Global Monthly June 2017 Overview Table of Contents • According to the June 2017 Global Economic Prospects Monthly Highlights .............................................. 2 report, global growth is projected to strengthen this year to Special Focus ....................................................... 6 2.7 percent, and to 2.9 percent in 2018-19. Recent Publications of Prospects Group .................. 8 • Global manufacturing and trade have firmed, financing conditions remain benign, and commodity prices have Recent World Bank Working Papers....................... 8 generally stabilized. Recent World Bank Reports .................................. 8 • Growth in emerging market and developing economies Table A: Major Data Releases ............................... 8 (EMDEs) is expected to increase to 4.1 percent in 2017 and Table B: Activity and Inflation.............................. 9 average 4.6 percent in 2018-19. Table C: Trade and Finance ................................. 9 • The improvement is driven by diminishing obstacles to Table D: Financial Markets ............................... 10 activity in commodity exporters and robust growth in commodity importers. Table E: Commodity Prices ................................. 10 Global growth forecasts over time Chart of the Month • As a moderate recovery continues, global growth forecasts are little changed since January 2017, following a series of downgrades in previous years. • Risks to the global outlook remain tilted to the downside, and include the possibility of increased protectionism, the dampening impact of further policy uncertainty on investment, and the risk of financial market disruptions following a period of exceptionally low volatility. • Over the long run, a protracted slowdown in productivity and investment growth could further weaken the growth Sources: World Bank. potential of both advanced economies and EMDEs. Note: The dates indicate the editions of Global Economic Prospects. Special Focus: Debt Dynamics in EMDEs—Time to Act? • Since the global financial crisis, fiscal positions in EMDEs have weakened and private sector debt has risen. • By 2016, government debt exceeded its 2007 level by more than 10 percentage points of GDP in more than half of EMDEs, while the average fiscal balance worsened by about 6 percentage points during this period. • EMDEs have stronger monetary policy frameworks and external buffers than in the past, but they may need to shore up their fiscal positions to be ready to deploy counter-cyclical policies in the event of financial stress. The Global Monthly is a publication of the Global Macroeconomics Team of the Prospects Group in the Development Economics Vice Presidency. This edition was prepared by Marc Stocker and Dana Vorisek, based on contributions from Naotaka Sugawara and Collette Wheeler. For more information, visit: http://www.worldbank.org/en/research/brief/economic-monitoring June 2017 Monthly Highlights FIGURE 1A Global growth Global growth: strengthening. Global growth is projected in the June 2017 Global Economic Prospects report to strengthen to 2.7 percent in 2017 and 2.9 percent in 2018-19, unchanged from January. In advanced economies, a modest, investment-led recovery is underway, with growth picking up to 1.9 percent in 2017, before moderating somewhat in 2018-19 as economic slack diminishes and monetary policy becomes less accommodative (Figure 1.A). In EMDEs, growth is anticipated to recover to 4.1 percent in 2017, from a post-crisis low of 3.5 percent in 2016, as obstacles to growth in commodity exporters diminish, while activity in commodity importers remains robust (Figure 1.B). FIGURE 1B Growth by country groups Growth in EMDEs should reach an average of 4.6 percent in 2018-19. Advanced economies: moderate recovery. Investment and export growth have regained momentum in advanced economies, following a subdued performance in 2016. Import demand has strengthened as well, further contributing to a recovery in global trade. Private consumption growth continues to be supported by improving labor market conditions, but tailwinds from lower energy prices are fading. In 2017, growth is expected to pick up in the United States and Japan, and to remain robust in the Euro FIGURE 1C Long-term inflation