015 . The April Commodity Markets Outlook maintains a central projection for oil prices at $53/bbl this year, implying a fall of 45 percent from average 2014 prices. At present, oil markets remain oversupplied, with large inventories, especially in the United States. The U.S. rig count fell by half in the past five months but U.S. oil production continued to grow in March and is only leveling off in the second quarter of 2015. OPEC production also rose during the first quarter, with Saudi Arabia averaging 10 mb/d in March. Uncertainty on ongoing supply adjustments has led to increased price volatility since November last year. Natural gas prices are expected to decline significantly this year given that many gas contracts are tied to oil prices. All main non-energy price indices will also fall this year, by an estimated 10 percent on average. Metals prices are projected to decline 13 percent due to capacity increases and slowing demand in China. The largest decline is expected for iron ore (-35 percent) due to new low-cost mining capacity (mainly in Australia) coming online this year and next. Agricultural prices are projected to fall by an average of 9 percent and fertilizer prices (a key cost for most agricultural commodities) by 4 percent on weaker demand, ample supply and reduced energy costs. APRIL 2015 Figure 1: Soft activity in the United States and China, combined with contracting activity in Russia and Brazil, is likely to translate into weak global growth outcomes for the first quarter of 2015. However, global composite PMI has continued to edge higher in recent months, pointing to better prospects ahead. Growth continued to disappoint across large emerging and developing countries, while slowing broadly as expected in China, cushioned by policy interventions. A. Global PMI indices B. Composite PMI indices Manufacturing Output Emerging markets High-income countries 60 Service Output 60 New export orders 55 55 50 50 45 45 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Source: World Bank, Haver Analytics. Source: World Bank, Haver Analytics. C. U.S. unemployment rate D. Euro Area retail sales Percent Index, 2005= 100 10 106 9 104 8 7 102 6 100 5 98 4 3 96 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2008 2010 2012 2014 2005 2007 2009 2011 2013 2015 Source: World Bank, Haver Analytics, FOMC (2015). Source: World Bank, Haver Analytics. Note: Dotted line is the central estimate of structural unemployment by members of the Federal Open Markets Committee. E. GDP growth forecast, 2015 F. China’s GDP growth Percent Percent GEP Jan 2015 April 2015 Updates Year/year rate 8 11 7 Annualized Quarterly Rate 6 10 5 4 9 3 2 8 1 0 7 -1 -2 6 -3 -4 5 -5 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 IND CHN EGY TUR MEX ZAF BRA RUS 2011 2012 2013 2014 2015 Source: World Bank. Source: World Bank, Haver Analytics. APRIL 2015 Figure 2: Global interest rates remain at historically low levels. This, combined with receding currency pressures and stabilizing oil prices, has contributed to rising asset price valuation across emerging markets. International reserves have fallen as a result of valuation effects and interventions to stem depreciation pressures. Oil prices should remain low , as expected in January, while forecasts for most other commodity prices for 