Global Monthly June 2016 Overview Table of Contents  The World Bank’s June 2016 Global Economic Prospects: Monthly Highlights ............................................... 2 Divergences and Risks projects global growth of 2.4 percent in Special Focus......................................................... 6 2016, unchanged from last year’s disappointing pace, and 0.5 percentage point below the forecast made in January. Table A: Real GDP ............................................... 8  Growth in emerging market and developing economies Key Prospects Group Publications .......................... 9 (EMDEs) is now projected at 3.5 percent for 2016, just Recent World Bank Working Papers ...................... 9 above the post-crisis low of 3.4 percent reached in 2015, Recent World Bank Reports ................................... 9 and 0.6 percentage point lower than expected in January. Table B: Major Data Releases ................................ 9  Investment remains soft in advanced economies, while Table C: Economic Developments ........................ 10 EMDE commodity exporters face persistent headwinds. Table D: Trade and Finance .............................. 11  Downside risks have become more pronounced, and limited Table E: Financial Markets ................................. 12 fiscal and monetary policy buffers mean that many countries are less prepared to cope with negative shocks. Table F: Commodity Prices .................................. 12 Chart of the Month Global trade growth forecasts  Global trade growth reached a post-crisis low in 2015 and is expected to remain sluggish in 2016.  Following downward forecast revisions, global trade is projected to recover very slowly in the coming years, held back by persistent weakness in global investment, maturing supply chains, and a slow pace of trade liberalization.  Services trade appears to have been more resilient, helped by consumer spending among oil importers.  Lingering weakness in global trade diminishes the scope for productivity gains in EMDEs through increasing Sources: Bloomberg, JPMorgan, World Bank. specialization and diffusion of technologies. Note: Trade is the sum of import and export volumes of goods and non-factor services. Special Focus: Quantifying Uncertainties in Global Growth Forecasts  An assessment of forecast uncertainty and the balance of risks is critical to support effective policy making.  Using information extracted from option pricing and survey-based data, risks to baseline growth forecasts can be quantified in a fan chart.  Based on this approach, forecast uncertainty is estimated to have increased since January 2016, while the balance of risks to global growth projections has tilted further to the downside.  The probability of a 1 percentage-point deviation from the current global growth projections for 2017 is estimated to be 17.5 percent. 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 Christian Eigen-Zucchi, with contributions from Anh Mai Bui, Adriana Maximiliano, Yirbehogre Modeste Some, Shituo Sun, and Dana Vorisek. For more information, visit http://www.worldbank.org/prospects. June 2016 Monthly Highlights FIGURE 1A Global growth Global growth: continued weakness. In the recently released June 2016 Global Economic Prospects, global growth is projected at 2.4 percent this year, unchanged from the disappointing pace of 2015, and 0.5 percentage point below the January forecast (Figure 1A, Table A). EMDEs account for about half of this downward revision, in large part due to the significant downgrade to growth forecasts for commodity exporters, and amid heightened domestic uncertainties and a challenging external environment (Figure 1B). Advanced economies are projected to expand by 1.7 percent this year, 0.5 percentage point lower than expected in January. Investment continues to be soft, and export prospects have worsened. Despite a boost from lower energy prices and improvements in labor markets, advanced-economy growth is struggling to gain momentum. FIGURE 1B Contribution to global growth revisions United States: decelerating growth. Growth is projected to slow to 1.9 percent this year, from 2.4 percent in 2015, reflecting a disappointing start of the year and continued headwinds in the manufacturing and energy sectors. Low oil prices, and associated financial stress, has led to a collapse of capital expenditure in the energy sector, while a strong U.S. dollar and weakening demand from emerging markets contributed to stalling exports. Private consumption remains the main engine of growth and labor market slack continues to diminish amid a declining unemployment rate (Figure 1C). However, May employment figures were weak. Mixed economic data and uncertainty about global economic and financial developments contributed to the decision by the Federal Reserve’s Federal Open Market Committee to leave policy interest rates unchanged after its June FIGURE 1C U.S. unemployment meeting, but the median forecast of its members still suggests two interest rate hikes later this year. Euro Area: modest momentum. Recovery in the Euro Area is