expectations Area. Forecasts for Japan and several major European economies have been upgraded. Economic slack continues to diminish, but inflation expectations remain low, particularly in Japan, and to a lesser extent in the Euro Area (Figure 1.C). Current forecasts do not incorporate assumptions about future changes in U.S. fiscal and trade policies, which still remain highly uncertain at the current juncture. Global trends: supportive. Global trade has regained momentum, following two years of pronounced weakness. It is expected to grow by 4 percent in 2017, its fastest pace since 2010. Sources: Bloomberg, World Bank. A.B. Shaded areas indicate forecasts. Aggregate growth rates calculated using constant 2010 U.S. dollars GDP weights. This represents a significant upgrade from previous projections. C. Long-term inflation expectations are derived from 5-year/5-year forward swap rates. Last observation is May 24, 2017. The upswing is driven by strengthening investment in advanced economies, increased trade flows to and from China, and 2 June 2017 improved import demand from commodity-exporting EMDEs (Figure 2.A). Nevertheless, slower trade liberalization, stagnating FIGURE 2A Global trade value chain integration, and elevated trade policy uncertainty continue to weigh on the medium-term outlook. Global financing conditions remain benign, benefiting from improving market expectations about growth prospects and prospects of persistently low interest rates amid depressed inflation expectations. Commodity prices are expected to recover at a moderate pace, although oil price projections have been revised down, reflecting the prospect of increased U.S. shale oil supplies and evidence of sharply falling production costs (Figure 2.B). Commodity-exporting EMDEs: diminishing obstacles. FIGURE 2B Breakeven prices for U.S. shale oil regions Following near-stagnation over the past two years, growth in commodity exporters is projected to rise to 1.8 percent in 2017 and 2.7 percent in 2018 in a broad-based recovery benefitting more than 60 percent of commodity-exporting EMDEs (Figure 2.C). However, longer-than-expected adjustment to low commodity prices and, to a lesser degree, lower oil price projections have resulted in forecast downgrades for a number of exporters. Country-specific factors contributing to growth forecast downgrades include decelerating oil production in the Islamic Republic of Iran, the protracted effects of sanctions in Russia, deeper-than-expected oil production cuts in Saudi Arabia, FIGURE 2C Share of EMDE commodity exporters and deteriorating investor confidence in South Africa amid recent with accelerating/decelerating growth sovereign rating downgrades to below-investment grade. In this context, the expected recovery in Sub-Saharan Africa is shaping up to be more moderate than projected in January, and growth in the Middle East and North Africa is now expected to slow notably more than expected in January, largely as a result of oil production cuts and protracted fiscal consolidation. Commodity-importing EMDEs: robust growth. Growth continues to be robust among commodity importers. Windfalls from the recent decline in commodity prices are waning, but Source: Rystad Energy, World Bank. A. Shaded areas indicate forecasts. Global trade is measured as volume of goods accommodative policies are supporting domestic demand and a and services. C. Shaded areas indicate forecasts. Accelerating / decelerating growth are recovery in global trade is fueling export growth. The forecast for changes of at least 0.1 percentage point in growth rates from the previous year. Sample includes 86 commodity-exporting EMDEs. 