103024 For more information, visit http://www.worldbank.org/prospects Overview Table of Contents • As in the first quarter, global growth of about 2.3 percent Monthly Highlights………………………….2 (saar) disappointed in the second quarter of 2015. Special Focus……………………………......6 • In August, equity markets corrected sharply (40 percent Major data releases……………………….....8 from mid-June) in China and fell across developing Other reports from Prospects Group………...8 countries. The currencies of emerging and frontier markets Recent WB country reports……………….....8 depreciated by an average of 7 percent. Annex table: economic developments………9 • Prospects of tighter financing conditions, combined with Annex table: financial markets……………..10 further weakening of commodity prices and slower growth, may continue to test the resilience and policy resolve of developing countries. Indices of volatility Chart of the Month • Volatility in currency and stock markets climbed sharply in July and August, while bond market movements have been less pronounced. • For example, the Chicago Board Options Exchanges’ Volatility Index, which tracks equity price swings and is known as the VIX, briefly jumped in August to a level not seen since the 2008 financial crisis. • Volatility has moderated since then, but there are continuing concerns about the slowdown in major emerging markets and speculation about the timing of a Source: Bloomberg. U.S. Federal Reserve interest-rate hike. Special Focus: How important are China and India in the global demand for commodities? • Demand from China and, to a lesser extent India, has accounted for virtually all of global demand growth in metals and coal (and, to a lesser extent, energy) since 2000, but considerably less in food commodities. • With growth in China and India expected to exceed high income country growth, combined with much scope for catch-up in metals and energy consumption, their demand for metals and oil may continue to grow robustly. • Consumption of agricultural commodities in China and India should grow broadly in line with global averages. • Metals and energy demand tends to be highly income elastic whereas food demand tends to grow more closely in line with population growth. Prepared by a team led by Christian Eigen-Zucchi (34960), comprising John Baffes, Mai Anh Bui, Xinghao Gong, Eung Ju Kim, and Trang Nguyen. DECPG - September 2015 September 2015 Monthly Highlights Global growth: another disappointing year is likely. Global growth struggled to gather momentum in the second quarter of 2015, with activity in the Euro Area and Japan slowing, growth in China continuing to decelerate, the economies of Russia and Brazil contracting, and those of other major commodity exporters weakening (Figure 1.A). Looking forward, PMI surveys are still firmly in expansionary territory in high-income countries, but point to contraction in developing countries (Figure 1.B). In its June Global Economic Prospects report, the World Bank predicted global growth of 2.8 percent this year, up from 2.6 percent in 2014, and 4.4 percent in developing countries, down from 4.6 percent in 2014. Against the backdrop of disappointing data outcomes and bouts of turbulence in global financial markets, there is now a likelihood that even the modest pick-up in global growth forecasted earlier for 2015 will not materialize, and projections are being revised downwards. Global inflation: still low. Global inflation remains low, reflecting the continued dampening effect of low commodity prices, sluggish wage growth in advanced economies, and overcapacity in China. Despite weaker activity, inflation increased or remained elevated in a number of large emerging markets so far this year (Brazil, Russia, Indonesia, Malaysia, Colombia, Chile, Turkey, South Africa, Egypt). This reflected significant currency