Global Monthly October 2018 Overview Table of Contents Monthly Highlights ............................................... 2 • Global activity appears to be decelerating amid tightening financial conditions and ongoing trade tensions. Special Focus......................................................... 6 Recent Prospects Group Publications ...................... 8 • Global trade remains weak despite an increase in global Recent World Bank Working Papers ....................... 8 goods trade in July. Recent World Bank Reports ................................... 8 • The United States is likely to continue growing at a robust Table A: Major Data Releases ................................ 8 pace, but signs of slowdown are becoming more apparent in Table B: Activity and Inflation .............................. 9 the Euro Area, China, and many other emerging market and Table C: Trade and Finance.................................. 9 developing economies (EMDEs). Table D: Financial Markets ............................... 10 • Commodity prices diverged in September, with increases in Table E: Commodity Prices.................................. 10 most energy prices and declines in many non-energy prices, and have been volatile in October. Number of central banks increasing monetary policy rates Chart of the Month • A growing number of countries, in both advanced economies and EMDEs, are tightening monetary policy. • Many EMDEs have raised policy rates in response to currency depreciation and higher energy costs. • In some countries, inflation is increasing as GDP rises above its potential. • Monetary tightening will weigh on domestic demand and Source: Haver Analytics. could contribute to further deceleration in activity. Note: The sample includes 15 advanced economies and 62 emerging market developing economies (EMDEs). Last observation is October 2018 for the 2018 bars, and December 2017 for the 2017 bars. Special Focus: Education Demographics and Global Inequality • An expected shift in the skill composition of the global labor force will have important consequences for the future of global income inequality. • A more educated labor force from emerging market and developing economies could reduce inequality, both between and within countries. e Global Monthly is a publication of the Global Macroeconomics Team of the Prospects Group in the Development Economics Vice Presidency. is edition was prepared by Patrick Kirby and Collette Wheeler, based on contributions from Ishita Dugar, Eung Ju Kim, Brent Harrison, Peter Nagle, Yoki Okawa, Julia Roseman, Rudi Steinbach, Temel Taskin, Ekaterine Vashakmadze, Dana Vorisek, and Sandy Ye. is Global Monthly re ects data available up to October 23. For more information, visit: www.worldbank.org/en/research/ brief/economic-monitoring. October 2018 Monthly Highlights FIGURE 1.A Global manufacturing PMI and infla- Global growth: solid but moderating. Global activity appears to tion have moderated in 18Q3. Global trade remains weak, and nancial conditions are tightening. Despite slowing global economic activity, median in ation has been rising (Figure 1.A). Currency depreciation and rising energy prices are prompting central banks in many countries to tighten domestic monetary policy, especially in EMDEs. e United States is likely to continue growing at a robust pace, but signs of slowdown are becoming more apparent in the Euro Area, China, and many other EMDEs. Global trade: recent pickup unlikely to persist. Following several months of weakness, global trade growth picked up in July, boosted by a rebound in exports from the Euro Area and emerging FIGURE 1.B Global goods trade growth, volumes Asia (Figure 1.B). However, recent data suggest that the pickup may have been temporary—global new export orders declined in September for the eighth consecutive month, falling just below the threshold that indicates contraction. at said, U.S. trade policy uncertainty diminished with the announcement of a new trade agreement with Mexico and Canada on October 1st. Changes introduced in the proposed new United States-Mexico-Canada Agreement include higher rules-of-origin requirements for the auto sector, somewhat greater U.S. access to the Canadian dairy market, more stringent labor and intellectual property provisions, and scaled-back dispute settlement rules. e agreement must still be rati ed by country legislatures before taking e ect. Global nancing conditions: spike in long-term yields. Buoyed FIGURE 1.C U.S. Treasury yields by strong economic data, U.S. 10-year Treasury yields jumped to 3.2 percent in early October, their highest level since May 2011, outpacing the increase in short-term