3 June 2017 growth in commodity importers remains stable, at an average of FIGURE 3A Regional growth (weighted average) 5.7 percent in 2017-19. Growth in China continues to be robust, notwithstanding a transition to slower and more sustainable growth. Excluding China, growth in commodity importers will accelerate from 4.6 percent in 2017 to an average of 5.0 percent in 2018-19. In East Asia and Pacific and in South Asia, solid domestic demand, strong infrastructure spending, and rising global demand are supporting growth (Figure 3.A). In Europe and Central Asia, robust domestic demand and rising exports to the Euro Area have also favored commodity importers. Relative to January projections, the outlook for major commodity FIGURE 3B Balance of risks to global growth importers is little changed. forecasts Low-income countries: recovering. Growth is expected to rebound in low-income countries, from a post-crisis low of 4.4 percent in 2016, to 5.4 percent in 2017 and 5.8 percent in 2018, as rising metals prices lift production in metals exporters and infrastructure investment continues in non-resource-intensive economies. Fiscal positions have improved somewhat across low- income countries, but government debt ratios have continued to rise, or remain elevated. Some low-income countries are still struggling with declining oil production, conflict, drought, and FIGURE 3C Investment growth security and political challenges. In this context, forecasts have been slightly downgraded from previous projections. Risks to the forecast: tilted to the downside. Downside risks continue to dominate the outlook, despite the possibility of more expansionary fiscal policy in major advanced economies (Figure 3.B). Escalating trade restrictions could derail a fragile recovery in trade and undo gains from past liberalization efforts. A further increase in policy uncertainty from already high levels could dampen confidence and investment. After a period of unusually Sources: Bloomberg, Consensus Economics, World Bank. low financial market volatility, market reassessment of policy- A. Data for 1995-2008 average are used for ECA to exclude the collapse of the Soviet Union. Bars denote latest forecasts; diamonds denote previous forecasts. related risks or of the pace of advanced-economy monetary policy B. A negative value indicates that risks to global growth forecasts are tilted to the downside. This measure of skewness in global growth forecasts is computed from the forecast distribution of three underlying risk factors (oil price futures, the normalization could provoke financial turbulence and contribute S&P 500 equity price futures, and term spread forecasts). Each of the three risk factors’ weight is estimated using the variance decomposition of global growth to swings in asset prices and capital flows in EMDEs. A renewed forecasts derived from the vector autoregression model described in Ohnsorge, Stocker, and Some (2016). C. Aggregate growth rates calculated using constant 2010 U.S. dollars gross slide in oil prices, which have recently fallen, despite the late May fixed investment weights. 4 June 2017 decision by OPEC and some non-OPEC producers to extend FIGURE 4A Manufacturing as a share of total production cuts, could set back the incipient recovery in oil employment exporters. Over the long term, persistent weakness in productivity and investment growth could further erode potential growth (Figure 3.C). Policy challenges for advanced economies: shifting. Central banks in major advanced economies face the challenge of normalizing monetary policy in coming years without disrupting a fragile recovery or triggering financing market disruptions. While monetary policy is expected to become less accommodative over time, many advanced economies have also shifted toward FIGURE 4B Fiscal sustainability gap less restrictive—and, in some cases, expansionary—fiscal policies. Regarding structural policies, measures to support workers affected by sectoral shifts in employment should be reinforced. Pressure from globalization and technological progress have coincided with a trend decline in the share of manufacturing jobs (Figure 4.A). This has contributed to calls for increased protection of domestic industries and for unwinding past trade liberalization efforts. Policy challenges for EMDEs: restore fiscal space and accelerate reforms. The adverse impact of the prior fall in commodity FIGURE 4C Trade-to-GDP ratio in low-income countries, 2000-15 prices on government budgets in commodity exporters is gradually dissipating, but fiscal space remains constrained and further fiscal adjustment would be needed to stabilize debt (Figure 4.B). Investment and productivity growth in EMDEs has slowed steadily in the post-crisis period, and reforms will need to accelerate to lift growth prospects. Policy priorities include structural measures to improve the business climate, support