proceeding at a moderate pace, supported by an exceptional level of monetary policy accommodation, low oil prices, and slightly expansionary fiscal policies. However, weak external demand, renewed domestic uncertainties, and broad geopolitical risks continue to weigh on confidence and activity. Private consumption has been resilient, and improved labor market conditions should help consolidate gains in 2016. Bank lending to non-financial corporations is recovering slowly, particularly among peripheral economies, where deleveraging pressures and Source: World Bank, Haver Analytics, Bureau of Labor Statistics. asset quality issues have kept borrowing costs at high levels A. Shaded area indicates forecasts. relative to core economies. In addition, inflation projections have B. Contribution to global growth revisions measured in constant 2010 U.S. dollars. Cumulative contributions from individual country growth revisions can continued to be downgraded (Figure 2A), complicating further differ from global growth revisions (reported in Table A) due to decimal rounding. C. "Marginally attached and underemployed" includes people currently not in the deleveraging efforts. labor force but wanting a full time job and having actively looked for work sometime in the past 12 months, as well as those employed part-time for economic reasons (defined as the difference between the U6 and U3 rates of Japan: continued stagnation. Japan continues to fluctuate unemployment). The natural rate of unemployment is the mid-point of the central tendency of the FOMC's forecast of the unemployment rate in the longer run in between periods of modest growth and contraction. Private the Summary of Economic Projections. Last observation is April 2016. 2 June 2016 consumption remains weak, falling short of modest gains in real FIGURE 2A Euro Area: inflation and consensus income (Figure 2B). GDP is now expected to grow by 0.5 forecasts percent in 2016, slightly down from 0.6 percent registered in 2015. Given the underlying weakness in the economy, Prime Minister Abe announced the government’s intention to postpone the consumption tax hike to 10 percent from April 2017 to October 2019. The announcement has not been factored into the forecast and could result in stronger than expected growth in 2017, but delay a return to a primary fiscal balance. China: ongoing rebalancing. Baseline projections envisage that growth in China will continue slowing moderately, to 6.7 percent in 2016 and to an average of 6.4 percent in 2017-18, with some rebalancing from investment to consumption (Figure 2C). The baseline assumes that reforms proceed as expected and that their impact is smoothed by additional policy action as needed. Positive tailwinds from lower oil prices and policy stimulus will FIGURE 2B Japan: income and consumption continue to offset further output declines in sectors at growth overcapacity. Producer price deflation, underway since 2012, showed signs of bottoming out at the start of 2016, while industrial profits recovered. The labor market is expected to remain robust and support private consumption growth. The shift toward services will continue, facilitated by policies to ease business regulations. Policy easing in 2016 has been increasingly focused on fiscal support measures and tax cuts, which have widened the central government deficit to a six-year high of 2.3 percent of GDP in 2015, and to an expected 3 percent of GDP in 2016. EMDEs: diverging prospects. Growth disappointments have extended into 2016. Aggregate growth for EMDEs is projected at 3.5 percent for 2016, just above the post-crisis low reached in 2015. However, the overall forecast masks a marked difference FIGURE 2C China: GDP growth and components between commodity exporters and importers (Figure 3A). After stagnating last year, growth in commodity-exporting EMDEs for 2016 is expected to be 0.4 percent—substantially below the 1.6 percent forecast in January, reflecting a significant downward revision in commodity price forecasts, weak global trade, volatile capital flows, and persistent domestic challenges. In contrast, growth projections for commodity-importing EMDEs are little changed at 5.8 percent for 2016, and are expected to be broadly stable at that level through 2018. Policy buffers continue to erode in commodity-exporting EMDEs, especially in oil-exporting countries, reducing their ability to withstand further negative shocks. EMDEs: persistent vulnerabilities. Among commodity exporters, current account and fiscal balances have deteriorated, Sources: World Bank, Haver Analytics, European Central Bank, Consensus Economics, International Monetary Fund. while inflation has risen above target levels in many cases. A. Last observation is April 2016. B. Real income is defined as compensation of employees in constant 2005 yen. Investor concerns have been reflected in numerous sovereign Last observation is 2016Q1. rating downgrades in that group of countries. In contrast, in 3 June 2016 several large commodity importers, fiscal and current account FIGURE 3A EMDE GDP growth deficits have narrowed, foreign