depreciations, and, to a lesser extent, increases in administrative prices and indirect taxes. The renewed drop in crude oil prices in July/August will help maintain downward pressure on global inflation in coming months (Figure 1.C). United States: recovery on track. Although slowing for the first half of 2015 as a whole, growth rebounded from a temporary setback in Q1 to a robust 3.7 percent in Q2 (saar) and has shown further signs of improvements since then. Labor market conditions continue to tighten, with the unemployment rate falling to 5.1 percent in August—the lowest since April 2008—and monthly employment gains averaging 247,000 over the past year (Figure 1.D). The U.S. Federal Reserve left the federal funds rate unchanged at the current 0-0.25 percent target range in September, citing dampening effects on the U.S. economy from recent global economic and financial developments. While the expected increase in U.S. policy interest rates is likely to proceed smoothly, there is a risk of market volatility through the tightening cycle. Euro Area: gradually healing. Growth in the Euro Area slowed to 1.4 percent (saar) in Q2, down from 2.1 percent in Q1. Both domestic demand and trade have picked-up in 2015, while inflation decelerated unexpectedly to 0.1 percent in August (y/y), far below the ECB’s 2 percent target. The ECB’s quantitative easing program is aimed at supporting growth, helping improve credit conditions, weaken the euro, and shelter peripheral economies from contagion risks from Greece (elections in Greece on September 20 returned the Syriza Party to power, without dissidents within the party who had opposed the bailout). Germany, Spain, and Ireland are on track for above-trend growth in 2015, while growth remains fragile in France and Italy. Inflows of 400,000 asylum seekers during the first half of 2015 (0.2 percent of the European Union labor force) and more in July-September present both political and fiscal challenges but, if absorbed into productive employment, could help lift long-term growth prospects. China: financial market turmoil amidst slowdown. Growth in China was reported to be 7 percent year-on-year in Q2, supported by stimulus measures. High-frequency indicators for Q3 are mixed, pointing to a continued slowdown in manufacturing activity, including contractions in exports and imports and slowing industrial production growth. Domestic demand-related indicators show greater resilience, with rising services PMI and retail sales growth. In August, a change in the calculation of the RMB reference rate resulted in a 4.5 percent depreciation of the renminbi against the U.S. dollar, the largest two-day drop since the mid-1990s. A 40 percent correction of Chinese stock markets since mid-June, after a strong rally during November 2014 to mid-June 2015, has dented investor confidence. Concerns about the outlook prompted the authorities to ease monetary policy further in the third quarter, lowering the benchmark interest rate by 25 bps to 4.6 percent and injecting more liquidity into the financial system, as well as announce further fiscal stimulus measures. Brazil: deepening recession. Brazil entered into recession in the first half of 2015, with a 7.2 percent (q/q saar) contraction in Q2 (Figure 1E). Investment has been falling since Q3 2013, with the Petrobras scandal hurting investor confidence and contributing to delays in much needed infrastructure investment. Due to the roll back of subsidies on key commodities and the pass-through from exchange rate depreciation, inflation remains high and is rising. To anchor inflation expectations, the policy interest rate has been raised repeatedly, now set at 14.25 percent (the highest in nine years). Fiscal consolidation has also weighed on growth, but presents opportunities for structural reforms. A challenging external environment, including falling commodities prices and more difficult financing conditions (especially with the loss of Brazil’s investment grade credit rating by S&P) are contributing to the economic weakness. 