2015 have been revised downwards on ample supplies, weak demand, and an appreciated U.S. dollar. A. 10-year government bond Yields B. U.S. policy rate expectations Percent Percent Apr-15 Jun-14 Dec-13 3.5 US German Japan 5 3.0 4 2.5 2.0 3 1.5 1.0 2 0.5 1 0.0 Jan-13 Jan-14 Jan-15 May-13 Sep-13 May-14 Sep-14 0 2015 2016 2017 2018 2019 2020 Source: World Bank, Haver Analytics. Source: World Bank, Bloomberg. Note: The last observation is for April 27, 2015. Note: U.S. policy rate expectations are based on forward swap rates. C. Financial markets’ year-to-date returns D. Emerging markets’ foreign-exchange reserves Percent US$ billion Percent Foreign reserve in USD Europe equity 7000 Y-o-Y percent change (RHS) 70 EM equity 6000 60 World equity 5000 50 4000 40 EM bond - $ Corp 3000 30 US bond - High Y. 2000 20 EM Bond - $ Sov. 1000 10 US equity 0 0 EM bond - local -1000 -10 EM currency 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014Q3 2013 2014Q1 2014Q2 2014Q4 -5 0 5 10 15 20 2015-Q1 Source: World Bank, Bloomberg. Source: World Bank, Haver Analytics. Note: YTD returns as of April 28, 2015. E. Remittance flows F. Change in commodities prices, 2014-15 Share of GDP, Percent Percent change 6 2014 Crude oil, avg, spot Iron ore 2015 Natural gas, US 5 2016 Natural gas LNG, Japan Soybean meal 4 Tin Nickel Wheat, US, HRW 3 Natural gas, Europe Palm oil 2 Soybeans Soybean oil 1 Coffee, Arabica Lead Copper 0 DEV EAP ECA LAC MNA SAS SST 0 -10 -20 -30 -40 -50 Source: World Bank. Source: World Bank. APRIL 2015 Special Focus: Fiscal Policy Challenges in Developing Economies  During the Great Recession, public debt stocks rose and primary deficits widened in many developing countries. Since then, primary deficits remain wider than they were pre-crisis (Figure 3). Although debt has grown slowly under benign post-crisis market conditions and prevailing low interest rates, debt-to-GDP ratios could increase rapidly if domestic growth slows and global interest rates rise. This is especially relevant for FMEs that have placed sovereign bonds in international markets recently, which could become more vulnerable to sharp increases in borrowing costs.  Weaker fiscal position in EMEs and FMEs were accompanied by rising private debt. Corporate and household debt in EMEs and FMEs has risen since the crisis. This rise has been substantial in some EMEs, with aggregate non-financial corporate debt growing by 39 percent over 2007–13. Moreover, in some countries, rising private sector debt has been accompanied by deteriorating fiscal sustainability. Some countries—including China, Thailand, Malaysia, and Vietnam — have already taken measures to restrain private credit growth. Rapid currency depreciations can be another source of risk in some countries, such as in parts of Latin America and the Caribbean. Nonfinancial firms have been borrowing substantially in international markets in foreign currencies and depositing the proceeds in local currencies in domestic financial systems. Sharp depreciations might strain the solvency of domestic firms and weaken the soundness of domestic financial sectors.  