exchange reserves are stable or increasing, and inflation is below target levels. However, high and rising private sector debt has become an increasing source of vulnerability for both commodity-exporters and -importers. LICs: commodity exporters struggling. Growth in low-income countries (LICs) slowed to 4.5 percent in 2015, with about half of the countries registering growth below long-term averages (Figure 3B). Although growth is projected to pick up to 5.3 percent this year, lower commodity prices and persistent security and political challenges have trimmed 0.9 percentage point from the previous forecast. While the difficult external environment confronting LICs will likely continue, growth is still expected to be supported by resilient investment growth and implementation of reforms. FIGURE 3B LICs with growth below long-term Policy buffers: limited. Limited fiscal and monetary policy average buffers in many countries is leaving the global economy and EMDEs in particular less prepared to cope with the materialization of downside risks. The room for policy accommodation has increasingly diverged between commodity importers and exporters (Figures 3C and 4A). Diminishing foreign reserves and fiscal buffers have already forced many commodity-exporting EMDEs to tighten policy pro-cyclically. In commodity-importing EMDEs, even though low commodity prices have reduced fiscal and external vulnerabilities and inflation, the scope for expansionary fiscal policy remains limited because of weak starting positions. In advanced economies, actual and expected inflation are below targets. Large-scale unconventional monetary policy may have diminishing effectiveness over time and raise financial stability risks. Expansionary fiscal policy could support activity in a number of FIGURE 3C EMDE policy interest rates advanced economies in the event of an adverse shock. Capital flows: weak but stabilizing. Following net outflows in 2015 and a period of high volatility at the start of this year, capital flows to EMDEs have stabilized, as major central banks committed to keep interest rates low for longer, and commodity prices and the U.S. dollar firmed. Bond issuance has ticked upwards so far in 2016 (Figure 4B), but a sustained recovery in portfolio and bank lending flows might prove elusive unless economic fundamentals improve. Liquidity conditions remain fragile and leave markets prone to sudden reversals. The low commodity price environment has negatively impacted mining and exploration investment, and hence prospects for inflows of foreign direct investment (FDI), in many EMDEs. Sources: Haver Analytics, World Bank, Central Bank Rates. B. Long-term growth averages calculated over the period 1996-2008. Sample Commodity prices: low but recovering. While commodity includes 28 low-income countries. C. Last observation is May 2016. Simple average. Sample includes 29 EMDE prices have generally recovered from dips in January, they remain commodity exporters and 21 EMDE commodity importers. low on the back of abundant supply and weak demand (Figure 4 June 2016 4C). Oil prices recovered to over $50 per barrel (bbl) in early FIGURE 4A EMDE fiscal balance June from under $30/bbl in January. A number of unscheduled outages (Nigeria, Ghana, Canada), stronger-than-expected demand (China, India, Russia), and a slowing stock build-up have contributed to a gradual rebalancing in the global oil market. Oil prices are expected to average $41 per barrel for 2016 (down from an assumption of $51 per barrel in the January Global Economic Prospects) and $50 per barrel for 2017. Metal prices are projected to decline 15 percent in 2016 and to rise moderately in the medium term as the expansion of capacity slows, but the timing will vary by individual metals. Prices of agricultural commodities are expected to stabilize in 2016, supported by favorable weather conditions in the Southern Hemisphere for most grains and oilseeds—except for rice, which has been subjected to some El Niño-related disruptions in East Asia. Upside risks arise from La Niña, which may affect crop FIGURE 4B Bond issuance by EMDEs conditions later in 2016. Risks: increasingly to the downside. In the short term, discussion around the U.K. referendum on EU membership is one of several factors that are contributing to current uncertainty in the global economy. Other risks are associated with deteriorating conditions among key commodity exporters, disappointing activity in advanced economies, rising private sector debt in large emerging markets, and heightened policy and geopolitical uncertainties. Financial market conditions remain fragile and subject to sudden bouts of volatility, especially given the perceived erosion of monetary and fiscal policy space that would be available to counteract further negative shocks. Prolonged stagnation in advanced economies and weaker growth potential in EMDEs could exacerbate protectionist sentiments. The materialization of these risks could slow the catch-up of FIGURE 4C Industrial commodity prices EMDE income per capita relative to advanced economy levels and set back poverty