investment in human and physical capital, and enhance the regional and global trade integration of EMDEs. Greater trade openness has been generally associated with lower poverty in Sources: Federal Reserve Bank of St. Louis; International Monetary Fund WEO; EMDEs, as well as graduation from low- to middle-income status Organisation for Economic Co-operation and Development; U.S. Bureau of Labor Statistics; World Development Indicators, World Bank. A. U.S. data measures total employment on nonfarm payrolls. (Figure 4.C). In China, avoiding a sharp slowdown and a B. Sustainability gap is the difference between the primary balance and the debt- stabilizing primary balance, assuming historical average interest and growth disorderly unraveling of financial vulnerabilities will require a rates. A negative gap indicates that government debt is on a rising path. Median is shown. Sample includes 44 commodity-exporting and 28 commodity-importing EMDEs. careful balancing of policy objectives. C. Simple averages. Graduated and current LICs include 31 and 29 countries, respectively. 5 June 2017 Special Focus: Debt Dynamics in FIGURE 5A Overall fiscal balance and government gross debt in EMDEs EMDEs—Time to Act? Fiscal positions in EMDEs. Since the global financial crisis, EMDEs’ vulnerability to financing shocks has grown as their fiscal positions weakened and private sector debt increased. On average across EMDEs, government debt has risen by 12 percentage points of GDP since 2007, to 47 percent of GDP in 2016. Fiscal deficits have widened to about 5 percent of GDP in 2016 from a surplus of roughly 1 percent of GDP in 2007 (Figure 5.A). At end-2016, government debt exceeded its 2007 level by more than 10 percentage points of GDP in more than half of EMDEs. In addition, the fiscal balance worsened from FIGURE 5B Credit to the private sector in EMDEs 2007 levels by more than 5 percentage points of GDP in one- third of EMDEs. The deterioration in fiscal positions was more pronounced in commodity exporters than in commodity importers, partly because of sharp growth slowdowns that accompanied a slide in commodity prices. Interactions with private sector debt. Government debt dynamics have deteriorated in tandem with mounting private sector debt (Figure 5.B). Since 2007, domestic bank credit to the private sector has risen by 12 percentage points of GDP, to 52 percent of GDP in 2016 (excluding China). By 2016, in almost two-thirds of EMDEs with high private sector debt, government FIGURE 5C Government gross debt in EMDEs debt was also set on a rising path. In these countries, bouts of financial stress could curtail both private and public sector activity, with weaknesses in both amplifying each other. Financial stress episodes. In the run-up to and during a financial stress episode, a country’s debt dynamics typically deteriorated as fiscal balances weakened and government debt increased (Figure 5.C). However, within two years after a financial stress event, government debt usually returned to a broadly stable path. In EMDEs, government debt averaged 69 percent of GDP in the year before a financial stress event and increased to an average of Sources: International Monetary Fund, World Bank. 77 percent of GDP in the episode year. It then declined to 63 A.B. GDP-weighted averages. The year of global recession (2009) is shaded in gray. percent in two years after the onset of the event. In 2016, C. Year t refers to the year of onset of financial stress episodes. The solid blue lines are simple averages for all episodes, while the dashed blue lines show the interquartile range. The red line is shown for reference and based on all EMDEs, government debt levels were lower than those on the eve of although it is not a stress episode. Financial stress episodes are taken from Gourinchas and Obstfeld (2012) and Laeven and Valencia (2013). When typical financial stress event. However, fiscal balances in EMDEs consecutive events are identified within a five-year period in a country, the one associated with the lowest real GDP growth is used. in 2016 compared unfavorably with those prior to such earlier episodes. 