Over the medium term, developing economies will need to return their fiscal positions to more sustainable levels to increase fiscal space. A wider fiscal space would increase the likelihood that fiscal stimulus is both available and effective as a countercyclical policy tool if monetary policy normalization in advanced economies constrains monetary policy. The appropriate speed of adjustment, however, depends on a host of country-specific factors, including the cyclical position of the economy and constraints on monetary policy. The recent slump in oil prices presents both risks and opportunities for developing countries. For oil exporters, the slump could result in loss of oil revenues, eroding their fiscal space. At the same time, in countries with substantial food and fuel subsidies, the continued soft commodity prices (as projected for 2015-16) would offer an opportunity to implement subsidy reform that could help rebuild fiscal space and also lessen distortions associated with these subsidies.  Fiscal rules impose numerical constraints on budgetary aggregates – debt, overall balance, expenditures or revenues. Fiscal rules, and in particular cyclically-adjusted or structural balance rules, have become increasingly popular in developing countries. The adoption of rules, per se, has had mixed success in limiting procyclicality. Rules are best when simply defined and supported by surveillanc e arrangements, respected by the government. Chile’s use of a technical fiscal council that facilitates transparency in the conduct of fiscal policy is a good example of a well-designed, credible and successfully operated fiscal rule.  Stabilization funds set aside receipts from significant natural resource revenues during favorable times to cushion revenue shortfalls and mitigate negative shocks to government expenditures. Stabilization funds were adopted widely in the 2000s, when high international oil prices—along with the discovery of oil in a number of countries —facilitated their establishment. Since stabilization funds separate government expenditure from fluctuations in the availability of revenues, they can be important institutional mechanisms for improving fiscal space, while mitigating fiscal procyclicality. The effectiveness of these funds depends largely on government commitment to fiscal discipline and macroeconomic management, rather than on just the existence of the instrument itself. Norway and Chile are examples of economies with stabilization funds that are associated with good fiscal management.  Medium-term expenditure frameworks (MTEFs) aim to establish or improve credibility in the budgetary process. More than two-thirds of all economies have adopted MTEFs of some form. The most common design of MTEFs translates macroeconomic objectives into budget aggregates and detailed spending plans. While credible MTEFs can significantly improve fiscal discipline, significant heterogeneity exists across countries possibly reflecting shortcomings in the practical implementation of MTEFs. Keys to robust implementation are coordination with broader public sector reform, and sensitivity to country characteristics. One of the lessons from the experiences of South Africa, Tanzania and Uganda is the need for realistic expectations during preparation of the budget. APRIL 2015 Figure 3: In emerging and frontier market economies, fiscal deficits widened during the Great Recession of 2008-09 and have yet to return to pre-crisis levels. Government debt has steadily