alleviation. Policy priority: focus on investment. Greater investment—in infrastructure, productivity enhancing technology, and human capital—could lay the foundation for stronger growth. Policies should aim to fill public infrastructure deficiencies, encourage FDI, strengthen human capital, foster diversification, and reduce trade barriers. Countries with diminishing fiscal space may be limited in financing such investments. Reallocating public expenditure towards well-identified infrastructure needs, facilitating public-private partnerships, and boosting efforts to attract FDI could help overcome budgetary constraints. International cooperation efforts could include commitments to Sources: IMF, World Bank, Dealogic, Bloomberg, Emerging Portfolio Fund Research. undertake expansionary fiscal policies if large downside risks A. 2014 data from the October 2014 IMF World Economic Outlook, 2015 data materialize, to channel pooled global resources into infrastructure from the October 2015 IMF World Economic Outlook. B. Last observation is 2016Q1. 2016Q2 is estimated based on pipeline and human capital investment, and to strengthen global safety issuances. C. Last observation is April 2016. Diamonds represent World Bank forecasts for nets for the most fragile countries.  2016 as of April 2016 Commodity Markets Outlook. 5 June 2016 Special Focus: Quantifying Uncertainties FIGURE 5A Risks to global growth in Global Growth Forecasts Measuring uncertainty and risks. A comprehensive assessment of global economic prospects requires baseline forecasts as well as an assessment of risks. The latter conveys to policy makers a sense of the uncertainty prevailing at the time of forecasting, which might vary with incoming data, past forecast performance, and changing expectations.. A Special Focus in the June 2016 Global Economic Prospects: Divergences and Risks presents a new fan chart approach that illustrates risks surrounding global growth forecasts. The analysis shows that uncertainty around global growth forecasts has risen and the balance of risks is increasingly tilted to the downside. Given the already-weak global growth prospects in 2016, the probability of global growth falling to or below 1 percent in 2016 is above its historical average. FIGURE 5B Uncertainty of global growth forecasts Introduction of the fan chart. The fan chart derives confidence intervals around global growth projections by mapping past forecast errors to changes in the distributions of selected risk factors, including equity markets, oil prices, and term spreads across G20 economies. Signals from the market-implied or consensus forecast distribution of forward-looking indicators are extracted and weighted to derive the fan chart around global growth projections. Changes in the degree of uncertainty (dispersion) and balance of risks (skewness) of underlying risk factors are used to assess the potential size and direction of forecast errors at any point in time. The resulting fan chart shows confidence intervals at 50, 80 and 90 percent probability around the growth projections in the June 2016 Global Economic FIGURE 5C Contribution of risk factors to forecast Prospects (Figure 5A). uncertainty Selected risk factors. Various market- and survey-based indicators have been suggested as useful measures of forecast uncertainty. In particular, the pricing of options used by investors to hedge can provide information on market perceptions of underlying risks and has predictive power in forecasting future uncertainty of the underlying assets. The degree of disagreement among private sector forecasters can also capture diverging signals on the outlook, and is particularly large around cyclical turning points. Three risk indicators are used in this exercise: equity price futures, term spreads (difference between long and short-term nominal interest rates), and crude oil forward prices, all of which are correlated with growth prospects.  Sources: World Bank, Bloomberg, Consensus Economics. Weights assigned to risk factors. Signals extracted from the A. “90 percent in Jan16” is the 90 percent confidence interval of a fan chart based on data available for the January 2016 Global Economic Prospects report. distribution of individual risk factors are aggregated using weights B. Dispersion is measured by the standard deviation. Gray areas represent the estimated from a vector autoregression model of global growth on global financial crisis of 2008-09 and the intensification of the Euro Area debt crisis in 2010 and 2012. the risk indicators. This approach allows individual risk factors to C. “Other factors” denotes the contribution of own shocks of global growth forecast error in VAR variance decomposition. “GEP Jan16” stands for Global tilt the global balance of risks differently at different forecast Economic Prospects in January 2016. 