2 September 2015 Emerging and frontier markets: more signs of slowing growth. High-frequency indicators suggest that weak growth in Q1 among major emerging markets (Brazil, Nigeria, Russia, and South Africa) has extended into Q2, and is likely to disappoint yet again in 2015. With the exception of India and Eastern Europe, among others, a majority of developing countries, could see weaker growth in 2015 compared with 2014, as subdued external demand weighs on exports. A number of oil exporters (Russia, Colombia, Nigeria, Venezuela, Malaysia) are under acute pressure from deteriorating terms-of-trade, while countries reliant on export revenues from metals and other non-energy commodities (Argentina, Indonesia, Chile, Peru, South Africa, Zambia) also face significant headwinds. Q2 growth releases show steep contractions in Brazil and Russia, and a further slowdown in Indonesia, Malaysia, Nigeria, and South Africa. In contrast, the recovery in India appears to remain robust. For now, growth prospects in 2015 for low-income countries remain above 6 percent. Trade: sharp slowdown. The first half of 2015 saw a 4 percent contraction in global trade compared with the second half of 2014. The fall was the first since 2009 and was driven by a significant contraction in import demand from emerging markets, including from Asia and Central and Eastern Europe (Figure 1.F). Global financial markets: high volatility. Volatility in currencies and stocks increased significantly in July and August, after the 40 percent equity price correction in June and the adjustment to the exchange rate setting mechanism in August in China. Global currency volatility continued to rise at the beginning of September, extending steady increases since January (Chart of the Month above). The Chicago Board Options Exchanges’ Volatility Index (VIX) briefly jumped in August to levels not seen since the 2008 financial crisis. A gauge of price swings in U.S. treasuries has risen but movements were far less pronounced. Volatility has moderated since then, but it remains elevated amid concerns about the slowdown in China and worries about U.S. policy interest rates. China’s foreign exchange reserves: falling sharply. With the People’s Bank of China intervening to steady the renminbi and valuation changes associated with the appreciation of the U.S. dollar, China’s foreign-exchange reserves fell by $93.9 billion in August to $3.56 trillion, the lowest level since July 2013 (Figure 2.A). Almost 40 percent of China’s reserves are held in U.S. Treasury securities, making China the world’s biggest investor in U.S. Treasuries. Exchange rates and emerging market equities: mounting pressures. The sharp correction in Chinese stock prices, unexpected depreciation of the renminbi, lingering weakness of commodity prices, and uncertainty about the timing of a U.S. Federal Reserve rate hike sparked a sharp sell-off in emerging market currencies and equities. Half of the 20 largest stock-markets among emerging and frontier economies have fallen 20 percent or more from their peaks, with Peru and China leading the decline with falls of more than 40 percent (Figure 2B). The currencies of key commodity exporters (including the Russian ruble, the Indonesian rupiah, the South African rand, the Brazilian real, and the Malaysian ringgit) fell to multi-year lows against the U.S. dollar. Growing investor concerns about political risk contributed to sharp depreciations of the Turkish lira and Brazilian real. Emerging market bonds: modest increases in borrowing costs. Although market turbulence in August was mostly concentrated in equity and currency markets, emerging