increased, especially in frontier markets. Weakening fiscal positions have been accompanied by rising private sector debt. The balance sheet vulnerabilities associated with higher private debt constrain monetary policy room to support activity. EMEs and FMEs need to rebuild fiscal space, which could allow them to buffer a growth slowdown with fiscal stimulus and increase the effectiveness of stimulus. A. Fiscal balance (percent of GDP) B. Government debt (percent of GDP) 3 EME FME LIC 140 EME FME LIC 2 120 1 100 0 -1 80 -2 60 -3 40 -4 -5 20 -6 0 1996 98 2000 02 04 06 08 10 12 14 1996 98 2000 02 04 06 08 10 12 14 Source: Global Economic Prospects, January 2015. Note: All figures are based on unweighted averages across the country grouping. EME: emerging market economies; FME: frontier market economies; LIC: low-income countries. C. Private sector debt D. Credit and sustainability gap, 2013 Percent of GDP Change in private sector credit to GDP ratio 2012-13 (%) 70 2007 2013 14 60 12 50 HRV 10 LBN MYS 8 CHN 40 ZAF 6 THA 30 UKR RUS 4 CHL VNM BRA 20 CZE 2 COL IND BGR POL 10 0 -5 -4 -3 -2 -1 0 1 2 3 -2 0 Sustainability gap (2013) EME FME Source: Global Economic Prospects, January 2015 Source: Global Economic Prospects, January 2015 Note: Circle size is proportional to domestic private credit-to-GDP ratio. The sustainability gap is the difference between the primary balance and an estimated debt-stabilizing primary balance based on interest rates and growth rates in 2013. A negative value suggests that the balance is debt increasing and positive values suggest that the balance is debt reducing. E. Fiscal rules – trends F. Stabilization funds - trends Number of funds Dollars per barrel 40 100 Developing economies 30 Number of stabilization funds Advanced economies 30 Number of oil-related funds 80 20 Oil price, US$ per barrel (right axis) 60 20 40 10 10 20 0 0 0 1985 90 95 2000 05 10 13 1952 1964 1976 1988 2000 2012 Source: Global Economic Prospects, January 2015. Source: Global Economic Prospects, January 2015. Note: The graph shows the number of countries with balanced Note: Oil-related stabilization funds are those for which funding budget rules. sources include petroleum. APRIL 2015 Major Data Releases 18 Mar, 2015- 29 Apr 2015 Upcoming releases: 30 Apr, 2015- 21 May 2015 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous France 3/26/2015 GDP(Y/Y) Q4 0.2% 0.2% 0.4% France 4/30/2015 Consumer Spending (Y/Y) MAR 3.0% South Africa 3/26/2015 PPI (Y/Y) FEB 2.6% 3.0% 3.5% Eurozone 4/30/2015 Unemployment Rate MAR 11.3% UK 3/26/2015 Retail Sales (Y/Y) FEB 5.7% 4.7% 5.9% Japan 4/30/2015 CPI (Y/Y) MAR 2.2% US 3/27/2015 GDP (Y/Y) Q4 2.4% 2.3% 2.7% United States 5/1/2015 PMI Manufacturing APR 55.7 Greece 3/30/2015 PPI (Y/Y) FEB -4.8% -8.5% -9.6% Thailand 5/3/2015 CPI (Y/Y) APR -0.6% Turkey 3/31/2015 GDP (Y/Y) Q4 2.4% 2.6% 1.8% China 5/3/2015 PMI Manufacturing APR 49.6 Germany 3/31/2015 Unemployment Rate FEB 4.8% - 4.8% Turkey 5/4/2015 PPI (Y/Y) APR 3.4% UK 3/31/2015 GDP (Y/Y) Q4 3.0% 2.7% 2.8% South Africa 5/5/2015 Unemployment Rate Q1 24.3% Brazil 4/1/2015 Industrial Production (Y/Y) FEB -9.1% - -5.2% Eurozone 5/5/2015 PPI (Y/Y) MAR -2.8% Thailand 4/1/2015 CPI (Y/Y) MAR -0.4% -0.6% -0.5% Brazil 5/5/2015 PPI (Y/Y) MAR 2.8% Romania 4/3/2015 Retail Sales (Y/Y) FEB 3.5% - 6.7% France 