yields and interrupting the trend of narrowing of yield spreads (Figure 1.C). In Italy, yields have risen signi cantly since the formation of the new government amid disagreements with the EU concerning the proposed 2019 budget. Government bond yields in other advanced economies have increased to a lesser degree. e U.S. dollar has strengthened against other major currencies in recent weeks, possibly in response to strong U.S. activity relative to the rest of the world. EMDE nancing conditions: renewed pressure. e trend decline in capital ows into EMDE bond and equity markets that began in early 2018 has continued (Figure 2.A). Many EMDEs have Sources: Bloomberg, CPB Netherlands Bureau for Economic Policy and Analysis, Haver Analytics. been under nancial pressure, fueled by a combination of U.S. A. Figure shows Purchasing Managers’ Index (PMI) for manufacturing and inflation. PMI Readings above 50 indicate expansion in economic activity; dollar strength, higher borrowing costs, and concerns about readings below 50 indicate contraction. Inflation is calculated as the median of 34 advanced economies and 95 EMDEs. Last observation is September 2018. softening growth prospects, especially in China. In early October, B. Last observation is July 2018. C. Last observation is October 23, 2018. EMDE equities posted their biggest weekly loss since February 2 October 2018 alongside declines in many currencies. After a brief reversal in FIGURE 2.A EMDE net capital inflows September, EMDE sovereign bond spreads resumed widening in October (Figure 2.B). Commodity markets: divergence and volatility. e divergence in commodity prices continued in September, with increases in most energy prices and declines in many non-energy prices, particularly for metals (Figure 2.C). Crude oil prices rose in September and the start of October, with the Brent oil price peaking at $86/bbl on October 3rd. Prices have been supported by fears about the impact of U.S. sanctions on Iranian oil exports. More recently, the Brent oil price fell to about $80/bbl on both demand and supply news— OPEC and the International Energy Agency revised down their oil demand forecasts due to weaker activity and trade tensions, while production rose in Russia and Saudi Arabia. Base metals prices resumed their decline in September, led by nickel, which dropped FIGURE 2.B Change in EMDE bond spreads, 2018 on weak steel prices, but picked up in October as copper and zinc prices rose following the announcement of more stimulative policies in China. Agricultural prices continued falling, dropping 2.7 percent in September (y/y). e decline was led by a 7 percent fall in wheat prices, triggered by an upward revision to global supplies for 2018-19. United States: historically low unemployment. Incoming data continue to show strength, supported by pro-cyclical scal policy. In September, consumer con dence rose to its highest level since 2000, while the manufacturing PMI stood at a healthy 55.6. e current account de cit has been widening as strong domestic demand, boosted by scal stimulus, pulls in imports (Figure 3.A). e economy continued to add an average of about 200,000 jobs per month, leading to a decline in the unemployment rate to 3.7 FIGURE 2.C Commodity prices, nominal percent in September, its lowest level since 1969. Nominal wages were up 2.7 percent (y/y), while CPI in ation decelerated from 2.7 to 2.3 percent due to base-year e ects on energy prices. e core measure of PCE in ation—the Federal Reserve’s preferred benchmark—remained at 2 percent in August. As expected, the Federal Reserve raised its target range for the federal funds rate by 25 basis points to 2-2.25 percent in September. Euro Area: declining sentiment. Incoming data continue to point to softness in the Euro Area. Economic sentiment declined for the ninth consecutive month in September. e manufacturing PMI, which has also been trending steadily down, dropped from 54.6 in August to 53.2 in September. e decline was linked to weakening Sources: Bloomberg, Institute of International Finance, World Bank. trade activity, possibly due to a combination of elevated A. Net capital are flows from both residents and non-residents covering portfolio flows, banking flows, direct investment, and other components of the financial uncertainty about global trade policy and a delayed impact from account in a nation's balance of payments. Last observation is August 2018. B. The regional aggregates reflect the J.P. Morgan Emerging Market Bond Index the appreciation of the euro in 2017 (Figure 3.B). Real indicators for the EMDE regions. Last observation is October 22, 2018. C. Index based on nominal U.S. dollars. Last observation is September 2018. 