market borrowing costs also rose in line with heightened risk- aversion, with the EMBI spread increasing by 23 basis points since end-July (Figure 2C). Outflows from emerging- market bond and equity funds have been significant in August, but the pace of outflows has eased and preliminary data suggests that international debt issuance by emerging markets remains steady. Commodity prices: continued downward pressures. Indices of agriculture, energy and metals prices continue to decline (Figure 2D). Oil prices fell below $46/bbl in August, to their lowest level since the 2008 crisis. The decline has been driven by an oversupplied global market, partly reflecting the resilience of U.S. shale oil production to date. OPEC production continues to climb, with Saudi Arabia and Iraq reaching record levels recently. The agreement with Iran over its nuclear program could, if ratified, increase Iranian oil exports by 0.5-0.7 million barrels per day by 2016. Increasing concerns about slowing growth in China—the world’s second largest oil consumer—also contributed to the recent drop in crude oil prices. Similar factors underpin a further slump in metal prices, to their lowest in more than six years. The strengthening U.S. dollar has played a role, as depreciating currencies of commodity producers tend to delay closure of higher-cost capacity. Grain and oilseed prices declined as well in August, down 8 percent and 7 percent, respectively, in response to well-supplied markets and despite El Nino concerns. As noted in the Commodity Markets Outlook, the broad weakness in commodity prices is expected to persist for the rest of 2015, before a modest recovery in 2016. 3 September 2015 Figure 1: Selected Activity Indicators A. Global GDP growth B. Manufacturing PMI Percent Index, +50: Expansion 15 2015Q1 58 2015Q2 Developing countries 10 High-income countries 5 56 0 54 -5 -10 52 United States India Brazil Russia China Indonesia United Kingdom Mexico Euro Area Japan South Africa 50 48 2010 2011 2012 2013 2014 2015 C. G20 inflation and oil price change D. U.S. job creation (non-farm payroll employment) Year-on-year, percent 12-month cumulative change, millions Percent 5 Inflation (LHS) 80 4 12 Projection (LHS) 60 4 Oil price changes (RHS) 2 6 40 3 20 0 0 0 -2 -6 2 -20 -40 -4 -12 1 -60 -6 -18 Job creation (LHS) 0 -80 Civilian unemployment rate (RHS) 2010 2011 2012 2013 2014 2015 2016 -8 -24 2000 2005 2010 2015 E. Brazil GDP growth F. Global import growth Percent Y/Y 8 Q/Q annualized 6 4 2 0 -2 -4 -6 -8 Q1-13 Q3-13 Q1-14 Q3-14 Q1-15 Sources: World Bank, Bloomberg, Haver Analytics, CPB World Trade Monitor. A: The latest available observation is Q1 for India, Brazil and South Africa, Q2 for all others. Data are average annualized growth rates, seasonally adjusted. B: The dotted lines show the trend. The last observation is July 2015. C: Consumption weighted average of inflation rates of 16 members of the G20 (ex. Russia and Argentina). Data for Japan excludes the April 2014 sales tax effect. Projections are from individual country Vector Autoregressive models. D: Last observation is August 2015. E: Last observation is Q2 2015. F: Merchandise world trade, fixed base 2005=100; 6 month-on-month annualized rate of change. 4 September 2015 Figure 2: Selected Financial and Commodity Indicators A. China’s foreign exchange reserves B. Emerging market stock-market indices (in local currency) US$, billions Percent Change from peaks YTD change 4,100 10 3,900 0 3,700 -10 3,500 -20 3,300 -30 3,100 -40 2,900 -50 MSCI EM Peru Egypt Brazil Turkey Thailand Malaysia India Russia China Colombia Indonesia South Africa Mexico 2,700 Sep-12 Feb-13 Aug-15 Jan-11 Jun-11 Apr-12 Jul-13 May-14 Oct-14 Nov-11 Dec-13 Mar-15 C. Emerging-market sovereign bond spreads D. Commodity price indices, monthly Basis points US$ nominal, 2010=100 500 Taper