6 June 2016 horizons. The variance decomposition and impulse responses are FIGURE 6A Balance of risks to global growth derived from a recursive identification also used in the analysis of forecasts growth spillovers (see the January 2016 Global Economic Prospects: Spillovers amid Weak Growth). Using the estimated weights, global uncertainty and the balance of risks can be drawn around the baseline global growth forecast. Uncertainty: close to decade average. Several episodes of heightened uncertainty stand out from the analysis of these risk factors (Figure 5B). The first one is the global financial crisis of 2008-09. Its unexpected severity was associated with financial market disruptions and a broad-based increase in volatility and risk aversion. This was also reflected in the rising degree of uncertainty of all three risk factors (Figure 5C). The second and third (milder) episodes were around intensifications in the Euro Area sovereign debt crisis in 2011 and 2012, when financial market indicators also pointed towards a greater level of FIGURE 6B Contribution of risk factors to the uncertainty surrounding global growth forecasts. Recent episodes balance of risks to global growth of market stress, such as those associated with the taper tantrum in 2013, the sharp decline of oil prices since mid-2014, and the ongoing EMDE slowdown, have also raised forecast uncertainty. Around these episodes, downside risks to growth have been more prevalent. Uncertainty about growth forecasts for 2016 and 2017 is estimated to be near the historical median but has increased since early January 2016, reflecting heightened volatility in oil prices, term spreads, and equity prices since the start of 2016 (Figure 5C). Risks: tilted to the downside. The balance of risks to global growth is tilting increasingly to the downside for 2016 (Figure 6A). Rising downside risks and diminishing upside risks compared to January forecasts reflect growth concerns in FIGURE 6C Probability of global growth being 1 particular, as captured in falling equity price futures (Figure 6B). percentage point below baseline forecasts Overall, the probability of global growth being 1 percentage point lower than currently projected in 2017 remains around the average for the decade (17.5 percent), and still well below the probability in 2008 on the eve of the global financial crisis (Figure 6C). Moreover, results indicate that the probability of global growth falling to or below 1 percent, which would likely trigger a global recession, is below the average of the decade (5 percent) for both 2016 and 2017.1 1A global recession corresponds to a contraction in world real output per capita Sources: World Bank, Bloomberg, Consensus Economics. accompanied by a broad, simultaneous decline in various other measures of global A. The balance of risk is measured by the skewness. Gray areas represent the economic activity, including industrial production, trade, capital flows, employment, and global financial crisis of 2008-09 and the intensification of the Euro Area debt crisis in 2010 and 2012. energy consumption. This has happened four times over the past half century: in 1975, B. “GEP Jan16” stands for Global Economic Prospects in January 2016. 1982, 1991, and 2009. 7 June 2016 TABLE A: Real GDP1 (percent change from previous year) Percentage point differences from January 2016 projections 2013 2014 2015e 2016f 2017f 2018f 2015e 2016f 2017f 2018f World 2.4 2.6 2.4 2.4 2.8 3.0 0.0 -0.5 -0.3 -0.1 Advanced economies 1.1 1.7 1.8 1.7 1.9 1.9 -0.1 -0.5 -0.2 -0.1 United States 1.5 2.4 2.4 1.9 2.2 2.1 -0.1 -0.8 -0.2 -0.1 Euro Area -0.3 0.9 1.6 1.6 1.6 1.5 0.1 -0.1 -0.1 -0.1 Japan 1.4 -0.1 0.6 0.5 0.5 0.7 -0.2 -0.8 -0.4 -0.6 Emerging and developing economies (EMDEs) 4.7 4.2 3.4 3.5 4.4 4.7 0.0 -0.6 -0.3 -0.2 Commodity exporting EMDEs 3.2 2.1 0.2 0.4 2.4 3.0 0.1 -1.2 -0.8 -0.3 Other EMDEs 5.9 5.9 5.9 5.8 5.7 5.8 0.0 -0.1 -0.1 -0.1 Other EMDEs excluding China 3.9 4.3 4.7 4.7 4.9 5.0 0.0 -0.2 -0.2 -0.2 East Asia and Pacific 7.1 6.8 6.5 6.3 6.2 6.1 0.1 0.0 0.0 -0.1 China 7.7 7.3 6.9 6.7 6.5 6.3 0.0 0.0 0.0 -0.2 Indonesia 5.6 5.0 4.8 5.1 5.3 5.5 0.1 -0.2 -0.2 0.0 Thailand 2.7 0.8 2.8 2.5 2.6 3.0 0.3 0.5 0.2 0.3 Europe and Central Asia 2.3 1.8 -0.1 1.2 2.5 2.8 0.0 -0.4 -0.1 0.0 Russia 1.3 0.7 -3.7 -1.2 1.4 1.8 0.1 -0.5 0.1 0.3 Turkey 4.2 3.0 4.0 3.5 3.5 3.6 -0.2 0.0 0.0 0.2 Poland 1.3 3.3 3.6 3.7 3.5 3.5 0.1 0.0 -0.4 -0.4 Latin America and the Caribbean 2.9 1.0 -0.7 -1.3 1.2 2.1 0.2 -1.3 -0.9 -0.3 Brazil 3.0 0.1 -3.8 -4.0 -0.2 0.8 -0.1 -1.5 -1.6 -0.7 Mexico 1.4 2.3 2.5 2.5 2.8 3.0 0.0 -0.3 -0.2 -0.2 Argentina 2.9 0.5 2.1 -0.5 3.1 3.0 0.4 -1.2 1.2 0.0 Middle East and North Africa 2.0 2.9 2.6 2.9 3.5 3.6 -0.2 -1.1 -1.0 -0.5 Saudi Arabia 2.7 3.6 3.4 1.9 2.0 2.3 0.6 -0.5 -0.9 -0.6 Iran, Islamic Rep. -1.9 4.3 1.6 4.4 4.9 4.7 -0.3 -1.4 -1.8 -1.3 Egypt, Arab Rep2 2.1 2.2 4.2 3.3 4.2 4.6 0.0 -0.5 -0.2 -0.2 South Asia 6.1 6.8 7.0 7.1 7.2 7.3 0.0 -0.2 -0.3 -0.2 India2 6.6 7.2 7.6 7.6 7.7 7.7 0.3 -0.2 -0.2 -0.2 Pakistan2 3.7 4.0 4.2 4.5 4.8 5.1 0.0 0.0 0.0 0.3 Bangladesh2 6.0 6.1 6.5 6.3 6.8 6.0 0.0 -0.4 0.0 -0.8 Sub-Saharan Africa 4.8 4.5 3.0 2.5 3.9 4.4 -0.3 -1.7 -0.7 -0.3 South Africa 2.2 1.5 1.3 0.6 1.1 2.0 0.0 -0.8 -0.5 0.4 Nigeria 5.4 6.3 2.7 0.8 3.5 4.0 -0.6 -3.8 -1.8 -1.3 Angola 6.8 3.9 2.8 0.9 3.1 3.4 -0.2 -2.4 -0.7 -0.4 Memorandum items: Real GDP1 High-income