3 October 2018 have also been generally sputtering—retail sales fell 0.6 percent in July (m/m) and another 0.2 percent in August, while industrial FIGURE 3.A U.S. federal budget and trade balance production has been stagnant since the beginning of the year. Signs of region-wide capacity pressures are limited— unemployment declined 0.1 percentage point in August, to 8.1 percent. Headline in ation rose 0.1 percentage point to 2.1 percent (y/y), slightly above the ECB’s target, but core in ation remains well below, at 1.1 percent. Japan: healthy growth. Japanese data have been positive, suggesting that growth will remain healthy, though likely not at the 3 percent pace (q/q saar) set in 18Q2. Industrial production rose by a robust 0.7 percent (m/m) in August, while retail sales were up 0.9 percent. e manufacturing PMI held steady at 52.5 in September, while core machinery orders rose 6.8 percent (m/m) FIGURE 3.B Contribution of net exports to GDP in August following an 11-percent increase in July. Total in ation growth in the Euro Area dipped 0.1 percentage point to 1.2 percent (y/y) in September, while in ation excluding fresh food and energy remained subdued at 0.4 percent. China: easing policies amid slowing growth. GDP growth moderated to 6.5 percent (y/y) in 2018Q3. Net exports remained a drag on growth amid resilient consumption and stable investment. Net capital out ows are estimated to have resumed in 2018Q3, with equity prices, the renminbi, and the central bank’s foreign exchange reserves declining due to concerns about trade tensions and slowing growth. e authorities continue to make progress at reducing shadow banking, with bank loans rising 12.7 percent (y/y) in 2018Q3 and non-bank nancing up only 3 percent. Policies in China are becoming more stimulative, as FIGURE 3.C Share of China’s goods imports affected by new tariffs authorities attempt to o set the e ects of new tari s on trade with the United States (Figure 3.C). Most recently, Chinese authorities lowered required reserve ratios for commercial banks and announced measures to decrease administrative and customs costs for exporters. Argentina: nancial stress weighing on growth. Growth contracted 4.2 percent (y/y) in 18Q2, and the combination of the lingering e ects of nancial stress, severe scal austerity, and extremely high policy interest rates will likely continue to constrain growth in the near term. e Argentine peso, which fell about 30 percent between August and September, regained some ground in October, bolstered by a $7 billion expansion of the IMF’s lending Sources: Haver Analytics, World Integrated Trade Solution (WITS), World Bank. program and by the central bank’s abandonment of in ation A. Data are year-to-date sums from January to September (federal budget) or to August (trade balance). Last observation is September 2018 for federal budget targeting in favor of controlling monetary base growth (Figure balance and August 2018 for the trade balance. B. Blue bars represent net exports contribution to quarter-on-quarter GDP 4.A). Bond yields have fallen somewhat from their end-August growth. C. Bars show the share of imports affected by increases in Chinese tariffs. Last observation is October 2018. 4 October 2018 peak. In ation is expected to continue rising, however, due to the earlier plunge of the currency. FIGURE 4.A Nominal effective exchange rate in- dex for Argentina and Turkey Turkey: collapse in sentiment. In ation accelerated to 24.5 percent (y/y) in September, as the previous depreciation of the lira increased prices at the highest pace since 2003. Despite this, the Turkish lira arrested its fall in early September and has since been slowly appreciating (Figure 4.A). Nominal domestic credit declined 3 percent in September, while con dence indicators have collapsed, with the manufacturing PMI falling 3.7 index points to 42.7 and consumer con dence falling 8.5 index points to 58.2, respectively, consistent with a sharp contraction in GDP. Other commodity-exporting EMDEs: metal exporters struggling. Activity in many commodity exporters has stalled. A number of economies have experienced exchange rate depreciation and FIGURE 4.B Nominal exchange rate against the nancial pressures, with more severe stresses among metals U.S. dollar in EMDE energy and metals exporters exporters (Figure 4.B). In South Africa, mining production is contracting, while manufacturing sentiment is at a nine-year low. Despite ongoing economic weakness, in ation has risen into the top half of the central bank’s target band and currency depreciation is expected to exert further upward pressure. In Brazil, retail