tantrum Collapse of oil price 180 Energy Metals 450 160 Agriculture 140 400 120 350 100 300 80 250 60 200 40 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Sources: World Bank, Bloomberg, Haver Analytics. A. The latest available observation is August 2015. B. YTD is year-to-date change. Last observation is September 10, 2015. C. JPMorgan’s EMBIG spreads are defined as weighted average of bond spreads of external debt instruments issued by sovereign and quasi-sovereign entities in emerging markets over U.S. government securities. The taper tantrum period covers early May through August 2013. D. Commodity Price Indices, 2010=100. 5 September 2015 Special Focus: How important are China and India in the global demand for commodities? Demand from China and, to a lesser extent, India significantly increased global demand for metals and energy— especially coal—but less so for food commodities. With growth in China and India expected to continue outpacing high income country growth, and significant scope for catch-up in metals and energy consumption, their demand is likely to continue growing strongly. In contrast, their consumption of agricultural commodities is projected to grow more slowly, in line with global averages. Differences in China’s and India’s demand for commodities are largely explained by different income elasticities and different growth engines in China and India. China’s metal consumption soared during 2000-14, while India’s grew at a measured pace. China’s metal consumption growth alone accounted for nearly all of the net increase in global consumption in 2000-14, whereas India accounted only for 5 percent of the global increase. As a result, China’s share of world metals consumption more than tripled from 13 percent in 2000 to 47 percent in 2014 (Figure 3A). During 2000-14, China’s primary energy consumption tripled, and India’s doubled (Figure 3B). Together, China and India accounted for 28 percent of global energy consumption in 2014. China’s and India’s energy consumption growth has been driven mainly by coal (Figure 3C). Together, the two countries accounted for nearly all of the increase in global coal consumption over the period. Today, China consumes half of the world’s coal, up from less than one- third in 2000, and India consumes almost one-tenth, more than double its 2000 share. Since 2010, growth in Chinese coal consumption has decelerated significantly as a result of slower economic activity, efforts to improve air quality, and increased use of other fuels such as oil, natural gas, nuclear, renewables, and hydropower. Although China’s share in global oil consumption has more than doubled since 2000 (from 4.8 to 11.1 mb/d), it remains a modest 12 percent while India’s share amounts to 4 percent. In contrast to coal and metals, China’s and India’s consumption of most agricultural commodities grew broadly in line with global consumption over the past two decades. As a result, their share of world consumption is virtually unchanged at about 22 percent and 10 percent, respectively (Figure 3D). The exception among agricultural commodities is edible oils, where China’s share of global consumption rose almost one-and-a-half fold (to one-fifth of the global total in 2014), while India’s share remained around one-tenth. The diverging impact of China’s and India’s expansion during the 2000s on individual commodity markets reflects different income elasticities between commodities. Consumption of industrial commodities, including metals and coal, tends to respond strongly to economic activity whereas rising consumption of food commodities (especially grains) is mainly associated with population growth. While China’s and India’s share of the global population has remained broadly stable at 37 percent, their share of global economic activity has tripled from 5 percent in 