countries 1.2 1.7 1.6 1.5 1.9 1.9 0.0 -0.6 -0.2 -0.2 Developing countries 5.3 4.9 4.3 4.3 4.9 5.1 0.0 -0.5 -0.4 -0.2 Low-income countries 6.5 6.1 4.5 5.3 6.3 6.6 -0.6 -0.9 -0.3 0.0 BRICS 5.7 5.1 3.8 4.2 5.1 5.3 -0.1 -0.4 -0.2 -0.1 World (2010 PPP weights) 3.2 3.4 3.1 3.1 3.6 3.7 0.0 -0.5 -0.2 -0.2 World trade volume3 3.3 3.8 3.1 3.1 3.9 4.1 -0.5 -0.7 -0.4 -0.4 Commodity prices Oil price4 -0.9 -7.5 -47.3 -25.7 32.5 6.5 -0.8 -17.2 25.3 -0.7 Non-energy commodity price index -7.2 -4.6 -15.0 -12.2 10.5 2.3 -0.2 -10.4 8.6 0.4 Capital inflows to EMDEs 5.4 4.3 1.8 3.2 3.8 4.2 -0.5 -0.1 -0.4 -0.2 (percent of GDP)5 Source: World Bank (Table 1.1 from the June 2016 Global Economic Prospects: Divergences and Risks). Notes: PPP = purchasing power parity; e = estimate; f = forecast. World Bank forecasts are frequently updated based on new information. Consequently, projections presented here may differ from those contained in other Bank documents, even if basic assessments of countries’ prospects do not differ at any given moment in time. Country classifications and lists of Emerging Market and Developing Economies (EMDEs) are presented in Annex Table 1. BRICS include: Brazil, Russia, India, China and South Africa. 1. Aggregate growth rates calculated using constant 2010 U.S. dollars GDP weights. 2. GDP growth values are on a fiscal year basis. Aggregates that include these countries are calculated using data compiled on a calendar year basis. 3. World trade volume for goods and non-factor services. 4. Simple average of Dubai, Brent, and West Texas Intermediate. 5. Balance of payments data for net capital inflows of foreign direct investment, portfolio investment, and other investment (BPM6). 8 June 2016 Key Prospects Group Publications Global Economic Prospects: Spillovers amid Weak Growth (January 2016) Policy Research Note No.4: Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness? Commodity Markets Outlook: Resource Development in an Era of Cheap Commodities (April 2016) Global Economic Prospects: Divergences and Risks (June 2016)   Recent World Bank Working Papers Recent Credit Surge in Historical Context Democratic Republic of Congo: Product and Market Concentration and the Vulnerability to Exogenous Shocks Non-renewable Resources, Fiscal Rules, and Human Capital Saving for Old Age Informed Trading in Business Groups, Ownership Concentration, and Market Liquidity Bank Competition, Financial Dependence, and Economic Growth in the Gulf Cooperation Council Agricultural Productivity and Non-farm Employment: Evidence from Bangladesh Estimating an Equilibrium Exchange Rate for the Argentine Peso Recent World Bank Reports Assessing the Impact of WTO Accession on Belarus: A quantitative evaluation Macroeconomic Management for Poverty Reduction: Chad, Mali, Niger Brazil Monthly Economic Update World Bank’s Experience with Structural Reforms for Growth and Development   TABLE B: Major Data Releases (Percent change y-o-y) (Percent change y-o-y)        Recent releases: May 26, 2016 - June 25, 2016 Upcoming releases: June 26, 2016 - July 30, 2016 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Sweden 5/30/16 GDP Q1 4.2 4.0 4.5 Iceland 6/28/16 CPI JUN 0.0 Denmark 5/31/16 GDP Q1 0.6 0.0 0.5 United States 6/28/16 GDP Q1 2.0 Lithuania 5/31/16 GDP Q1 2.5 2.3 2.0 Denmark 6/30/16 GDP Q1 0.5 India 5/31/16 GDP Q4 7.9 7.3 7.3 UK 6/30/16 GDP Q1 0.0 Belgium 5/31/16 GDP Q1 1.5 1.5 1.5 Portugal 6/30/16 IP MAY 3.5 Australia 5/31/16 GDP Q1 3.1 2.7 3.0 South Korea 6/30/16 CPI JUN 0.8 Switzerland 6/1/16 GDP Q1 0.7 0.8 0.3 Japan 6/30/16 CPI MAY -0.3 Brazil 6/1/16 GDP Q1 -5.4 -5.9 -5.9 Indonesia 7/1/16 CPI JUN 3.3 Czech Republic 6/3/16 GDP Q1 3.0 3.0 4.0 Czech Republic 7/1/16 GDP Q1 4.0 Finland 6/3/16 GDP Q1 1.6 1.2 Brazil 7/1/16 IP MAY -7.2 Hungary 6/7/16 GDP Q1 0.4 0.9 2.6 Romania 7/8/16 GDP Q1 4.2 Iceland 6/7/16 GDP Q1 4.2 4.9 3.2 Hungary 7/8/16 CPI JUN -0.2 South Africa 6/7/16 GDP Q1 -0.2 0.6 Czech Republic 7/8/16 IP MAY 4.2 Croatia 6/7/16 GDP Q1 2.7 1.9 1.9 Bulgaria 7/8/16 IP MAY 2.5 Cyprus 6/9/16 GDP Q1 2.7 2.8 Brazil 7/8/16 CPI JUN 9.3 Estonia 6/9/16 GDP Q1 1.7 1.8 0.7 China 7/12/16 GDP Q2 6.7 Malta 6/8/16 GDP Q1 5.2 6.2 South Korea 7/25/16 GDP Q2 2.7 Turkey 6/10/16 GDP Q1 4.5 4.4 4.1 Belgium 7/28/16 GDP Q2 1.5 New Zealand 6/15/16 GDP Q1 2.8 2.6 2.3 Austria 7/29/16 GDP Q2 1.3 Netherlands 6/24/16 GDP Q1 1.4 Spain 7/29/16 GDP Q1 3.4 Denmark 6/30/16 GDP Q1 0.5 Sweden 7/29/16 GDP Q2 4.2 9 June 2016   TABLE C: Economic Developments (Percent change y-o-y, except quarterly data on industrial production, which are percent change q-o-q, annualized) 2015 2016 2015 2016 2014 2015 Q3 Q4 Q1 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 1 Industrial Production, sa World 3.2 1.9 1.8 1.7 1.4 1.7 2.3 1.9 2.4 1.6 2.0 1.5 0.8 1.8 1.3 1.3 1.7 Advanced Economies 2.0 0.4 0.8 -1.1 0.3 0.1 0.7 0.5 1.0 0.3 0.5 -0.3 -1.4 0.3 -1.0 -0.9 0.1 Emerging Market and 4.6 3.5 2.9 4.5 2.5 3.4 4.0 3.3 3.9 2.9 3.6 3.3 3.0 3.4 3.6 3.6 3.4 Developing Economies Commodity-exporting EMDE   0.1 0.1 -2.2 0.8 1.0 0.1 1.3 -0.1 0.0 -0.9 -0.5 -0.2 -1.2 0.0 0.9 -1.0 - Other EMDE 6.8 5.1 5.1 6.0 3.1 4.8 5.2 4.8 