sales picked up more than expected in August, nearly reaching the level prior to the truckers’ strike in May, while industrial production slipped slightly in July and August. In ation accelerated in September due to rising food and fuel prices. Incoming data suggest that energy exporters have fared somewhat better but are also facing rising in ation. Manufacturing PMIs rose in both Malaysia and Russia in September, while declining in Indonesia, Nigeria, and Saudi Arabia. FIGURE 4.C Oil prices in major EMDEs, adjusted for the exchange rate against the U.S. dollar Other commodity-importing EMDEs: mostly stable. Activity remains mostly stable in commodity importers, despite less favorable external conditions and a drastic increase in the price of imported oil due to rising prices and currency depreciation (Figure 4.C). In India, the composite PMI slipped 0.6 index point to 50.9 in September while industrial production growth moderated to 4.3 percent (y/y) in August. In Mexico, retail sales growth was sluggish in July and industrial production contracted in August, but consumer con dence rose sharply after the July elections and the manufacturing PMI remains expansionary. Activity in Poland is slowing due to capacity constraints, with unemployment at 5.8 percent, its lowest level on record, and the manufacturing PMI Sources: Bloomberg, Haver Analytics, J. P. Morgan, World Bank. declining for the third consecutive month in September, to 50.5. A. Last observation is October 23, 2018. B. Vertical axis is inverted to show depreciations in the bilateral exchange rate In ailand, the latest data suggest that activity moderated index as declines. Figure shows the median for each country group. Sample includes 28 oil-exporting EMDEs and 17 metals-exporting EMDEs. Last somewhat in 18Q3 but remained healthy. observation is October 23, 2018. C. Bars show the change in oil prices in local currencies using the bilateral exchange rate against the U.S. dollar since the start of the year. Last observation is September 2018. 5 October 2018 Special Focus: Education Demographics FIGURE 5.A Trends in the average Gini, by region and Global Inequality Emergence of a global labor market. In the last two decades, global inequality was partly shaped by the rapid integration of rising working-age populations in EMDEs into the world econo- my. e information and communications technology revolution, combined with cross-border increases in trade and nancial ows, reduced the costs of communication and fragmented production by combining high-tech capital with best managerial practices and low-paid workers globally. A “global labor market” emerged rapidly in the 1990s, when China, India, and the former Soviet bloc began to integrate into the global economy. is integration increased the global labor pool from 1.5 billion workers to 2.9 FIGURE 5.B Global inequality billion workers. is “great doubling” brought in workers who were mostly low-skilled and low-wage. Impact on inequality. e immediate impact was to alter the global capital-labor ratio, favoring returns to capital relative to wages, while also bene ting low-skilled workers in China, India and, to a lesser extent, the former Soviet bloc. Demand for the goods they produced rose, and so did their wages. Increased glob- al economic integration accelerated di usion and adoption of new technologies, which in turn supported rapid growth in EMDEs before the global nancial crisis. ese developments coincided with a decline in inequality in EMDEs, with average FIGURE 5.C Number of skilled workers country-speci c Gini coe cients for EMDE regions falling from 41.1 in 1998 to 38.9 in 2013 (Figure 5.A). e opposite occurred for low-skilled workers in advanced economies. As average in- comes across countries converged, the relative contribution of within-country inequality to global inequality rose (Figure 5.B). Future labor market trends. Global demographic and education- al projections foretell a second wave of substantial changes in the global labor market. Over the next two decades, the working-age population is expected to expand in EMDEs and shrink in ad- vanced economies. Due to their growing populations and invest- ments in education, EMDEs will contribute all of the additional Sources: Ahmed et al. (2017), World Bank. A.C. EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin workers to the world pool of educated workers (Figure 5.C). America and the Caribbean; MNA = Middle East and North Africa; SSA = Sub- Saharan Africa; and AEs = Advanced Economies. A. Data are simple averages. Skilled and unskilled workers. Large heterogeneity across regions B. The line shows the Gini Index, which ranges from 0 (perfect equality) to 100 percent (perfect inequality). The height of the stacked bars shows an alternative measure of inequality, the GE(0) index which can be decomposed into within- and is likely to remain, as re ected in the growth rates of skilled versus between-country inequality and increases from 0 (perfect equality) with growing inequality. The red bars show the population-weighted average of within-country unskilled workers. In most regions, the number of skilled workers inequality; and the blue bars show the average between-country inequality. The numbers in the bars denote the relative contributions (in percent shares) of these two sources to total global inequality. 