73586


                      DECPG Daily
        Economics and Financial Market Commentary
                    October 16, 2012
           Allen Dennis (84812), Eung Ju Kim (85804), Sanket Mohapatra (37721),
                            Ekaterine T. Vashakmadze (36773)
  You’ll find recent issues of this Daily and lots of other current analysis and h igh-frequency data at our
                                    website: http://www.worldbank.org/gem

Financial Markets…The Euriobor-OIS spread, a measure of banks’ reluctance to lend
to one another in Europe, fell to 11.9 basis points, close to the lowest level since August
2007 reached on October 1 (11.8 bps).
Spain successfully sold €4.86 billion ($6.32 billion) of 12-and 18-month Treasury bills on
Tuesday, exceeding its upper target range of €4.5 billion with borrowing costs sliding
from last month’s similar auction. The securities were priced at an average yield of
2.83% and 3.02%, compared to 2.84% and 3.07% at the previous sale in September.
Russia’s Sberbank signed a $1.5 billion 3-year syndicated loan deal with 12 foreign
lenders, which marked the biggest deal for a borrower in Europe and Central Asia this
year. The loan carries interest of 150 basis points over Libor, the same margin paid for
its $1.2 billion 3-year loan signed last November.
High-income Economies…US industrial production rose 0.4% (m/m) in September,
after a 1.4% decline in August, suggesting signs of stabilization in manufacturing amid
rising retail sales and strengthening consumer demand.
US consumer prices rose 0.6% (m/m) in September, the same rate of increase as
August, reflecting a continued increase in gasoline prices. The annual inflation rate rose
to 2% (y/y), reaching the Federal Reserve's inflation target, from 1.7% in August.
UK consumer price inflation slowed to 2.2% (y/y) in September, its lowest level in
almost three years, from 2.5% in August, mostly due to a high base from steep price
increases last year. Consumer prices, however, rose 0.4% from the previous month.
Germany’s ZEW index of investor and analyst expectations climbed to -11.5 in October
from -18.2 in September, indicating less pessimism about future prospects. ZEW’s
index of the current economic situation, however, fell to 10 from 12.6 in September.
Euro Area consumer price inflation remained steady at 2.6% (y/y) in September, the
same rate as August, according to revised data from Eurostat.
Israel’s consumer price inflation edged up to 2.1% (y/y) in September from 1.9% in
August boosted by rises in fuel, fresh vegetables and utility costs, but remained within
central bank’s inflation target range of 1%-3%.
Developing Economies…Peru’s GDP grew at 6.3% (y/y) in August, a still robust pace
although lower than July 7.2% rate. Growth was led by strong domestic demand in
construction and retail sectors.
Turkey's consumer confidence index fell to 88.8 in September from 91.1 in August.
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Tanzania’s consumer price inflation fell for the ninth month in a row to 13.5% (y/y) in
September from 14.9% in August on declining food prices and tight monetary policy.

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