6 June 2017 Oil price plunges. Fiscal positions among oil-exporting EMDEs FIGURE 6A Sustainability gap, oil-exporting deteriorated sharply during past oil price plunges, but rebounded EMDEs as a result of pro-cyclical fiscal tightening and, in some episodes, a recovery in oil prices (Figure 6.A). Within two years of these oil price plunge episodes, fiscal positions were restored close to their pre-plunge levels. Fiscal surpluses in the year before the oil price plunge turned into significant deficits (-3.3 percent of GDP, on average) in the following year as resource revenues declined, before stabilizing after two years (-0.9 percent of GDP, on average). However, oil-exporting EMDEs entered the most recent oil price drop with significantly weaker fiscal positions than in previous episodes. And while the deterioration of fiscal positions after the 2014-15 oil price plunge was similarly pronounced as in FIGURE 6B EMDEs with inflation-targeting frameworks and central bank independence the past, no improvement was observed by 2016. Challenges and buffers. Though monetary policy normalization in advanced economies is expected to proceed smoothly, there is a possibility it could generate financial market volatility. A growing number of EMDEs employ inflation-targeting frameworks and have increased exchange rate flexibility to absorb shocks (Figures 6.B and 6.C). Reserve buffers have also strengthened and allowed, especially, energy-exporting EMDEs to soften the adjustment to prospects of lower commodity prices. Despite EMDEs having stronger policy frameworks than in the past, these economies may need to shore up their fiscal positions to prevent sudden spikes in FIGURE 6C EMDEs with floating exchange rate regimes financing costs from forcing them into fiscal tightening. Policy responses. EMDEs can adopt several measures to shore up fiscal sustainability. In many commodity importers, where growth has generally been robust since the global financial crisis, unexpected revenue windfalls can be set aside to reduce fiscal deficits and debt. Across EMDEs, structural reforms can support fiscal credibility and generate long-term fiscal gains with limited short-term growth impact (e.g., pension reforms). Revenue collection efforts can be enhanced to raise spending envelopes, and expenditures can be reallocated toward growth-enhancing or Sources: Dincer and Eichengreen (2014), Hammond (2012), International better-targeted spending. In low-income countries, strong Monetary Fund, World Bank. A. Year t refers to the year of oil price plunges. Past oil price plunges include revenue bases and improvements in spending efficiency are collapses in global oil prices in 1991, 1998, 2001, and 2008 (World Bank 2015b). Simple averages of 36 EMDE oil exporters in all episodes. The red lines are for essential to finance the investment needed to achieve the latest plunge starting in 2014. B.C. Sample includes 46 EMDEs in which actual primary fiscal deficits exceed development goals. debt-stabilizing primary fiscal deficits by more than 1 percentage point of GDP. See June 2017 Global Economic Prospects for an exact definition. B. Refer to Dincer and Eichengreen (2014) for further information on the index of central bank independence. C. Floating exchange rate regimes are those classified as floating, free floating, or independently floating. 7 June 2017 Recent Prospects Group Publications Global Economic Prospects - June 2017: A Fragile Recovery Commodity Markets Outlook - April 2017 Global Economic Prospects - January 2017: Weak Investment in Uncertain Times Commodity Markets Outlook - January 2017: Investment Weakness in Commodity Exporters Recent World Bank Working Papers How Important Are Spillovers from Major Emerging Markets? Where to Create Jobs to Reduce Poverty: Cities or Towns? Does Energy Efficiency Promote Economic Growth?: Evidence from a Multi-country and Multi-sector Panel Data Set Deterring Kickbacks and Encouraging Entry in Public Procurement Markets: Evidence from Firm Surveys in 88 Developing Countries Energy Prices and International Trade: Incorporating Input-Output Linkages Credit Composition, Output Composition, and External Balances The Labor Market Effects of Financial Crises: The Role of Temporary Contracts in Central and Western Europe Financial Globalization and Market Volatility: An Empirical Appraisal Should Emerging Markets Worry about U.S. Monetary Policy