5/7/2015 Industrial Production (Y/Y) MAR 0.6% United States 4/3/2015 Unemployment Rate MAR 5.5% 5.5% 5.5% Czech Republic 5/7/2015 Industrial Production (Y/Y) MAR 10.0% Brazil 4/6/2015 PMI Composite MAR 47.0 48.0 51.3 Malaysia 5/7/2015 Interest Rate Decision APR 3.3% Philippines 4/6/2015 CPI (Y/Y) MAR 2.4% 2.7% 2.5% Mexico 5/8/2015 PPI (Y/Y) APR 2.6% Romania 4/7/2015 GDP (Y/Y) Q4 2.6% - 2.9% Turkey 5/8/2015 Industrial Production (Y/Y) MAR 1.0% Eurozone 4/7/2015 PPI (Y/Y) FEB -2.8% -3.1% -3.5% United States 5/8/2015 Participation Rate APR 62.7% Germany 4/9/2015 Industrial Production (Y/Y) FEB -0.3% 1.0% -0.1% Canada 5/8/2015 Unemployment Rate APR 6.8% Greece 4/9/2015 Unemployment Rate MAR 25.7% 26.1% 25.9% Malaysia 5/11/2015 Industrial Production (Y/Y) MAR 5.2% Canada 4/10/2015 Unemployment Rate MAR 6.8% 6.9% 6.8% Denmark 5/11/2015 CPI (Y/Y) APR 0.6% Japan 4/13/2015 Industrial Production (M/M) FEB -2.0% - -2.8% Greece 5/11/2015 Industrial Production (Y/Y) MAR 1.9% Portugal 4/13/2015 CPI (Y/Y) MAR 0.4% -0.2% -0.1% United Kingdom 5/12/2015 Industrial Production (Y/Y) MAR 0.1% Eurozone 4/14/2015 Industrial Production (Y/Y) FEB 1.6% 0.8% 0.4% South Africa 5/12/2015 Manufacturing Production (Y/Y) MAR -0.5% United States 4/14/2015 PPI (Y/Y) MAR -0.8% -0.9% -0.6% Germany 5/13/2015 GDP (Y/Y) Q1 1.4% South Korea 4/14/2015 Unemployment Rate MAR 3.7% 3.6% 3.9% Eurozone 5/13/2015 GDP (Y/Y) Q1 0.9% China 4/14/2015 GDP(Y/Y) Q1 7.0% 7.0% 7.3% France 5/13/2015 GDP (Y/Y) Q1 0.1% Germany 4/15/2015 CPI (Y/Y) MAR 0.3% 0.3% 0.1% Poland 5/14/2015 CPI (Y/Y) APR -1.5% Turkey 4/15/2015 Unemployment Rate JAN 11.3% 11.2% 10.4% Brazil 5/14/2015 Retail Sales (Y/Y) MAR -3.1% Czech Republic 4/17/2015 PPI (Y/Y) MAR -2.9% - -3.6% Japan 5/15/2015 Consumer Confidence Index APR 41.7 Eurozone 4/17/2015 CPI (Y/Y) MAR -0.1% -0.2% -0.2% Czech Republic 5/15/2015 GDP (Y/Y) Q1 1.4% Switzerland 4/17/2015 Retail Sales (Y/Y) MAR -2.7% - -0.3% Greece 5/15/2015 GDP (Q/Q) Q1 -0.4% Malaysia 4/21/2015 CPI (Y/Y) MAR 0.9% 0.9% 0.1% Thailand 5/17/2015 GDP(Q/Q) Q1 7.9% South Korea 4/22/2015 GDP (Y/Y) Q1 2.4% 2.5% 3.3% Japan 5/18/2015 Industrial Production (Y/Y) MAR -2.0% Germany 4/23/2015 PMI Manufacturing APR 51.9 53.3 52.8 United Kingdom 5/19/2015 CPI (Y/Y) APR 0.0% United Kingdom 4/23/2015 Retail Sales (Y/Y) MAR 4.2% 5.9% 5.4% Eurozone 5/19/2015 CPI (Y/Y) APR -0.1% Argentina 4/24/2015 Industrial Production (Y/Y) MAR -1.9% - -2.2% Japan 5/19/2015 GDP(Q/Q) Q1 0.4% Mexico 4/27/2015 Unemployment Rate MAR 4.2% 4.2% 4.4% Malaysia 5/20/2015 CPI (Y/Y) APR 0.9% United States 4/27/2015 PMI Composite APR 57.4 - 59.2 Sweeden 5/20/2015 Unemployment Rate APR 7.7% Germany 4/29/2015 CPI (Y/Y) APR 0.4% 0.4% 0.3% South Africa 5/20/2015 Retail Sales (Y/Y) MAR 4.0% United States 4/29/2015 GDP (Q/Q) Q1 0.2% 1.1% 2.2% Mexico 5/21/2015 GDP (Q/Q) Q1 0.7% APRIL 2015 Financial Markets 2013 2014 2014 2015 MRV 1 Chg since 2010 2011 2012 2013 Q4 Q1 Q2 Q3 Q4 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Sep-12 '08 3 Interest rates and LIBOR (%) U.S. Fed Funds Effective 0.18 0.10 0.14 0.11 0.09 0.07 0.09 0.09 0.10 0.10 0.09 0.09 0.09 0.09 0.09 0.12 0.12 0.11 0.11 0.13 -1.97 ECB repo 1.00 1.25 0.88 0.55 0.35 0.25 0.22 0.12 0.05 0.16 0.15 0.15 0.06 0.05 0.05 0.05 0.05 0.05 0.05 0.05 -4.20 US$ LIBOR 3-months 0.34 0.34 0.43 0.27 0.24 0.24 0.23 