2000 to 16 percent in 2014. With income elasticity of metals consumption exceeding unity, and that of energy estimated at around unity, their demand for primary energy and metals has grown even faster than GDP. In contrast, the income elasticity of most agricultural commodity consumption is typically less than unity. Thus, the response of real food commodity prices to income could be negative depending on the changes in inflation. Edible oils are an exception, since growing incomes are associated with increased food consumption in restaurants and in processed form—both with higher edible oil content compared to home-cooked meals. Divergent trajectories of demand between China and India stem from their predominant growth models, their pace of growth, and relative economic size (Figures 3E and F) . Consumption of primary energy and, especially, metals is strongly correlated with industrial production. The industry-led nature of China’s growth between 2000-14, compared with India’s, partly accounts for China’s stronger surge in metals consumption. Industry (energy, manufacturing, and construction) accounted for almost half of China’s growth but only about one quarter of India’s growth during 2000-14. As a result, China’s share of global industrial production increased five-fold during the past two decades and is now eight times higher than that of India. 6 September 2015 Figure 3. How important are China and India in the global demand for commodities? China and India have played an important role in boosting global demand for metals and primary energy, especially coal. Their demand for food commodities has been more stable, broadly following global averages. These trends are more pronounced for China, which has grown faster since 2000 than India, and pursued a growth model more reliant on industry. The divergence in the demand for commodities is associated with differing income elasticities. A. Metal consumption B. Primary energy consumption Million metric tons Million tons of oil equivalent 60 10,000 50 8,000 40 6,000 China 30 China India 4,000 Rest of world 20 India Rest of world 10 2,000 0 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 1975 1981 1987 1993 1999 2005 2011 C. Coal consumption D. Grain consumption Million tons of oil equivalent Million metric tons 2,000 1,500 China India 1,200 Rest of world 1,500 China 900 1,000 India Rest of world 600 500 300 0 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 1975 1980 1985 1990 1995 2000 2005 2010 2015 E. China’s consumption of key commodities F. India’s consumption of key commodities Primary energy 9.2 Primary energy 2.4 22.0 4.5 Oil 4.1 Oil 1.9 11.3 4.0 Metals 6.4 Metals 1.9 43.9 3.4 Grains 22.8 Grains 9.9 22.5 9.8 Edible oils 12.6 Edible oils 9.3 20.0 11.5 Population 21.4 Population 16.6 19.2 17.6 GDP 2.7 1990-94 GDP 1.3 1990-94 10.3 2.7 2010-14 2010-14 IP 4.5 IP 1.0 19.7 2.5 0 15 30 45 0 15 30 45 Percent of world total Percent of world total 7 September 2015 Major data releases Major Data Releases 24 August 2015-20 September2015 Upcoming releases: 21 September, 2015-15 October 2015 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Mexico 8/20/2015 GDP (Q/Q) Q2 0.5% 0.5% 0.4% China 9/22/2015 PMI Manufacturing SEP 47.3 Eurozone 8/21/2015 PMI Composite AUG 54.1 53.7 53.9 France 9/23/2015 GDP (Q/Q) Q2 0.6% Canada 8/21/2015 CPI (Y/Y) JUL 1.3% 1.4% 1.0% South Africa 9/23/2015 CPI (Y/Y) AUG 5.0% South Africa 8/25/2015 GDP (Q/Q) Q2 -1.3% 0.4% 1.3% United States 9/25/2015 GDP (Q/Q) Q2 -0.2% United States 8/27/2015 GDP (Q/Q) Q2 3.7% 3.12% 0.6% Mexico 9/28/2015 Unemployment Rate AUG 4.3% UK 8/28/2015 GDP (Q/Q) Q2 0.7% 0.7% 0.4% China 9/29/2015 PMI Manufacturing SEP 47.3 Brazil 8/28/2015 GDP (Q/Q) Q2 -1.9% -2.0% -0.2% UK 9/30/2015 GDP (Q/Q) Q2 0.4% Mexico 8/28/2015 Unemployment Rate JUL 4.3% - 4.4% Eurozone 9/30/2015 Unemployment Rate