5.6 4.6 5.4 4.7 4.8 4.9 4.8 5.5 4.9 East Asia and Pacific 7.5 5.8 4.8 8.0 3.5 5.6 6.2 5.6 5.8 5.1 5.3 5.8 5.3 5.5 5.5 6.3 5.6 East Asia excl. China 3.0 3.6 3.9 7.9 5.3 1.9 3.2 4.0 3.8 2.0 3.8 4.3 2.0 5.6 5.7 3.5 2.8 Europe and Central Asia 2.6 0.6 1.3 4.1 2.2 -0.4 0.8 -0.7 0.9 0.4 1.1 1.3 1.2 1.6 2.2 1.4 2.2 Latin America and -0.7 -3.2 -4.5 -6.8 -2.7 -2.9 -1.6 -2.8 -3.2 -4.0 -4.8 -5.2 -4.6 -3.8 -5.0 -4.3 -4.7 Caribbean Middle East and North Africa 1.3 4.0 3.5 7.5 1.3 4.8 2.9 2.8 4.0 3.1 5.0 5.6 3.3 5.7 5.7 1.4 - South Asia 2.6 4.3 1.9 -7.0 4.6 4.3 5.6 4.1 7.7 3.6 10.3 -1.3 0.9 0.4 3.7 2.3 0.5 Sub-Saharan Africa -0.1 0.3 5.8 -2.2 0.0 -0.3 -0.7 5.4 0.7 0.6 -0.7 -1.5 0.0 -1.0 1.0 -1.3 2.2 Inflation, sa 2 World 2.2 1.4 1.4 1.5 1.4 1.2 1.4 1.3 1.3 1.5 1.5 1.5 1.5 1.6 1.4 1.3 1.3 Advanced Economies 0.6 0.1 0.1 0.1 0.3 0.2 0.2 0.2 0.1 0.0 0.1 0.1 0.2 0.5 0.3 0.1 0.1 Emerging Market and 3.3 2.2 2.2 2.2 2.8 2.2 2.2 2.3 2.6 2.2 2.1 2.2 2.6 2.6 3.0 3.0 2.8 Developing Economies Commodity-exporting EMDE   3.6 3.5 3.2 3.1 3.3 3.4 3.6 3.3 3.3 3.3 3.1 3.1 3.3 3.2 3.6 3.7 4.2 Other EMDE 2.9 1.3 0.8 1.1 1.6 1.2 0.9 0.9 1.1 0.9 1.2 1.2 1.2 1.8 1.7 1.1 1.0 East Asia and Pacific 3.1 1.2 0.8 1.1 1.5 1.0 0.9 1.2 0.8 0.8 1.3 1.4 1.4 1.7 1.9 2.2 2.3 Europe and Central Asia 1.6 1.7 1.8 1.4 0.9 2.1 1.9 1.5 2.0 2.0 1.7 1.4 1.5 1.7 0.9 0.4 0.3 Latin America and 3.4 2.6 2.4 2.3 3.1 2.5 2.2 2.1 2.5 2.1 2.3 2.0 2.3 3.1 3.4 3.3 3.1 Caribbean Middle East and North Africa 2.7 1.8 1.9 1.5 2.5 2.1 2.1 2.2 1.7 1.6 2.1 1.5 1.6 2.4 2.6 2.6 2.5 South Asia 6.8 3.5 2.4 3.0 3.5 4.1 4.0 2.6 2.4 2.2 2.6 3.3 3.3 3.3 3.6 4.0 5.4 Sub-Saharan Africa 4.4 3.5 4.5 4.1 4.5 3.6 3.7 3.3 4.3 3.9 4.0 4.6 4.2 4.0 6.6 6.1 5.9 1Industrial production is total production (may exclude construction). When data are unavailable, "industral production, manufacturing" and "industrial production, manufacturing, non-durable manufacturing, petroleum and coal products, crude petrolem products" are used as proxies. 2Median inflation rate for each grouping. 10 June 2016 TABLE D: 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 2015 2016 2014 2015 Q3 Q4 Q1 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Exports, Nominal, US$, sa World 1.1 -11.8 -6.8 -7.2 -12.6 -13.9 -8.4 -13.7 -14.1 -12.9 -12.7 -11.4 -10.2 -11.8 -8.9 -3.8 -3.0 Advanced Economies 1.3 -11.2 -6.3 -7.5 -6.4 -13.5 -8.2 -12.3 -13.0 -11.5 -11.6 -9.7 -9.8 -9.5 -4.3 -4.0 -0.4 Emerging Market and 0.8 -12.6 -7.6 -6.7 -21.7 -14.5 -8.8 -15.9 -15.7 -15.0 -14.3 -13.9 -10.7 -15.2 -15.3 -3.7 -7.2 Developing Economies Commodity-exporting EMDE   -4.8 -24.7 -24.7 -14.6 -27.4 -25.9 -19.4 -27.8 -29.3 -28.1 -25.0 -23.6 -21.2 -24.6 -13.6 -17.2 - Other EMDE 4.8 -4.6 2.9 -2.5 -17.5 -6.8 -1.7 -7.9 -6.8 -6.7 -7.8 -8.2 -4.7 -10.2 -15.5 5.1 -2.1 East Asia and Pacific 4.6 -3.3 1.9 -2.4 -22.2 -4.9 0.5 -7.8 -6.4 -5.5 -8.1 -7.7 -4.1 -11.8 -19.7 7.4 -3.2 Europe and Central Asia -0.7 -20.6 -18.7 -9.1 -19.9 -23.0 -17.6 -27.9 -24.2 -19.2 -20.4 -17.5 -14.9 -21.8 -12.2 -12.9 -9.6 Latin America and -0.9 -12.1 -9.1 -10.5 -5.2 -17.0 -9.4 -12.9 -16.6 -13.8 -12.0 -11.7 -11.4 -11.6 -3.6 -8.7 -5.4 Caribbean Middle East and North Africa -5.2 -27.6 -18.5 -11.7 - -29.00 -22.3 -27.2 -31.2 -33.9 -26.4 -24.9 -22.4 -23.4 - - - South Asia 2.6 -14.4 -10.1 -6.2 -7.7 -16.5 -10.1 -10.1 -15.5 -22.5 -14.5 -22.7 -12.3 -11.3 -3.2 -4.4 -5.2 Sub-Saharan Africa -6.3 -26.7 -27.4 -21.1 - -21.27 -21.0 -29.1 -26.9 -31.9 -28.5 -28.2 -28.8 -25.3 -23.1 - - Imports, Nominal, US$, sa World 1.3 -12.7 -5.1 -7.8 -15.1 -15.2 -9.2 -13.2 -12.7 -15.2 -13.4 -10.5 -11.4 -11.8 -5.5 -7.7 -6.2 Advanced Economies 2.2 -12.5 -4.4 -7.9 -10.6 -15.1 -10.1 -14.5 -12.2 -13.2 -11.8 -8.9 -11.3 -9.7 -2.7 -7.0 -4.4 Emerging Market and -0.3 -13.0 -6.3 -7.7 -22.3 -15.5 -7.7 -11.0 -13.7 -18.4 -16.0 -13.1 -11.4 -15.3 -10.2 -8.6 -9.0 Developing Economies Commodity-exporting EMDE   -2.2 -15.2 -10.6 -13.0 -19.1 -18.2 -12.1 -16.4 -16.0 -19.7 -17.9 -16.5 -17.9 -19.5 -16.9 -13.3 - Other EMDE 0.9 -11.7 -3.9 -4.7 -24.8 -13.9 -5.2 -7.7 -12.2 -17.7 -14.9 -11.1 -7.6 -12.7 -6.4 -6.2 -7.6 East Asia and Pacific -0.4 -13.0 -5.8 -2.5 -30.0 -15.4 -5.6 -8.8 -14.3 -19.7 -18.2 -8.8 -8.3 -16.5 -11.4 -5.4 -8.5 Europe and Central Asia -3.7 -20.9 -9.2 -10.1 2.9 -24.9 -20.0 -22.5 -20.0 -21.4 -19.2 -19.0 -18.7 -15.1 -5.5 -4.3 -4.0 Latin America and -0.8 -10.1 -5.3 -15.3 -16.4 -14.2 -3.7 -9.4 -11.6 -12.9 -13.0 -11.3 -15.6 -16.6 -10.0 -14.3 -9.9 Caribbean Middle East and North Africa 3.1 -7.1 -5.3 -7.2 - -8.33 -2.5 -4.6 -9.0 -14.4 -6.8 -12.0 -9.9 -10.9 - - - South Asia 1.1 -13.2 -3.0 -13.6 -32.8 -12.3 -9.3 -8.9 -10.9 -24.5 -18.0 -25.2 -3.3 -7.0 -3.8 -19.0 -19.1 Sub-Saharan Africa 3.0 -10.1 -12.4 -9.4 - -11.87 -4.8 -12.2 -11.8 -14.2 -17.8 -13.5 -16.0 -27.3 - - - International Reserves, US$1 World -1.0 -5.8 -2.1 -2.6 0.0 -0.5 -0.1 -0.8 -0.9 -0.5 -0.1 -1.6 -0.9 -1.0 0.0 1.0 0.6 Advanced Economies 0.2 2.2 0.4 -0.6 2.3 -0.3 0.1 -0.6 0.4 0.6 -0.3 -1.0 0.7 0.4 0.2 1.6 0.5 Emerging Market and -1.6 -9.9 -3.5 -3.7 -1.4 -0.5 -0.3 -1.0 -1.5 -1.0 0.0 -2.0 -1.8 -1.8 -0.2 0.6 0.6 Developing Economies Commodity-exporting EMDE   -6.1 - -1.9 - - -0.2 -0.3 -0.7 -0.4 -0.9 - - - - - - - Other