77814

                      DECPG Daily
        Economics and Financial Market Commentary
                      March 8, 2013
           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 high -frequency data at our
                                    website: http://www.worldbank.org/gem

Thailand’s sovereign credit rating raised…US unemployment drops…Brazil
inflation picks up
Financial Markets… U.S. Treasuries slid further on Friday, pushing the benchmark 10-
year note yields to an 11-month high of 2.08% in morning trade, after stronger-than-
expected U.S. jobs data. U.S government securities have been weak after upbeat
incoming economic data fueled investor optimism about the growth outlook.
Spanish 10-year government bond yields dropped as low as 14 basis points to 4.76% in
Friday trading, the lowest level since November 2010, after a strong new debt sale on
Thursday and government data showed less-than-expected decline in industrial
production in January. Spanish bonds have outperformed those of Italy and Germany
thus far this month.
Fitch Rating upgraded Thailand’s sovereign credit rating by one notch to ‘BBB+’ from
‘BBB,’ citing the country’s resilient economy despite repeated shocks and a more stable
political situation. The rating agency also cited Thailand’s strong external financing
position and low public debt.
High-income Economies…US non-farm payroll employment rose by 236,000 jobs,
compared to an increase of 119,000 in January, helping push the unemployment rate to
a 4-year low of 7.7% in February from 7.9% the month before. The increase reflected
strong hiring in the private sector (246,000 jobs) that helped offset the loss of 10,000
government jobs.
In Germany, the pace of contraction in industrial production eased in January with
output falling by 5.6% (3m/3m saar) compared to a 9,2% decline in December. In
monthly terms, output remained flat supported by rising construction output, after
gaining 0.6% (m/m, sa) in December.
Final Q4 GDP estimates show that Japan's GDP was flat compared to Q3, after
preliminary readings suggested a 0.1% contraction. Q4 data were boosted by upward
revisions to consumer spending and private investment which fell less than initially
estimated.
Construction output in the UK contracted for the 13th month in a row in January, falling
by 7.9% (y/y, vol. nsa) after a 14.5% fall in December. The slide reflects a sharp fall in
public sector works (ex. housing) combined with weak private sector activity. Separately
a quarterly survey from the Bank of England (BoE) showed that Britons’ inflation


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expectations for the year ahead rose to 3.6% in March from 3.5% in November. Inflation
has remained above the BoE’s 2% inflation target since October 2009
Developing Economies…East Asia and Pacific: China’s exports leaped 21.8% (y/y)
in February in a possible sign of stronger global demand. Imports fell by 15.2% (y/y), a
decline from January's 28% growth suggesting that domestic demand is weakening.
This resulted in a trade surplus of $15.25 billion compared with a deficit of $32 billion in
the same month last year.
Europe and Central Asia: Turkey’s industrial production accelerated in January to
1.9% (y/y), reversing the 1.8% (y/y) decrease recorded in the previous month led by
advances in the manufacturing sector.
Latin America and the Caribbean: Chile’s inflation edged downwards in February to
1.3% (y/y) from 1.5% (y/y) in the previous month. The annual inflation rate is still below
the central bank’s 2 to 4% target range and at the slowest pace since June 2010.
Brazil’s inflation rose by 6.31% (y/y) in February, up from 6.15% (y/y) in January, which
is the fastest pace since December 2011. Inflation is approaching the upper end of the
central bank’s 4.5% +/- 2% inflation targeted range.

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