Announcements? Employment Multipliers over the Business Cycle Recent World Bank Reports World Development Report 2017: Governance and the Law Doing Business 2017: Equal Opportunity for All TABLE A: Major Data Releases (Percent change, y/y) (Percent change y/y) Recent releases: May 24, 2017 - July 4, 2017 Upcoming releases: July 5, 2017 - July 25, 2017 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Poland 5/31/17 GDP Q1 4.0 % 4.0 % Brazil 7/7/17 CPI JUN 3.6 % Slovenia 5/31/17 GDP Q1 5.3 % 2.6 % Mexico 7/7/17 CPI JUN 6.2 % Belgium 5/31/17 GDP Q1 1.6 % 1.2 % China 7/9/17 CPI JUN 1.5 % Italy 6/1/17 GDP Q1 1.2 % 0.8 % 0.8 % Denmark 7/10/17 CPI JUN 0.8 % Switzerland 6/1/17 GDP Q1 1.1 % 0.7% China 7/11/17 GDP Q2 6.9 % Finland 6/1/17 GDP Q1 2.7 % 1.2% Czech Republic 7/12/17 CPI JUN 2.4 % Brazil 6/1/17 GDP Q1 -0.4 % -2.5 % Portugal 7/12/17 CPI JUN 1.5 % Czech Republic 6/2/17 GDP Q1 2.9 % 2.9 % Germany 7/13/17 CPI JUN 1.5 % Greece 6/2/17 GDP Q1 0.4 % -1.1 % France 7/13/17 CPI JUN 0.8 % South Africa 6/6/17 GDP Q1 1.0 % 0.7 % Sweden 7/13/17 CPI JUN 1.7 % Australia 6/6/17 GDP Q1 1.7 % 1.7 % 2.4 % Italy 7/14/17 CPI JUN 1.4 % Romania 6/7/17 GDP Q1 5.6 % 4.9 % Ireland 7/14/17 GDP Q1 7.2 % Hungary 6/7/17 GDP Q1 4.2 % 1.5 % United States 7/14/17 CPI JUN 1.9 % Bulgaria 6/7/17 GDP Q1 3.5 % 3.4 % Eurozone 7/17/17 CPI JUN 1.4 % Japan 6/7/17 GDP Q1 1.0 % 1.2 % Austria 7/18/17 CPI JUN 1.9 % Turkey 6/12/17 GDP Q1 4.7 % 3.5 % UK 7/18/17 CPI MAY 2.9 % New Zealand 6/14/17 GDP Q1 2.5 % 2.7 % 2.7 % Malaysia 7/19/17 CPI JUN 3.9 % Netherland 6/23/17 GDP Q1 3.2 % 2.4% South Africa 7/19/17 CPI JUN 5.4 % France 6/23/17 GDP Q1 1.1 % 1% 1.1 % Canada 7/21/17 CPI JUN 1.3 % United States 6/29/17 GDP Q1 2.1 % 2.0 % Mexico 7/25/17 GDP Q2 SA 2.7 % UK 6/30/17 GDP Q2 2.0 % 2.1 % 2.0 % Australia 7/25/17 CPI Q2 2.1 % 8 June 2017 TABLE B: Activity and Inflation (Percent change y/y, except quarterly data on industrial production, which are percent change q/q, annualized) 2016 2017 2016 2017 2015 2016 Q2 Q3 Q4 Q1 June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Industrial production, sa 1 World 1.9 2.2 2.4 2.8 5.3 3.6 2.1 1.8 2.4 2.1 2.2 3.3 3.7 3.1 3.5 4.0 3.9 - Advanced economies 0.2 0.2 0.4 1.7 3.9 1.5 -0.2 -0.4 0.6 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.5 - Emerging market and developing economies 3.5 4.2 4.3 4.0 6.8 5.9 4.3 4.0 4.2 3.8 4.2 4.7 4.9 5.2 4.8 5.8 5.3 - Commodity-exporting EMDEs 0.2 1.3 0.7 2.9 4.8 2.7 1.6 2.0 1.3 1.0 1.3 2.3 3.4 3.0 2.4 3.0 4.2 - Other EMDEs 5.0 5.3 5.8 4.3 7.7 6.6 5.4 4.8 5.4 4.9 5.2 5.6 5.6 6.1 5.7 6.6 5.6 5.8 East Asia and Pacific 5.8 5.8 7.3 5.5 6.0 7.2 6.2 6.0 6.3 5.5 5.6 5.9 6.0 6.2 6.1 7.2 6.3 6.2 East Asia excl. China 3.5 4.5 8.3 3.9 3.1 4.3 6.9 6.8 5.9 2.2 2.5 4.3 6.1 4.8 4.8 5.0 4.6 - Europe and Central Asia 1.5 2.0 0.6 -2.1 9.8 5.7 2.0 0.2 1.8 0.6 1.5 2.8 2.7 4.4 1.4 4.4 4.4 6.8 Latin America and the Caribbean -3.1 -2.8 0.0 0.7 -0.9 0.3 -2.4 -2.2 -2.8 -1.8 -2.6 -0.8 1.1 0.2 0.7 -0.8 -0.1 - Middle East and North Africa 2.8 - -2.9 8.3 - - 2.9 3.7 3.1 4.3 6.5 - - - - - - - South Asia 3.5 5.7 4.9 2.0 4.3 2.9 6.6 5.9 5.4 4.5 5.1 5.7 3.0 3.8 2.4 4.4 3.7 - Sub-Saharan Africa 0.1 0.8 6.6 -6.1 -3.5 -3.1 4.2 1.4 0.1 0.0 -1.1 0.6 -0.9 0.0 -2.8 -2.1 -0.1 - Inflation, sa 2 World 1.4 1.3 1.6 1.3 1.6 2.4 1.6 1.5 1.2 1.4 1.5 1.5 1.8 2.3 2.4 2.4 2.3 2.1 Advanced economies 0.1 0.4 0.2 0.4 0.8 1.6 0.4 0.4 0.4 0.5 0.6 0.7 1.1 1.5 1.8 1.6 1.9 1.5 Emerging market and developing economies 2.5 2.3 2.8 2.8 2.4 3.4 2.5 2.8 2.7 2.9 2.4 2.4 2.5 2.9 3.4 3.5 3.5 3.4 Commodity-exporting EMDE 3.9 3.5 3.6 3.2 3.2 3.5 3.5 3.5 3.2 3.1 2.9 2.9 3.1 3.4 3.5 3.6 3.7 3.6 Other EMDE 1.0 1.1 1.8 1.6 1.7 3.1 1.5 1.8 1.5 1.4 1.5 1.6 1.8 2.6 3.2 3.5 3.1 3.2 East Asia and Pacific 1.3 1.4 1.6 1.9 2.0 2.4 1.8 1.9 1.6 2.1 1.6 1.8 2.1 2.7 3.2 3.5 3.3 3.2 Europe and Central Asia 1.9 0.4 0.3 0.5 1.0 2.4 0.4 1.2 0.5 0.5 0.9 0.9 1.5 2.4 2.5 2.7 2.6 2.3 Latin America and the Caribbean 2.7 2.4 3.5 3.0 3.1 3.4 3.4 2.9 3.1 3.1 2.9 3.2 3.2 3.1 3.3 3.2 3.6 3.1 Middle East and North Africa 1.9 2.2 2.3 2.3 1.9 2.5 2.4 2.3 2.1 2.5 1.9 2.0 1.8 2.2 2.5 2.9 2.0 2.0 South Asia 4.5 4.9 5.3 5.3 3.9 4.3 5.7 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 5.0 3.9 3.6 Sub-Saharan Africa 3.6 5.3 5.0 5.7 5.5 6.7 5.4 4.9 5.9 5.8 5.8 4.9 6.5 6.7 6.7 6.8 6.7 6.5 