6 October 2018 is expected to grow faster—in some cases, much faster—than that FIGURE 6.A Cumulative growth in the number of of unskilled workers (Figure 6.A). skilled and unskilled labor, 2012-30 Two forward-looking scenarios. To examine the consequences of these developments on inequality, two contrasting scenarios were developed. e baseline, ‘education-wave’ scenario uses the Unit- ed Nations medium fertility scenario and economic growth pro- jections from the World Bank (2015), and assumes that the share of skilled workers grows in line with population growth with con- stant education attainment rates. In this scenario, the average schooling of the working-age population will increase as students move up from one educational grade to the next, while older, usu- ally less educated ones leave the workforce. Over three decades, the proportion of skilled workers in the labor force grows from FIGURE 6.B Gini coefficient 31.5 to 35.5 percent in EMDEs and from 41.1 to 42.8 percent globally. e counterfactual, ‘no education wave’ scenario is iden- tical, except that it assumes that the number of skilled and un- skilled workers grows at the same rate as the working-age popula- tion for each country. Education and inequality. Since better skills are associated with higher income, the world under the baseline scenario will contin- ue to become more equal by 2030 as EMDE per capita incomes catch up with those in advanced economies . In the no-education- wave scenario, removing the additional in ux of skilled workers FIGURE 6.C Economies with higher or lower from the global labor market would enhance the skill premium within-country inequality in the education-wave compared to the baseline scenario and increase inequality (Figure scenario compared to the no-wave scenario 6.B). By 2030, the number of countries with lower inequality in the education-wave scenario is uniformly and signi cantly higher than under the no-wave scenario across all regions (Figure 6.C). Although the education wave will likely reduce global inequality because of income convergence between countries, the relative contribution of within-country inequality to global inequality is still expected to rise. External and domestic shocks. Internal and external shocks could present severe setbacks to the scenarios outlined above. Internal shocks include con icts and droughts while external shocks in- Sources: Ahmed et al. (2017), World Bank. clude commodity price falls, decline in world trade due to trade A.C. EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MNA = Middle East and North Africa; SSA = Sub- tensions, sudden stops or even reversals in capital in ows, and Saharan Africa; and AEs = Advanced Economies. B. Refer to the footnote for Figure 5.B for details. recessions in major trading partners. By contrast, policies that C. Figure shows the share of countries in each region in which the within-country Gini coefficient is lower in the education-wave scenario than the no wave scenario (red bars “Lower inequality”) or higher in the education-wave scenario than the no- raise educational attainment and improve learning outcomes wave scenario (blue bars “Higher inequality”). could further reduce inequality by adding to the pool of skilled workers and improving productivity growth 7 October 2018 Recent Prospects Group Publications Global Economic Prospects - January 2019 (forthcoming) Commodity Markets Outlook - October 2018 (forthcoming) Global Economic Prospects - June 2018: The Turning of the Tide? Global Economic Prospects - January 2018: Broad-Based Upturn, but for How Long? Recent World Bank Working Papers Concentration in the Banking Sector and Financial Stability: New Evidence How Much Will the Belt and Road Initiative Reduce Trade Costs? FDI and the Skill Premium: Evidence from Emerging Economies Are the Poor Getting Globalized? Assessing the Effect of Public Capital on Growth: An Extension of the World Bank Long-Term Growth Model Methodology for