0.23 0.24 0.23 0.23 0.23 0.23 0.23 0.23 0.25 0.25 0.26 0.27 0.28 -2.54 EURIBOR 3-months 0.75 1.34 0.49 0.15 0.20 0.27 0.27 0.13 0.00 0.21 0.17 0.16 0.06 0.06 0.06 0.00 0.00 0.00 0.00 0.06 -4.89 US 10-yr Treasury yield 3.20 2.77 1.79 2.33 2.73 2.75 2.61 2.49 2.27 2.59 2.53 2.41 2.52 2.29 2.32 2.20 1.88 1.98 2.04 2.00 -1.72 German Bund, 10 yr 2.78 2.65 1.57 1.63 1.79 1.68 1.43 1.07 0.77 1.35 1.19 1.01 1.00 0.87 0.79 0.64 0.45 0.35 0.26 0.16 -4.02 Spreads (basis points) JP Morgan Emerging Markets 301 341 342 319 342 352 300 301 367 282 282 310 312 349 350 402 443 420 411 376 19 Asia 206 218 216 219 237 231 197 195 202 189 195 202 187 207 193 206 233 215 208 201 -95 Europe 247 301 320 267 290 301 265 262 319 236 244 274 270 295 293 368 417 396 384 336 23 Latin America & Caribbean 360 404 393 379 409 429 360 366 471 343 336 373 390 443 455 516 560 531 521 473 85 Middle East 342 366 449 435 428 408 376 369 398 360 372 379 358 395 388 411 452 452 443 425 -73 Africa 274 364 337 322 338 332 287 280 319 278 278 292 270 307 306 343 385 364 371 348 348 Stock Indices (end of period) 2 Global (MSCI) 331 300 340 409 409 411 429 417 417 429 423 432 417 419 426 417 410 432 425 443 38.3 High-Income ($ Index) 1280 1183 1339 1661 1661 1674 1743 1698 1710 1743 1714 1749 1698 1708 1740 1710 1678 1773 1741 1803 40.5 United States (S&P-500) 1258 1258 1426 1848 1848 1872 1960 1972 2059 1960 1931 2003 1972 2018 2068 2059 1995 2105 2068 2115 69.0 Euro Area (S&P-350$) 1124 1005 1143 1339 1339 1361 1401 1411 1401 1401 1380 1404 1411 1382 1425 1401 1502 1603 1624 1661 43.7 Japan (Nikkei-225) 10229 8455 10395 16291 16291 14828 15162 16174 0 15162 15621 15425 16174 16414 17460 0 17674 18798 19207 20059 64.2 Developing Markets (MSCI) 1151 916 1055 1003 1003 995 1051 1005 956 1051 1066 1088 1005 1016 1005 956 962 990 975 1067 24.7 EM Asia 468 379 447 446 446 444 472 460 457 472 485 489 460 467 467 457 468 479 481 523 59.7 EM Europe 529 395 473 438 438 409 435 374 297 435 403 399 374 369 353 297 286 313 302 338 -33.5 EM Europe & Middle East 450 336 402 372 372 348 360 321 257 360 340 337 321 314 303 257 247 269 258 287 -29.8 EM Latin America & Caribbean 4614 3602 3798 3201 3201 3194 3370 3171 2728 3370 3399 3664 3171 3158 3008 2728 2555 2654 2451 2758 -22.0 Exchange Rates (LCU / USD) High Income Euro Area 0.76 0.72 0.78 0.75 0.73 0.73 0.73 0.76 0.80 0.74 0.74 0.75 0.78 0.79 0.80 0.81 0.86 0.88 0.92 0.91 29.7 Japan 87.76 79.74 79.85 97.61 100.51 102.78 102.14 104.04 114.62 102.07 101.75 102.98 107.39 108.02 116.40 119.44 118.33 118.78 120.37 118.86 10.1 Developing Brazil 1.76 1.67 1.95 2.16 2.28 2.36 2.23 2.28 2.55 2.23 2.22 2.27 2.34 2.45 2.55 2.65 2.64 2.82 3.15 2.94 64.9 China 6.77 6.46 6.31 6.15 6.09 6.10 6.23 6.16 6.15 6.23 6.20 6.15 6.14 6.13 6.13 6.19 6.22 6.25 6.24 6.21 -9.3 Egypt 5.63 5.94 6.07 6.87 6.89 6.96 7.07 7.15 7.15 7.15 7.15 7.15 7.15 7.15 7.15 7.15 7.27 7.59 7.60 7.63 40.7 India 45.73 46.67 53.41 58.55 62.00 61.75 59.82 60.59 61.96 59.76 60.06 60.83 60.87 61.40 61.70 62.77 62.20 62.06 62.48 63.19 38.2 Russia 30.37 29.41 31.06 31.86 32.56 35.07 34.96 36.31 47.98 34.37 34.75 36.17 38.01 40.96 46.30 56.67 64.33 64.16 60.13 51.54 101.9 South Africa 7.32 7.26 8.21 9.65 10.16 10.86 10.54 10.77 11.22 10.68 10.66 10.66 10.99 11.06 11.09 11.51 11.56 11.58 12.08 11.86 48.4 Memo: USA nominal effective rate 100.19 98.53 102.00 104.76 106.30 108.31 108.66 110.57 114.05 109.31 109.43 110.61 111.67 112.66 113.83 115.67 117.82 119.65 121.74 120.65 25.9 1 MRV = Most Recent Value. 