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/y, except quarterly trade data, which are percent change q/q, annualized, and international reserves data, which are percent change over the previous period) 2016 2017 2016 2017 2015 2016 Q2 Q3 Q4 Q1 June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Exports, nominal, US$, sa World -11.5 -3.0 15.5 -0.8 7.9 18.2 -4.1 -6.9 2.8 -0.8 -3.3 4.9 4.1 10.4 7.1 12.3 4.0 - Advanced economies -11.3 -0.8 16.6 -1.1 4.4 15.9 -2.3 -5.5 5.4 1.4 -1.8 6.1 5.7 9.3 7.3 9.5 1.0 - Emerging market and developing economies -12.0 -6.6 13.6 -0.3 14.9 22.6 -7.1 -9.1 -1.7 -4.4 -5.6 3.0 1.5 12.7 6.8 17.6 9.8 - Commodity-exporting EMDEs -24.2 -9.3 16.2 5.4 28.1 48.7 -13.5 -15.1 -1.9 -1.7 -5.6 7.6 7.8 26.7 19.5 24.7 - - Other EMDEs -3.8 -4.6 12.6 -2.3 10.2 13.9 -3.1 -5.6 -0.9 -4.9 -5.0 1.8 -0.5 7.8 2.4 15.1 7.9 - East Asia and Pacific -3.5 -6.1 13.4 -2.4 11.1 15.7 -5.4 -6.9 -1.6 -6.9 -6.0 1.7 -2.2 9.1 2.4 16.2 9.6 10.6 Europe and Central Asia -20.7 -6.1 21.6 -2.1 20.8 37.4 -4.2 -8.9 0.5 -1.1 -3.6 6.5 7.7 22.2 12.6 21.2 6.8 - Latin America and the Caribbean -11.9 -2.4 9.3 6.6 14.3 29.8 -8.0 -7.6 2.6 2.9 -4.4 10.2 10.9 14.7 12.4 16.9 8.9 - Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - - South Asia -4.8 1.6 4.1 -18.3 31.5 2.4 5.1 -4.0 5.8 -3.2 10.6 3.3 0.2 2.9 -0.1 7.6 5.2 - Sub-Saharan Africa -26.8 -14.8 21.4 -2.8 29.0 - -18.6 -22.3 -12.7 -2.7 -9.8 0.5 2.9 23.0 26.2 - - - Imports, nominal, US$, sa World -6.8 -5.2 19.6 -17.8 21.0 18.7 -4.4 -10.9 -6.8 -5.6 -9.6 3.6 -1.7 11.5 5.4 10.3 -5.9 - Advanced economies -12.5 -3.4 10.0 -3.0 2.1 20.3 -4.6 -8.2 1.7 -1.9 -5.0 2.4 1.2 9.4 3.1 8.6 2.7 - Emerging market and developing economies -3.3 -6.3 25.7 -25.5 34.0 17.7 -4.2 -12.4 -11.6 -7.8 -12.1 4.4 -3.2 12.8 6.8 11.3 -10.4 - Commodity-exporting EMDEs -0.9 -7.1 28.0 -31.8 38.5 11.0 -3.9 -12.7 -15.5 -9.8 -14.9 4.2 -5.2 12.0 2.3 8.9 - - Other EMDEs -11.5 -3.3 17.7 1.2 19.8 42.8 -5.7 -11.3 3.5 -0.2 -0.3 5.3 3.8 15.3 23.2 19.8 11.0 - East Asia and Pacific -13.1 -3.6 21.4 4.0 21.8 52.2 -6.6 -10.8 5.7 0.0 -0.7 6.0 5.6 17.1 33.5 20.7 12.6 17.8 Europe and Central Asia -20.7 -1.3 13.3 -3.8 7.1 46.9 0.3 -9.7 8.8 1.5 0.8 5.8 6.4 21.6 8.2 14.1 7.2 - Latin America and the Caribbean -9.8 -7.4 7.7 2.0 5.6 26.6 -8.8 -15.5 1.5 -3.3 -8.4 1.7 3.9 11.3 5.3 13.8 -1.7 - Middle East and North Africa 1.5 - - - - - - - - - - - - - - - - - South Asia -13.2 -5.3 3.3 10.4 59.7 34.5 -6.4 -14.9 -9.4 0.4 9.5 12.0 2.8 14.8 21.5 40.5 41.3 - Sub-Saharan Africa -7.6 - - - - - - - - - - - - - - - - - International reserves, US$ 1 World -5.9 -1.1 0.8 0.4 -3.3 1.7 0.8 0.3 -0.1 0.2 -1.1 -1.7 -0.6 0.7 0.3 0.7 0.8 0.9 Advanced economies 0.6 4.4 1.7 1.4 -2.5 3.4 1.4 0.5 0.1 0.9 -0.7 -1.5 -0.2 1.5 0.4 1.5 1.2 1.0 Emerging market and developing economies -9.9 -4.8 0.2 -0.2 -3.9 0.5 0.5 0.2 -0.2 -0.2 -1.4 -1.8 -0.9 0.1 0.2 0.1 0.5 0.8 Commodity-exporting EMDEs -11.1 - -0.7 -0.2 - - 0.0 0.4 -0.5 -0.1 -1.7 -1.1 - - - - - - Other EMDEs -9.1 -5.7 0.7 -0.3 -4.5 0.5 0.7 0.1 -0.1 -0.2 -1.2 -2.1 -1.2 0.0 0.2 0.3 0.6 0.8 East Asia and Pacific -11.3 -7.3 0.3 -0.7 -4.9 0.4 0.9 0.0 -0.3 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 0.1 0.8 0.8 Europe and Central Asia -6.3 4.4 2.7 1.2 -3.8 2.7 1.4 0.5 0.5 0.3 -0.8 -1.7 -1.4 2.1 0.4 0.2 0.0 1.2 Latin America and the Caribbean -5.3 1.1 0.7 1.6 -0.9 0.8 0.1 1.6 0.0 -0.1 -0.6 -0.6 0.1 0.5 0.4 0.0 1.0 0.1 Middle East and North Africa -17.1 - -2.6 -2.0 - - -1.3 -0.7 -0.8 -0.5 -2.6 - - - - - - - South Asia 11.6 3.5 2.0 3.3 -2.8 1.7 0.8 1.4 0.6 1.4 -1.0 -0.9 -0.9 -0.1 0.5 1.3 0.6 1.8 Sub-Saharan Africa -12.0 - -1.9 - - - - - - - - - - - - - - - 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. 