a World Bank Human Capital Index Learning-Adjusted Years of Schooling (LAYS): Defining A New Macro Measure of Education Global Dataset on Education Quality: A Review and Update (2000-2017) Recent World Bank Reports Atlas of Sustainable Development Goals 2018 Fair Progress? : Economic Mobility Across Generations Around the World Global Trade Watch 2017 : Trade Defies Policy Uncertainty–Will It Last? The Changing Wealth of Nations 2018: Building a Sustainable Future Doing Business 2018: Reforming to Create Jobs TABLE A: Major Data Releases (Percent change, y/y) (Percent change y/y) Recent releases: September 24, 2018 - October 23, 2018 Upcoming releases: October 24, 2018 - November 23, 2018 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Austria 9/25/18 GDP Q2 2.3% 3.1% South Africa 10/24/18 CPI SEP 4.9% Japan 9/27/18 IP AUG 0.5% 2.3% United States 10/26/18 GDP Q3 2.9 % United States 9/27/18 GDP Q2 2.9 % 2.6% Belgium 10/29/18 GDP Q3 1.4 % United Kingdom 9/28/18 GDP Q2 1.2 % 1.3 % 1.1% Italy 10/30/18 GDP Q3 1.2 % Italy 9/28/2018 CPI SEP 1.5 % 1.6% Mexico 10/30/18 GDP Q3 1.6% Indonesia 10/1/18 CPI SEP 2.9 % 3.2 % 3.2 % Australia 10/30/18 CPI Q3 2.1 % South Korea 10/1/18 IP AUG 2.5 % 1.0% Euro Area 10/31/18 GDP Q3 2.3% Turkey 10/3/18 CPI SEP 24.5% 22.0% 17.9% Brazil 11/1/18 IP SEP 3.0% Brazil 10/5/18 CPI SEP 4.5% 4.2% Turkey 11/5/18 CPI OCT 24.5% Germany 10/8/18 IP AUG -0.1 % -1.0% 1.5% Indonesia 11/6/18 GDP Q3 5.3% Mexico 10/9/18 CPI SEP 5.0% 4.9% Germany 11/7/18 IP SEP -0.1 % United Kingdom 10/10/18 IP AUG 1.4% 1.0% Brazil 11/7/18 CPI OCT 4.5% France 10/11/18 CPI SEP 2.2 % 2.2 % 2.3 % Mexico 11/8/18 CPI OCT 5.0% Euro Area 10/12/18 IP AUG 0.9 % -0.3 % 0.3% Japan 11/13/18 GDP Q3 1.3% Germany 10/12/18 CPI SEP 2.3 % 2.0 % Germany 11/14/18 GDP Q3 2.0% India 10/12/18 IP AUG 4.3 % 6.5% Netherlands 11/14/18 GDP Q3 3.1 % Mexico 10/12/18 IP AUG 0.2 % 1.2 % Portugal 11/14/18 GDP Q3 2.3 % China 10/15/18 CPI SEP 2.5 % 2.5 % 2.3 % United Kingdom 11/14/18 CPI OCT 2.4 % Euro Area 10/17/18 CPI SEP 2.1 % 2.1 % 2.0 % Euro Area 11/16/18 CPI OCT 2.1 % China 10/18/18 GDP Q3 6.5 % 6.6% 6.7 % Thailand 11/19/18 GDP Q3 4.6 % Canada 10/19/18 CPI SEP 2.2 % 2.8 % Canada 11/23/18 CPI OCT 2.2 % 8 October 2018 TABLE B: Activity and Inflation (Percent change y/y, except quarterly data on industrial production, which are percent change q/q, annualized) 2017 2018 2017 2018 2016 2017 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Industrial production, sa 1 World 2.1 4.0 3.7 5.5 3.9 3.0 4.3 4.1 4.4 4.6 4.6 4.7 4.3 4.4 4.0 3.7 3.7 3.4 Advanced economies 0.0 2.8 2.1 5.3 -0.2 3.1 3.0 3.1 3.5 3.6 2.7 3.0 3.2 2.5 2.7 2.5 2.1 2.2 Emerging market and developing economies 4.2 5.2 5.3 5.7 8.0 3.0 5.6 5.1 5.4 5.6 6.6 6.4 5.3 6.3 5.3 4.9 5.4 4.6 Commodity-exporting EMDEs 0.6 2.6 4.4 1.1 5.6 0.1 3.7 3.0 2.5 2.3 3.9 3.3 3.3 5.1 1.8 1.5 3.2 2.9 Other EMDEs 5.3 6.0 5.5 7.0 8.6 3.7 6.2 5.7 6.2 6.5 7.3 7.3 5.9 6.6 6.3 5.7 5.9 5.1 East Asia and Pacific 5.9 6.1 4.9 5.6 10.1 4.8 6.4 5.8 5.7 5.8 7.2 7.1 5.7 7.1 6.7 5.2 5.9 5.9 East Asia excl. China 4.6 3.7 6.6 0.3 14.9 -2.2 5.3 2.7 3.0 2.9 7.5 6.0 3.8 7.6 5.9 0.7 4.9 4.1 Europe and Central Asia 3.4 5.9 6.1 5.9 7.0 1.7 7.9 5.9 5.8 6.4 7.8 7.5 5.9 5.8 5.3 4.3 5.8 3.6 Latin America and Caribbean -2.2 0.7 4.1 2.4 3.4 -1.7 0.8 1.7 1.6 2.1 1.6 1.8 3.0 4.4 -1.3 3.0 2.2 2.0 Middle East and North Africa -1.1 5.9 17.2 1.2 -9.1 3.7 3.1 6.1 7.1 8.6 2.2 2.7 4.5 2.0 1.4 5.1 3.6 -5.5 South Asia 5.3 4.7 7.2 12.4 4.9 -2.3 4.7 3.7 8.9 7.6 8.1 7.3 5.5 5.6 4.5 6.1 5.7 1.9 Sub-Saharan Africa 1.2 0.1 2.9 8.1 -7.4 0.3 -1.0 2.1 2.4 3.2 1.7 0.9 1.2 -1.3 1.8 2.0 2.4 1.5 Inflation, sa 2 World 1.4 2.2 2.2 2.2 2.3 2.3 2.2 2.3 2.3 2.3 2.4 2.3 2.4 2.3 2.1 2.4 2.4 2.5 Advanced economies 0.3 1.4 1.5 1.4 1.3 1.8 1.5 1.4 1.5 1.5 1.5 1.4 1.4 1.6 1.9 2.1 2.1 2.0 Emerging market and developing economies 2.6 3.2 3.0 2.8 3.0 2.7 3.2 3.0 2.9 3.0 2.9 3.0 2.7 2.6 2.8 2.9 2.9 3.2 Commodity-exporting EMDEs 3.5 3.4 3.3 2.8 2.9 2.5 3.2 3.0 2.9 2.9 2.9 2.9 2.7 2.5 2.4 2.5 2.5 2.6 Other EMDEs 1.3 2.9 2.7 2.8 3.6 3.2 3.0 2.8 2.9 3.0 3.7 3.5 3.1 3.2 3.0 3.2 3.5 3.5 East Asia and Pacific 2.0 2.3 1.7 2.4 2.2 3.0 2.3 2.6 2.4 2.4 2.3 2.5 2.3 2.4 2.9 2.6 2.5 2.6 Europe and Central Asia 0.4 2.4 2.7 2.8 2.7 2.2 2.8 2.6 2.8 2.8 2.5 2.7 2.5 2.2 2.1 2.3 2.4 3.0 Latin America and Caribbean 2.4 2.6 2.5 2.5 2.9 3.1 2.6 2.3 2.5 2.6 2.9 2.9 3.1 3.0 3.0 3.2 2.9 3.2 Middle East and North Africa 2.1 1.6 1.1 2.2 2.8 2.7 1.6 2.1 1.7 1.9 2.9 2.9 2.6 2.6 2.8 3.0 3.2 3.1 South Asia 4.4 3.8 3.5 3.7 4.2 4.6 3.5 3.6 3.8 4.3 4.4 4.1 3.7 4.1 4.8 5.2 5.6 5.5 Sub-Saharan Africa 5.3 5.7 5.5 4.7 3.5 3.3 5.4 5.2 4.6 4.6 4.3 3.4 3.3 3.3 3.3 3.1 3.0 3.2 Sources: Haver Analytics, IMF International Financial Statistics, World Bank. 1Industrial production is total production (may exclude construction). When data are unavailable, "industrial production, manufacturing" is used as a proxy. 