2 MSCI Indices for Asia, Africa, and Europe and C. Asia, for 2008 are calculated from February-December, due to data availability. 3 Change expressed in levels for interest rates and spreads; percent change for stock market and exchange rates. Commodity Prices 2013 2014 2014 MRV Chg since 2010 2011 2012 2013 Q4 Q1 Q2 Q3 Q4 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Sep-12 '08 3 1 Oil price, $/b, nominal 79 104 105 104 105 104 106 100 75 108 105 100 96 86 77 61 48 55 53 53 -45.8 Non - Oil Index 2 .. 97 85 79 75 76 77 73 70 76 75 74 71 70 71 69 66 65 63 63 .. 2 Food Index .. 99 97 89 85 86 89 75 74 86 79 76 72 72 75 75 73 72 70 69 .. Metals and Minerals Index 3 103 117 99 94 92 88 87 89 83 87 90 90 87 84 84 80 75 74 73 75 -27.9 Baltic Dry Index 4 2755 1545 916 1215 1876 1375 983 948 1103 912 796 948 1101 1096 1332 881 727 539 576 596 -87.6 1 Simple average of Brent, Dubai and WTI. 2 Base Date = Jan 3, 2011 due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. 3 Base Date = Jan 4, 2010 due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. APRIL 2015 Economic Developments indicators expressed as %ch y/y, except Industrial Production quarterly figures are %ch q/q, annualized 2014 2014 2015 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Industrial Production, S.A. World 8.8 4.7 3.1 2.5 3.7 2.3 2.5 3.9 3.7 3.6 3.5 3.5 3.4 2.7 3.4 3.1 2.9 3.3 2.6 2.46 - High Income Countries 7.7 2.9 1.1 0.6 3.0 0.3 0.5 3.1 3.0 2.8 2.2 2.3 2.4 1.3 1.7 1.8 1.4 1.9 1.6 1.3 - Developing Countries 10.9 7.8 6.3 5.5 4.8 5.4 5.4 5.0 4.9 4.8 5.5 5.4 5.0 4.8 6.0 5.1 5.1 5.3 4.1 4.22 - East Asia and Pacific 14.2 11.3 9.0 8.9 4.8 8.0 6.7 8.6 7.5 7.9 8.2 8.6 7.8 6.6 7.6 7.1 6.6 7.3 6.5 6.26 4.8 East Asia x. China 8.9 0.7 4.1 4.7 -0.7 7.8 4.2 5.2 0.8 2.5 4.0 4.7 1.1 4.6 5.7 4.4 3.5 4.4 4.5 3.23 - Europe and Central Asia 10.9 13.1 8.9 2.2 5.3 2.0 1.5 -0.9 4.2 4.2 6.6 3.6 4.0 2.4 2.8 2.5 2.1 1.3 -0.1 1.87 - Latin America and Caribbean 5.9 2.5 -0.1 0.9 1.2 -2.9 -0.1 -2.6 1.5 -2.3 -1.2 -2.8 -1.6 -1.0 -1.4 -0.8 -1.5 -1.0 -2.4 -2.6 - Middle East and N. Africa 2.0 -8.5 5.6 -6.7 17.0 2.8 25.2 -2.0 -8.9 -9.1 -7.4 -4.7 -1.7 9.7 17.2 10.8 12.7 7.3 -0.4 -0.41 5.36 South Asia 9.3 5.5 1.1 1.7 7.1 5.8 2.1 -3.0 0.1 4.2 5.3 4.5 1.9 2.6 4.0 -0.9 5.9 3.7 3.4 5.31 - Sub-Saharan Africa 4.7 3.4 3.2 1.0 -2.8 -0.9 -5.1 10.9 -0.1 0.2 -1.6 0.6 -7.4 -0.6 6.4 1.6 -0.9 0.4 -1.4 -0.2 - Inflation, S.A. 1 High Income Countries 1.7 2.8 2.0 1.5 1.4 2.0 1.8 1.5 1.5 2.0 2.0 2.0 1.8 1.7 1.7 1.7 1.5 1.2 0.9 1.0 1.1 Developing Countries 5.8 7.5 6.5 7.4 7.4 7.7 7.9 7.9 7.5 7.5 7.9 7.7 7.9 8.0 7.8 7.7 7.7 8.2 7.7 7.9 7.8 East Asia and Pacific 3.4 5.6 2.8 3.0 2.9 2.9 2.5 2.2 2.9 2.5 3.1 3.0 2.8 2.5 2.2 2.1 2.2 2.3 1.5 2.0 2.0 Europe and Central Asia 7.3 8.2 8.7 6.2 5.8 7.4 7.9 8.1 6.1 7.0 7.6 7.5 7.7 8.0 8.0 8.2 8.4 7.8 7.6 8.3 9.1 Latin America and Caribbean 6.4 7.5 6.7 9.8 12.5 13.9 15.5 16.9 12.9 13.6 13.9 14.2 14.9 15.5 16.0 16.3 16.6 17.6 17.2 17.0 16.5 Middle East and N. Africa 7.0 12.0 13.8 19.2 13.2 9.7 10.1 10.8 11.3 10.1 9.9 9.2 9.9 10.2 10.1 10.6 10.6 11.3 10.4 10.9 11.1 South Asia 10.3 9.8 9.4 10.1 8.1 7.8 6.7 4.2 8.1 8.4 8.1 