9 June 2017 TABLE D: Financial Markets (Percent change y/y, except quarterly trade data, which are percent change q/q, annualized, and international reserves data, which are percent change over the previous period ) 2016 2017 2016 2017 MRV 1 2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Interest rates and LIBOR (percent) U.S. federal funds effective 0.13 0.40 0.39 0.45 0.70 - 0.39 0.40 0.40 0.41 0.41 0.55 0.66 0.66 0.79 0.91 0.90 - 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 0.70 0.81 0.85 0.88 0.91 0.98 1.03 1.04 1.13 1.16 1.19 1.26 1.30 EURIBOR 3-months -0.02 -0.26 -0.30 -0.31 -0.33 -0.33 -0.29 -0.30 -0.30 -0.31 -0.31 -0.32 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 US 10-year Treasury yield 2.12 1.84 1.56 2.12 2.44 2.25 1.48 1.56 1.63 1.74 2.12 2.50 2.44 2.42 2.47 2.29 2.29 2.18 2.30 German Bund, 10 year 0.54 0.14 -0.07 0.18 0.35 0.30 -0.09 -0.07 -0.05 0.03 0.22 0.30 0.34 0.32 0.39 0.25 0.36 0.28 0.47 Spreads (basis points) JP Morgan Emerging Markets 415 410 372 369 340 325 387 367 361 357 380 370 354 338 329 331 320 325 326 Asia 224 221 197 197 175 169 210 190 191 192 201 198 185 173 166 173 167 166 164 Europe 348 302 282 283 261 242 290 282 273 274 294 282 272 258 253 250 237 240 244 Latin America and the Caribbean 540 537 477 475 445 427 496 473 463 453 491 481 463 442 431 431 420 430 432 Middle East 456 517 508 467 396 362 540 492 493 487 475 438 416 396 377 350 353 382 375 Africa 415 518 461 436 389 386 494 448 440 441 444 422 401 387 380 400 376 383 391 Stock indexes (end of period) Global (MSCI) 399 424 418 424 449 465 414 417 418 413 413 424 433 445 449 455 464 465 465 Advanced economies ($ index) 1663 1761 1726 1761 1854 1916 1713 1720 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1919 United States (S&P 500) 2044 2258 2168 2258 2363 2423 2170 2171 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2424 Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1376 1390 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1546 Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16556 16887 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 20082 Emerging market and 794 861 903 861 958 1011 879 894 903 908 863 861 909 936 958 978 1005 1011 1007 developing economies (MSCI) EM Asia 404 419 448 419 474 512 431 442 448 444 426 419 443 459 474 484 505 512 509 EM Europe 244 295 273 295 301 304 264 269 273 274 273 295 302 296 301 313 308 304 305 EM Europe and Middle East 211 248 233 248 252 251 227 232 233 232 230 248 253 249 252 259 255 251 252 EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2359 2402 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2559 Exchange rates (LCU / USD) Advanced economies Euro Area 0.90 0.90 0.90 0.93 0.94 0.91 0.90 0.89 0.89 0.91 0.93 0.95 0.94 0.94 0.94 0.93 0.91 0.89 0.87 Japan 121.00 108.80 102.36 109.63 113.63 111.10 104.09 101.31 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 112.39 Emerging market and developing economies Brazil 3.33 3.49 3.25 3.28 3.14 3.21 3.28 3.21 3.25 3.18 3.33 3.35 3.20 3.10 3.13 3.14 3.20 3.30 3.31 China 6.29 6.65 6.67 6.84 6.89 6.86 6.68 6.65 6.67 6.74 6.85 6.92 6.89 6.87 6.90 6.89 6.88 6.81 6.78 Egypt 7.70 10.12 8.87 14.71 17.82 18.10 8.87 8.87 8.88 9.25 16.34 18.56 18.68 17.01 17.76 18.09 18.10 18.11 18.12 India 64.14 67.19 66.94 67.39 66.97 64.48 67.18 66.91 66.74 66.73 67.60 67.86 68.06 67.01 65.83 64.52 64.46 64.45 64.58 Russia 61.34 67.06 64.61 62.95 58.67 57.17 64.43 64.93 64.48 62.57 64.25 62.03 59.76 58.42 57.83 56.53 56.88 58.10 58.87 South Africa 12.77 14.71 14.07 13.92 13.24 13.21 14.40 13.79 14.01 13.92 13.96 13.88 13.60 13.17 12.95 13.46 13.25 12.91 13.07 Memo: U.S. nominal effective rate 114.7 119.7 118.4 122.5 123.4 120.7 118.9 117.8 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 119.2 (index) 1 MRV = most recent value. TABLE E: Commodity Prices 2016 2017 2016 2017 MRV 1 2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Energy 2 65 55 57 64 68 - 57 58 58 64 59 68 69 69 65 67 64 - 64 Non-energy 2 82 80 82 83 86 - 82 82 81 81 83 84 85 87 85 83 83 - 83 Agriculture 2 89 89 91 90 91 - 92 91 90 90 90 89 91 91 89 88 89 - 89 2 Metals and minerals 68 64 64 71 78 73 64 65 64 65 73 75 76 79 79 75 73 72 74 Memo items: Crude oil, average ($/bbl) 51 43 45 49 53 50 44 45 45 49 45 53 54 54 51 52 50 46 47 Gold ($/toz) 1161 1249 1334 1221 1219 - 1337 1340 1327 1267 1238 1157 1192 1234 1231 1267 1246 - 1246 Baltic Dry Index 711 676 736 994 938 1023 707 675 826 870 1080 1031 913 760 1142 1229 979 861 901 Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg 1 MRV = most recent value. 2 Indexes, 2010 = 100. © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The maps were produced by the Map Design Unit of The World Bank. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on these maps do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorse- ment or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. 10