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) 2017 2018 2017 2018 2016 2017 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Exports, nominal, US$, sa World -3.0 10.3 14.5 14.6 14.6 24.3 11.1 12.4 13.2 11.7 17.0 16.8 9.2 16.3 10.6 10.2 12.0 - Advanced economies -0.8 9.5 18.2 11.3 11.3 22.0 10.9 12.0 12.9 11.3 17.5 12.0 10.8 16.5 9.2 9.3 10.2 - Emerging market and developing economies -6.4 11.7 8.0 20.9 20.9 28.6 11.4 13.3 13.8 12.3 16.1 25.8 6.4 16.1 13.4 11.8 15.4 - Commodity-exporting EMDEs -8.8 17.7 19.5 26.7 26.7 31.3 17.0 20.9 15.9 14.5 20.9 15.3 13.3 23.6 15.3 16.2 23.4 - Other EMDEs -4.5 9.5 3.6 18.5 18.5 27.5 9.2 10.3 12.9 11.4 14.1 30.3 3.7 13.1 12.5 9.9 12.4 - East Asia and Pacific -6.1 9.9 2.7 16.1 16.1 28.8 9.9 10.0 12.9 10.9 14.0 33.1 0.9 12.4 11.9 10.8 12.9 9.5 Europe and Central Asia -6.1 16.5 17.1 30.3 30.3 40.3 16.5 22.3 19.5 16.2 26.6 21.0 15.1 27.8 19.8 14.0 23.8 - Latin America and Caribbean -2.4 12.0 7.8 15.5 15.5 21.2 10.5 15.8 9.3 8.7 12.0 11.8 10.4 13.9 7.0 6.6 12.6 - Middle East and North Africa - - - - - - - - - - - - - - - - - - South Asia 0.6 5.6 12.3 22.9 22.9 6.8 4.7 4.1 12.2 11.6 7.3 10.1 5.5 9.0 20.3 10.7 11.7 - Sub-Saharan Africa -13.1 15.4 12.3 31.4 31.4 24.4 8.4 17.5 17.8 17.1 14.5 15.2 12.3 - - - - - Imports, nominal, US$, sa World -5.3 12.2 1.7 31.2 31.2 16.1 5.8 18.2 13.3 19.6 16.3 21.4 9.1 24.9 4.3 10.0 12.3 - Advanced economies -3.4 9.1 14.2 18.0 18.0 23.1 9.1 14.7 14.1 13.9 18.6 15.3 12.1 18.5 10.0 9.2 11.6 - Emerging market and developing economies -6.4 13.9 -4.4 38.8 38.8 12.6 4.0 20.2 12.8 22.7 15.1 24.7 7.5 28.5 1.6 10.4 12.6 - Commodity-exporting EMDEs -7.3 13.2 -8.8 46.0 46.0 3.2 -0.2 21.2 11.3 25.9 10.1 29.3 6.1 31.9 -2.3 9.9 - - Other EMDEs -3.0 16.3 12.3 17.1 17.1 50.3 17.7 16.8 18.1 12.6 32.5 11.1 12.1 17.7 17.2 11.8 18.2 11.7 East Asia and Pacific -3.7 17.4 15.1 15.1 15.1 68.3 19.2 18.0 18.8 9.7 37.8 9.3 12.0 21.8 20.9 11.9 21.5 14.9 Europe and Central Asia -1.2 18.6 20.3 17.3 17.3 38.8 20.2 21.4 23.7 23.4 29.6 21.8 17.7 19.2 9.0 6.5 6.6 - Latin America and Caribbean -7.3 8.3 9.9 17.8 17.8 23.8 5.0 16.3 9.2 6.8 13.9 14.3 4.1 21.4 12.8 9.6 23.8 - Middle East and North Africa - - - - - - - - - - - - - - - - - - South Asia -5.4 22.8 -8.2 32.0 32.0 23.5 18.6 11.0 20.8 19.1 24.3 11.9 7.8 4.3 16.0 20.7 22.2 21.4 Sub-Saharan Africa -13.7 - - - - - - - - - - - - - - - - - International reserves, US$1 World -2.0 7.2 1.7 1.2 1.2 1.4 0.3 0.0 0.5 0.7 1.4 -0.5 0.5 -0.5 -0.5 -0.2 0.0 -0.1 Advanced economies 3.2 10.0 1.7 1.1 1.1 1.3 0.3 -0.3 0.7 0.8 1.3 -0.5 0.5 -1.0 -0.2 0.4 -0.1 0.1 Emerging market and developing economies -5.2 5.3 1.7 1.3 1.3 1.4 0.4 0.2 0.4 0.6 1.4 -0.5 0.5 -0.2 -0.7 -0.6 0.0 -0.2 Commodity-exporting EMDEs -4.4 3.5 0.7 1.2 1.2 2.1 0.1 0.6 0.4 0.2 1.4 -0.3 1.0 - - - - - Other EMDEs -5.7 6.1 2.2 1.3 1.3 1.1 0.5 0.1 0.4 0.8 1.5 -0.6 0.3 -0.6 -0.8 -0.6 0.2 -0.5 East Asia and Pacific -7.3 5.6 2.1 1.3 1.3 0.6 0.6 0.0 0.4 0.9 1.1 -0.8 0.4 -0.5 -0.5 -0.3 0.1 -0.2 Europe and Central Asia 3.4 10.2 3.1 0.9 0.9 4.3 0.3 0.2 1.0 -0.3 3.5 0.2 0.6 -0.5 -1.2 -1.6 0.9 -1.1 Latin America and Caribbean 1.4 2.1 0.9 -0.9 -0.9 1.8 -0.1 0.5 -0.4 -0.9 1.5 0.0 0.3 -0.3 -0.4 -1.2 0.4 -0.2 Middle East and North Africa -10.7 - - - - - - - - - - - - - - - - - South Asia 3.6 11.8 2.5 2.3 2.3 2.5 0.1 -0.1 0.2 2.1 2.4 -0.2 0.3 -0.2 -2.5 -1.2 -0.8 -0.6 Sub-Saharan Africa -2.9 10.2 1.1 6.1 6.1 8.7 0.9 1.3 3.3 1.4 1.8 0.9 5.8 1.2 - - - - Sources: Haver Analytics, IMF International Financial Statistics, World Bank. 1Total reserves excluding gold are used as proxies when total reserves data are unavailable. 9 October 2018 TABLE D: Financial Markets (Percent change y/y, except quarterly trade data, which are percent change q/q, annualized, and international reserves data, which are percent change over the previous period) 2017 2018 2017 2018 MRV 1 2016 2017 Q4 Q1 Q2 Q3 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Interest rates and LIBOR (percent) U.S. federal funds effective 0.39 0.97 1.17 1.40 1.67 1.88 1.13 1.13 1.27 1.38 1.38 1.45 1.63 1.63 1.77 1.88 1.88 1.90 2.13 ECB repo 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.74 1.26 1.47 1.93 2.34 2.34 1.36 1.43 1.61 1.73 1.87 2.18 2.35 2.34 2.33 2.34 2.32 2.35 2.49 EURIBOR 3-months -0.26 -0.33 -0.33 -0.33 -0.33 -0.32 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.32 -0.32 -0.32 -0.32 -0.32 U.S. 10-year Treasury yield 1.84 2.33 2.37 2.76 2.92 2.92 2.36 2.35 2.41 2.58 2.86 2.84 2.87 2.97 2.91 2.89 2.89 