SEP 10.9% China 8/31/2015 PMI Composite AUG 48.8 - 50.2 Indonesia 10/1/2015 CPI (Y/Y) SEP 7.2% Indonesia 9/1/2015 CPI (Y/Y) AUG 7.2% 7.1% 7.3% India 10/1/2015 PMI Manufacturing SEP 52.3 Eurozone 9/1/2015 Unemployment Rate AUG 10.9% 11.1% 11.1% Turkey 10/1/2015 PMI Manufacturing SEP 49.3 Canada 9/1/2015 GDP (Q/Q) Q2 -0.1% - -0.2% Eurozone 10/1/2015 PMI Manufacturing SEP 52.3 Australia 9/1/2015 GDP (Q/Q) Q2 0.2% 0.5% 0.9% United States 10/1/2015 PMI Manufacturing SEP 53.0 Brazil 42249 Industrial Production (Y/Y) JUL -8.90% - -3.2% United States 10/2/2015 Unemployment Rate SEP 5.1% India 9/3/2015 PMI Composite AUG 52.6 - 52.0 Turkey 10/5/2015 CPI (Y/Y) SEP 7.1% Turkey 9/3/2015 CPI (Y/Y) AUG 7.1% - 6.8% South Africa 10/5/2015 PMI Manufacturing SEP 49.3 Canada 9/4/2015 Unemployment Rate AUG 7.0% 6.87% 6.8% Eurozone 10/8/2015 GDP (Q/Q) Q2 0.4% United States 9/4/2015 Unemployment Rate AUG 5.1% 5.2% 5.3% Turkey 10/8/2015 Industrial Production (Y/Y) AUG 0.30% Eurozone 9/8/2015 GDP (Q/Q) Q2 0.4% 0.30% 0.4% Mexico 10/8/2015 CPI (Y/Y) SEP 2.6% Mexico 9/9/2015 CPI (Y/Y) AUG 2.6% - 2.7% Canada 10/9/2015 Unemployment Rate SEP 7.0% Other reports from the Prospects Group Global Economic Prospects – June 2015: The Global Economy in Transition Commodity Market Outlook – July 2015 Policy Research Note – March 2015: The Great Plunge in Oil Prices Policy Research Note – September 2015: The Coming U.S. Interest Rate Tightening Cycle: Smooth Sailing or Stormy Waters Recent World Bank Country Updates Indonesia: Slower than Expected Growth Russia: Contracted 4.6 percent in Q2 after 2.2 contraction in Q1. Serbia Public Finance Review: Toward a Sustainable and Efficient Fiscal Policy Recent World Bank Research The cost of road infrastructure in low and middle income countries. The impact of Syrian refugees on the Turkish labor market. The middle-income trap turns ten. Impact of property rights reform to support China’s rural-urban integration : village-level evidence from the Chengdu national experiment. Depreciations without exports ? global value chains and the exchange rate elasticity of exports. 8 September 2015 Economic Developments indicators expressed as %ch y/y, except Industrial Production quarterly figures are %ch q/q, annualized 2014 2015 2014 2015 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Industrial Production, S.A. World 8.8 4.7 2.9 2.4 3.7 2.3 2.5 3.8 1.6 3.4 3.4 2.6 3.3 3.1 2.9 3.3 2.7 2.5 2.5 2.2 2.0 2.6 - High Income Countries 7.4 2.8 0.8 0.4 2.7 0.4 0.5 3.1 2.1 2.2 2.3 1.1 1.6 1.7 1.4 1.9 1.7 1.4 1.4 1.1 0.8 1.2 - Developing Countries 11.4 8.1 6.6 5.8 5.1 5.3 5.4 4.9 0.7 5.3 5.2 4.9 5.9 5.1 5.1 5.4 4.0 4.1 4.0 3.9 3.7 4.5 4.1 East Asia and Pacific 14.3 11.3 9.0 8.9 5.2 8.1 6.5 8.3 1.8 8.6 7.8 6.5 7.6 7.1 6.6 7.4 6.5 6.2 5.8 5.7 5.4 6.1 6.0 East Asia x. China 8.9 0.7 4.1 4.6 -0.8 9.0 3.6 5.9 -0.3 4.8 1.1 4.6 5.7 4.4 4.0 4.8 4.3 2.7 6.5 3.8 0.6 2.0 - Europe and Central Asia 11.0 13.7 9.8 2.2 5.0 0.6 2.5 0.3 1.2 3.0 3.7 2.5 2.8 2.9 2.1 1.3 -0.6 1.6 2.5 1.3 1.2 3.7 - Latin America and Caribbean 7.6 2.3 -0.3 1.2 0.8 -3.2 0.1 -3.1 -4.7 -3.4 -0.6 -0.6 -1.2 -0.6 -2.1 -1.4 -2.5 -2.8 -2.9 -3.2 -3.5 -2.3 - Middle East and N. Africa 2.0 -8.5 5.6 -6.6 18.8 2.0 28.4 -2.1 -17.2 -4.5 -0.1 11.3 16.2 12.1 13.2 8.1 -0.3 -0.3 5.2 4.2 6.4 - - South Asia 9.3 5.5 1.1 1.7 7.7 5.1 0.8 -1.9 12.3 4.6 1.6 2.0 3.5 -1.5 5.8 4.3 3.4 5.1 3.4 4.7 4.3 5.1 - Sub-Saharan Africa 4.3 3.4 3.2 1.5 -4.1 1.4 -4.7 9.0 -1.7 1.2 -6.4 -0.2 6.3 1.5 -0.9 0.2 -1.5 0.3 3.8 -1.4 -0.1 -0.5 - Inflation, S.A. 1 High Income Countries 1.9 3.0 2.3 2.1 2.4 3.1 3.0 2.9 2.4 3.1 3.0 3.0 3.0 3.1 2.9 2.8 2.4 2.4 2.4 2.0 2.0 1.9 1.8 Developing Countries 5.3 7.1 6.0 6.4 5.6 5.5 5.4 5.0 5.0 5.4 5.6 5.5 5.2 5.0 4.9 5.0 4.7 5.0 5.2 5.4 5.4 5.5 5.2 East Asia and Pacific 3.4 5.6 2.8 3.0 3.0 2.9 2.5 2.2 1.8 3.0 2.8 2.5 2.2 2.1 2.2 2.3 1.5 2.0 2.0 2.2 1.9 2.0 