EMDE 1.0 -10.2 -4.2 -4.2 -1.7 -0.7 -0.2 -1.1 -2.0 -1.1 0.3 -2.2 -2.3 -2.1 -0.3 0.7 0.7 East Asia and Pacific 0.2 -12.5 -4.9 -4.4 -2.3 -0.9 -0.4 -1.3 -2.4 -1.2 0.4 -2.3 -2.6 -2.7 -0.3 0.6 0.3 Europe and Central Asia -16.8 -5.9 1.0 -3.0 4.0 -0.1 0.5 -1.0 1.6 0.4 -0.3 -1.6 -1.0 1.0 1.6 1.3 1.6 Latin America and 3.5 -5.4 -3.0 -2.3 -0.2 -0.2 -0.2 -0.2 -1.0 -1.8 -1.6 -1.5 0.7 0.0 -0.6 0.4 1.6 Caribbean Middle East and North Africa -2.0 - - - - -0.5 -0.8 - - - - - - - - - - 1Total Sub-Saharan Africa reserves excluding gold are used -7.9 - as proxies when - total reserves - are unavailable. data - 0.0 -1.0 1.0 - - - - - - - - - 11 June 2016 TABLE E: Financial Markets (Percent change y-o-y, except quarterly trade data, which are percent change q-o-q, annualized, and international reserves data, which are percent change over the previous period ) 2015 2016 2015 2016 MRV 1 2014 2015 Q3 Q4 Q1 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.09 0.13 0.14 0.16 0.37 0.13 0.15 0.14 0.12 0.12 0.24 0.36 0.37 0.37 0.37 0.36 0.37 ECB repo 0.16 0.05 0.05 0.05 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.23 0.32 0.31 0.41 0.62 0.29 0.32 0.33 0.32 0.37 0.54 0.62 0.62 0.63 0.63 0.65 0.65 EURIBOR 3-months 0.06 -0.02 -0.03 -0.09 -0.19 -0.02 -0.03 -0.04 -0.05 -0.09 -0.13 -0.15 -0.18 -0.23 -0.25 -0.26 -0.26 US 10-yr Treasury yield 2.53 2.12 2.20 2.18 1.92 2.32 2.14 2.14 2.04 2.26 2.23 2.11 1.77 1.88 1.79 1.80 1.58 German Bund, 10 yr 1.24 0.54 0.70 0.56 0.32 0.76 0.66 0.68 0.55 0.55 0.59 0.51 0.23 0.21 0.17 0.16 -0.02 Spreads (basis points) JP Morgan Emerging Markets 330 426 423 431 478 397 431 442 437 413 442 485 507 443 421 418 432 Asia 206 232 233 245 264 212 237 250 246 235 253 268 282 243 224 223 239 Europe 287 348 345 311 339 328 359 347 332 294 308 338 359 319 308 305 317 Latin America & Caribbean 407 559 560 577 645 527 567 585 582 553 595 662 687 588 559 552 559 Middle East 388 471 447 506 555 420 444 479 502 503 512 542 580 545 539 530 547 Africa 323 449 425 509 626 374 428 472 490 482 555 644 661 573 546 552 568 Stock Indices (end of period) Global (MSCI) 417 399 382 399 395 427 403 382 411 407 399 375 372 395 403 403 392 Advanced Economies ($ Index) 1710 1663 1582 1663 1638 1766 1659 1582 1706 1694 1663 1562 1547 1638 1671 1675 1628 United States (S&P 500) 2059 2044 1920 2044 2051 2104 1992 1920 2079 2080 2044 1940 1932 2051 2065 2097 2078 Europe (S&P Euro 350) 1401 1474 1405 1474 1352 1614 1478 1405 1523 1558 1474 1381 1347 1352 1379 1399 1298 Japan (Nikkei 225) 16292 16292 17388 18817 16555 20585 18812 17388 19083 19921 18817 17518 15989 16555 16407 17235 15434 Emerging Market and 956 794 792 794 821 902 882 792 848 814 794 742 740 821 840 807 800 Developing Economies (MSCI) EM Asia 457 404 391 404 404 440 433 391 422 408 404 374 369 404 405 400 395 EM Europe 297 244 259 244 272 293 285 259 273 263 244 237 241 272 288 268 256 EM Europe & Middle East 257 211 226 211 230 253 246 226 235 222 211 202 208 230 243 225 218 EM Latin America & Caribbean 2728 1830 1895 1830 2121 2305 2206 1895 2007 1919 1830 1744 1804 2121 2292 2038 2072 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.75 0.90 0.90 0.91 0.91 0.91 0.89 0.89 0.89 0.93 0.92 0.92 0.90 0.90 0.88 0.89 0.89 Japan 105.89 121.00 122.06 121.41 115.23 123.39 122.71 120.10 120.01 122.61 121.62 118.37 114.44 112.87 109.57 108.97 104.65 Emerging and Developing Economies Brazil 2.35 3.33 3.55 3.84 3.91 3.23 3.53 3.89 3.88 3.78 3.87 4.06 3.97 3.70 3.56 3.54 3.47 China 6.16 6.29 6.31 6.39 6.54 6.21 6.34 6.38 6.35 6.37 6.45 6.57 6.55 6.51 6.48 6.53 6.59 Egypt 7.08 7.70 7.82 7.88 8.04 7.81 7.83 7.83 7.91 7.91 7.83 7.83 7.82 8.47 8.87 8.86 8.87 India 61.03 64.14 64.97 65.91 67.50 63.65 65.09 66.16 65.04 66.15 66.54 67.31 68.22 66.95 66.49 66.93 67.28 Russia 38.58 61.34 63.62 66.17 74.84 57.53 66.23 67.10 63.31 65.01 70.19 77.36 77.23 69.93 66.54 65.96 65.73 South Africa 10.85 12.77 13.03 14.22 15.83 12.46 12.94 13.67 13.48 14.14 15.04 16.30 15.79 15.39 14.62 15.36 15.31 Memo: U.S. nominal effective rate 102.2 114.7 116.2 118.1 120.3 114.6 116.6 117.4 116.4 118.3 119.4 121.8 120.7 118.4 116.5 117.8 118.8 (index) 1 MRV = Most Recent Value. Table F: Commodity Prices 2015 2016 2015 2016 MRV 1 2014 2015 Q3 Q4 Q1 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Energy 2 118 65 63 54 43 69 59 60 60 55 48 40 41 47 51 57 60 Non-energy 2 97 82 81 78 76 83 80 79 79 77 76 75 76 78 80 81 81 Agriculture 2 103 89 88 86 85 91 87 86 87 86 85 83 84 86 89 91 93 Metals and minerals 2 88 68 65 60 59 67 64 65 64 59 57 56 59 62 63 61 58 Memo items: Crude oil, average ($/bbl) 96 51 48 42 33 54 45 46 47 43 37 30 31 37 41 46 46 Gold ($/toz) 1266 1161 1124 1107 1181 1128 1118 1125 1159 1086 1076 1098 1200 1245 1242 1261 1277 Baltic Dry Index 1103 711 975 627 363 975 1061 889 790 582 510 391 307 390 608 623 598 Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg. 1MRV = Most Recent Value. 2Indexes, 2010 = 100. The Index component combination in the Weekly tables differs from that of the Pink Sheet. © 2016 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. 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