3.00 3.20 German Bund, 10 year 0.11 0.37 0.38 0.57 0.42 0.28 0.43 0.37 0.36 0.50 0.67 0.54 0.48 0.46 0.33 0.25 0.26 0.35 0.35 Spreads (basis points) JP Morgan emerging markets 410 325 313 309 351 378 306 320 312 299 309 319 322 353 377 366 383 386 379 Asia 221 164 151 157 185 189 148 153 151 146 156 168 171 186 197 193 185 189 194 Europe 302 243 233 221 275 313 226 244 229 212 217 234 246 277 301 291 329 318 296 Latin America and the Caribbean 537 429 416 418 455 487 407 422 419 410 420 423 422 459 486 471 493 498 498 Middle East 517 385 400 367 429 464 381 421 398 359 366 374 385 432 472 451 464 478 449 Africa 518 376 350 320 385 440 360 359 332 305 317 337 342 379 436 420 445 455 439 Stock indexes (end of period) Global (MSCI) 424 508 508 500 505 524 497 505 508 502 517 500 510 509 505 520 524 524 494 Advanced economies ($ index) 1761 2086 2086 2042 2089 2184 2037 2077 2086 2053 2113 2042 2087 2093 2089 2153 2179 2184 2062 United States (S&P 500) 2258 2668 2668 2590 2718 2923 2575 2648 2668 2631 2711 2590 2648 2729 2718 2816 2902 2923 2763 Europe (S&P Euro 350) 1475 1558 1558 1493 1533 1548 1600 1563 1558 1518 1522 1493 1556 1545 1533 1581 1547 1548 1461 Japan (Nikkei 225) 19302 22530 22530 21203 22305 24021 22198 22730 22530 21650 21794 21203 22488 22095 22305 22554 22788 24021 22615 Emerging market and 861 1139 1139 1167 1070 1048 1119 1121 1139 1158 1202 1167 1164 1121 1070 1087 1055 1048 971 developing economies (MSCI) EM Asia 419 577 577 589 552 537 571 572 577 584 603 589 587 582 552 553 546 537 486 EM Europe 295 341 341 350 312 313 330 330 341 354 370 350 335 316 312 319 294 313 298 EM Europe and Middle East 248 275 275 280 253 259 268 265 275 285 295 280 271 257 253 263 246 259 249 EM Latin America & Caribbean 2341 2811 2811 3008 2477 2577 2809 2719 2811 2945 3095 3008 2988 2561 2477 2702 2466 2577 2702 Exchange rates (LCU / USD) Advanced economies Euro Area 0.90 0.89 0.85 0.81 0.84 0.86 0.85 0.85 0.84 0.82 0.81 0.81 0.81 0.85 0.86 0.86 0.87 0.86 0.87 Japan 108.80 112.11 112.75 107.94 109.16 111.52 112.93 112.81 112.51 109.83 107.96 106.02 107.62 109.72 110.13 111.45 111.03 112.09 112.56 Emerging market and developing economies Brazil 3.49 3.19 3.24 3.24 3.61 3.95 3.19 3.26 3.28 3.19 3.25 3.28 3.41 3.64 3.79 3.82 3.93 4.10 3.71 China 6.65 6.76 6.61 6.35 6.38 6.81 6.62 6.62 6.59 6.41 6.32 6.32 6.30 6.37 6.47 6.72 6.85 6.86 6.93 Egypt 10.12 17.85 17.71 17.68 17.80 17.90 17.64 17.68 17.81 17.74 17.67 17.63 17.68 17.83 17.88 17.90 17.88 17.92 17.92 India 67.19 65.11 64.71 64.40 66.99 70.19 65.07 64.85 64.20 63.72 64.44 65.06 65.69 67.49 67.79 68.74 69.62 72.22 73.33 Russia 67.06 58.31 58.47 56.96 62.03 65.64 57.76 58.97 58.70 56.93 56.81 57.15 61.01 62.28 62.81 62.83 66.48 67.60 65.50 South Africa 14.71 13.31 13.62 11.93 12.65 14.09 13.71 14.06 13.11 12.15 11.82 11.84 12.10 12.52 13.33 13.39 14.13 14.75 14.38 Memo: U.S. nominal effective rate 119.7 119.6 117.5 114.1 116.6 120.4 117.5 117.7 117.4 114.7 113.7 113.9 113.9 117.0 118.9 119.6 120.6 120.9 122.1 (index) Sources: Bloomberg, J.P. Morgan, and World Bank. 1 MRV = most recent value. TABLE E: Commodity Prices 2017 2018 2017 2018 MRV 1 2016 2017 Q4 Q1 Q2 Q3 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Energy 2 55 68 75 82 90 92 71 76 78 85 81 81 86 92 91 92 90 95 95 Non-energy 2 79 84 84 88 89 83 84 85 84 87 88 88 90 90 88 84 83 81 81 Agriculture 2 87 87 85 88 91 85 85 85 85 87 88 90 92 92 89 86 85 83 83 Metals and minerals 2 64 79 84 88 88 80 84 84 85 89 89 85 87 88 88 81 79 79 79 Memo items: Crude oil, average ($/bbl) 43 53 59 64 71 73 55 60 61 66 63 64 69 73 72 73 71 75 76 Gold ($/toz) 1249 1258 1275 1329 1307 1213 1280 1282 1264 1331 1331 1325 1335 1303 1282 1238 1202 1198 1198 Baltic Dry Index 676 1152 1509 1171 1256 1602 1484 1455 1589 1234 1130 1149 1126 1289 1352 1649 1710 1447 1576 Sources: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg. 1 MRV = most recent value. 2 Indexes, 2010 = 100. © 2018 International Bank for Reconstruction and Development / e World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved is work is a product of the sta of e World Bank with external contributions. e ndings, interpretations, and conclusions expressed in this work do not necessarily re ect the views of e World Bank, its Board of Executive Directors, or the governments they represent. e maps were produced by the Map Design Unit of e World Bank. e World Bank does not guarantee the accuracy of the data included in this work. e boundaries, colors, denominations, and other information shown on these maps do not imply, on the part of e 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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