6.8 7.3 6.9 5.8 4.8 3.5 4.4 5.1 5.1 4.9 Sub-Saharan Africa 7.5 10.1 11.1 8.1 8.6 9.2 9.8 8.4 8.5 8.7 9.2 9.7 9.9 10.1 9.3 8.4 8.4 8.6 7.6 7.6 7.6 1 Inflation is calculated as the GDP-weighted average for all groups. Trade and Finance indicators expressed as %ch y/y, except International Reserves are %ch p/p and trade quarterly figures are %ch q/q, annualized 2014 2015 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Exports, Nominal, US$, S.A. World 21.9 19.2 0.2 2.1 -2.4 4.8 2.3 -14.8 3.0 3.0 4.3 3.7 6.1 1.1 2.9 -1.1 -4.2 -3.3 -10.0 -5.5 - High Income Countries 19.4 18.6 -1.1 1.3 0.7 2.9 -1.8 -18.0 5.3 3.8 4.3 2.9 5.5 -0.1 1.2 -2.7 -5.7 -4.9 -11.5 -12.0 - Developing Countries 28.3 20.7 3.3 3.8 -9.2 9.3 12.1 -7.5 -2.2 1.0 4.1 5.5 7.5 4.0 6.7 2.6 -0.8 0.3 -6.6 10.3 -16.5 East Asia and Pacific 30.8 19.7 6.3 6.4 -12.2 13.5 22.1 3.2 -3.7 2.0 5.1 7.6 11.2 8.1 12.7 8.3 3.5 5.8 -3.3 29.6 -14.5 Europe and Central Asia 15.5 20.3 -0.1 -0.3 7.6 -4.3 -6.4 -29.0 8.9 3.2 6.7 5.4 6.0 -3.8 -1.0 -6.1 -9.3 -11.7 -13.0 -15.8 - Latin America and Caribbean 28.4 23.3 1.7 0.6 -10.2 8.2 3.4 -25.0 -3.1 -0.7 1.0 1.5 5.4 -0.8 -0.4 -4.5 -9.1 -6.9 -8.8 -13.5 -4.3 Middle East and N. Africa 24.3 15.1 2.1 - - - - - - - - - - - - - - - - - - South Asia 34.3 31.6 -1.8 6.2 -8.0 5.0 7.4 -3.1 1.7 4.5 10.1 8.2 0.5 1.1 -0.9 -5.7 8.2 -1.9 -9.4 -13.3 -18.8 Sub-Saharan Africa 32.7 19.1 -2.9 0.2 -7.1 2.0 -18.2 -28.2 -7.9 -10.3 -8.2 -4.1 -9.2 -7.7 -7.5 -9.4 -16.7 -14.8 - - - Imports, Nominal, US$, S.A. World 21.1 19.7 0.6 1.3 3.7 -1.7 1.7 -16.9 3.7 1.8 1.8 5.5 3.2 0.3 3.6 -2.2 -4.5 -4.2 -14.4 -14.4 - High Income Countries 17.9 17.8 -1.0 0.3 4.5 1.0 -2.5 -19.8 7.6 4.4 4.2 6.4 5.5 0.3 2.0 -3.5 -5.7 -4.9 -14.1 -14.4 - Developing Countries 29.7 24.5 4.6 3.5 1.9 -7.8 12.5 -9.9 -4.7 -3.8 -3.6 3.2 -2.0 0.3 7.4 0.8 -1.7 -2.7 -15.2 -14.7 -8.9 East Asia and Pacific 37.3 24.2 5.7 6.1 2.0 -12.9 13.9 -8.4 -10.2 -1.9 -3.7 3.7 -2.5 -0.8 7.1 2.9 -5.1 -3.3 -17.6 -17.4 -9.8 Europe and Central Asia 20.6 27.1 -0.2 2.9 -11.3 -6.7 -5.9 -8.9 -0.4 -6.0 -2.3 0.1 -7.2 -4.2 -4.5 -7.5 -8.1 -9.2 -16.7 -15.2 - Latin America and Caribbean 29.0 22.5 3.8 2.9 3.9 -3.4 6.0 -7.5 2.7 -4.7 -2.4 2.6 -0.8 -1.9 7.4 -4.4 0.1 3.3 -8.5 -8.6 0.0 Middle East and N. Africa 15.0 18.0 9.8 - - - - - - - - - - - - - - - - - - South Asia 33.9 31.4 4.0 -4.0 10.8 8.9 35.5 -15.0 1.4 -9.4 -10.0 8.8 4.2 7.0 23.7 7.1 21.4 -2.5 -12.2 -12.5 -11.0 Sub-Saharan Africa 13.3 24.3 3.5 2.4 -4.7 12.5 4.4 - 3.5 0.1 6.1 2.6 1.1 2.7 2.9 6.5 - - - - - International Reserves, US$ High Income Countries 10.2 11.3 9.2 3.6 0.8 0.7 -1.8 -1.4 0.3 0.0 0.3 0.5 -0.4 0.0 -1.3 -0.6 0.0 -0.9 0.2 -0.1 - Developing Countries 15.6 10.5 5.2 8.2 1.8 1.5 -1.9 -1.7 0.7 1.0 0.1 0.4 -0.2 -0.1 -1.7 -0.7 -0.3 -0.7 -0.7 -0.2 -1.6 East Asia and Pacific 19.3 11.9 4.5 12.2 3.0 1.2 -2.5 -1.4 0.8 0.9 0.1 0.3 -0.5 0.1 -2.1 -0.8 -0.3 -0.4 -0.8 -0.2 -1.9 Europe and Central Asia 9.3 5.5 7.8 3.6 -2.9 3.4 -1.7 -7.2 0.6 1.6 0.7 1.0 -1.1 1.1 -1.7 -2.0 -1.1 -4.2 -0.9 -3.2 -2.4 Latin America and Caribbean 16.2 16.3 8.4 -1.1 0.2 3.4 1.2 -1.2 0.1 1.5 0.6 1.2 1.1 0.0 0.1 -0.1 0.7 -1.8 0.4 -0.3 -0.4 Middle East and N. Africa 6.1 3.0 5.9 3.0 -1.9 -2.2 -3.8 -3.2 -0.8 -0.8 -0.9 -0.6 -0.4 -1.1 -2.3 -0.2 -1.0 -2.1 -3.7 - - South Asia 6.1 -0.9 0.4 -0.2 3.8 5.6 -0.6 2.1 3.3 2.9 1.1 1.5 1.3 -0.4 -1.4 0.5 -0.3 1.9 1.8 3.3 1.0