2.2 Europe and Central Asia 7.6 8.6 9.0 6.5 6.3 7.9 8.5 8.9 9.1 8.0 8.2 8.6 8.7 8.9 9.1 8.6 8.3 9.0 9.9 11.1 11.0 10.1 9.7 Latin America and Caribbean 4.5 5.4 4.8 5.1 4.7 4.9 5.3 5.3 5.8 5.0 5.3 5.3 5.4 5.3 5.3 5.2 5.4 5.7 6.2 6.1 6.3 6.6 6.9 Middle East and N. Africa 7.0 12.0 13.8 19.2 13.2 9.7 10.1 10.7 10.7 9.1 9.9 10.2 10.1 10.5 10.5 11.2 10.3 10.8 11.1 11.3 11.7 11.2 9.6 South Asia 10.3 9.8 9.4 10.1 8.1 7.8 6.7 4.2 5.0 6.8 7.3 6.9 5.8 4.8 3.5 4.4 5.1 5.1 4.9 4.6 4.8 5.1 3.6 Sub-Saharan Africa 7.5 10.1 11.1 8.1 8.6 9.2 9.8 8.4 7.5 9.7 9.9 10.1 9.3 8.3 8.4 8.5 7.6 7.5 7.5 7.9 8.3 9.1 8.9 1 Inflation is calculated as the GDP-weighted average for all groups. Trade and Finance indicators expressed as %ch y/y, except International Reserves are %ch p/p and trade quarterly figures are %ch q/q, annualized 2014 2015 2014 2015 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Exports, Nominal, US$, S.A. World 21.9 19.2 0.3 1.8 -1.6 3.9 2.0 -16.0 -28.5 3.3 5.3 0.7 2.8 -1.4 -4.5 -3.9 -11.1 -7.4 -13.5 -13.6 -13.4 -8.2 - High Income Countries 19.4 18.5 -1.2 1.3 1.4 1.1 -2.1 -19.4 -29.6 2.6 5.0 -0.5 0.9 -3.5 -6.3 -5.6 -12.8 -13.6 -13.9 -15.1 -15.2 -9.9 - Developing Countries 28.7 20.8 3.9 3.1 -8.5 11.1 12.1 -7.7 -26.1 5.1 6.2 3.7 7.2 3.8 -0.1 0.1 -7.1 8.3 -12.5 -9.9 -9.3 -3.9 -10.1 East Asia and Pacific 30.8 19.7 6.3 6.5 -12.0 18.1 19.6 0.8 -18.3 7.8 11.3 8.2 12.7 8.3 3.4 5.7 -3.4 29.3 -11.6 -6.6 -4.4 0.6 -7.7 Europe and Central Asia 15.7 20.9 1.6 -1.4 6.9 -6.2 -9.1 -29.1 -18.4 3.7 3.6 -4.8 -2.1 -6.0 -10.9 -14.0 -13.5 -16.4 -18.6 -17.2 -22.1 -16.3 - Latin America and Caribbean 28.9 23.2 2.4 0.6 -7.5 9.2 2.6 -23.5 -18.5 2.5 6.6 0.5 1.2 -3.3 -7.7 -6.0 -7.8 -12.3 -5.5 -11.3 -14.7 -7.0 -10.0 Middle East and N. Africa 23.7 15.8 5.0 -11.1 -6.0 -1.7 28.2 -12.5 -60.3 -8.8 -17.0 -1.7 2.0 16.5 -3.4 -10.4 -15.9 -21.9 -18.0 -11.2 - - - South Asia 34.4 31.4 -1.8 6.2 -7.7 13.6 -0.2 -1.9 -47.6 10.8 -0.1 1.5 -0.4 -5.5 8.6 -0.7 -7.6 -12.6 -17.7 -13.3 -18.0 -12.4 -8.5 Sub-Saharan Africa 32.5 19.6 -2.4 -1.1 0.5 -10.7 -1.4 -19.0 -54.3 -2.8 -1.5 -10.0 -2.0 -7.6 -7.5 -8.8 -25.3 -28.7 -18.9 -24.58 -14.40 - - Imports, Nominal, US$, S.A. World 21.0 19.6 0.7 1.5 4.6 -1.3 0.7 -15.5 -31.5 5.2 3.2 0.7 3.9 -1.8 -4.1 -3.6 -13.9 -13.2 -11.6 -14.5 -15.5 -9.4 - High Income Countries 17.9 17.8 -1.0 0.4 5.6 0.7 -3.2 -18.4 -28.9 6.2 5.3 0.4 2.2 -3.0 -5.3 -4.4 -13.8 -13.3 -12.7 -15.3 -15.6 -10.9 - Developing Countries 30.5 24.5 4.9 4.1 2.3 -5.8 10.4 -8.6 -37.0 3.0 -1.7 1.3 7.7 1.0 -1.3 -1.8 -13.9 -13.0 -9.0 -12.5 -15.2 -5.8 -9.4 East Asia and Pacific 37.3 24.1 5.7 6.2 4.7 -13.0 11.8 -9.2 -41.1 3.1 -2.8 -0.7 7.1 2.9 -5.2 -3.4 -17.6 -17.3 -9.6 -14.1 -15.8 -5.4 -9.5 Europe and Central Asia 22.2 29.2 0.7 2.6 -14.4 -7.1 -7.3 -6.7 -31.6 -1.8 -10.9 -4.7 -5.5 -7.9 -9.2 -9.8 -15.3 -13.6 -12.8 -17.6 -18.7 -14.7 - Latin America and Caribbean 30.9 21.0 4.0 3.8 5.3 1.4 5.0 -5.2 -19.4 4.9 0.9 1.3 8.7 -2.8 2.4 5.3 -7.3 -7.0 -0.5 -10.2 -14.8 -3.5 -10.3 Middle East and N. Africa 14.9 17.4 10.8 3.9 -1.1 -2.5 16.6 -20.3 -27.5 -2.4 1.6 10.9 7.5 -1.7 -3.8 -2.6 -11.2 -7.2 -11.4 -7.8 - - - South Asia 33.9 31.4 4.0 -4.0 9.3 10.2 32.0 -11.0 -54.9 8.4 3.5 6.9 23.7 7.1 21.5 -1.2 -12.3 -13.2 -12.3 -7.9 -12.1 -10.0 -8.3 Sub-Saharan Africa 13.6 25.3 3.8 5.9 0.1 12.7 4.2 4.0 -29.0 3.2 3.9 7.0 9.4 4.9 3.0 7.6 -2.2 1.8 -10.0 -9.729 - - - International Reserves, US$ High Income Countries 9.9 10.9 8.9 3.2 0.8 0.7 -1.8 -1.4 -0.5 0.5 -0.4 -0.1 -1.4 -0.7 0.1 -0.8 0.2 -0.1 -0.6 0.8 -0.3 0.0 - Developing Countries 16.0 10.8 5.5 8.7 1.8 1.5 -1.9 -1.7 -2.5 0.5 -0.1 0.0 -1.7 -0.7 -0.2 -0.8 -0.7 -0.2 -1.5 0.7 -0.6 -0.2 -1.0 East Asia and Pacific 19.3 11.9 4.5 12.2 3.0 1.2 -2.5 -1.4 -2.8 0.3 -0.5 0.1 -2.1 -0.8 -0.3 -0.4 -0.8 -0.2 -1.9 0.6 -0.9 -0.4 -1.3 Europe and Central Asia 11.0 4.9 11.4 3.5 -4.7 4.2 -0.5 -7.3 -6.1 1.2 -0.5 1.4 -1.4 -1.5 -1.1 -4.8 -1.6 -2.8 -1.9 0.9 0.0 0.2 0.7 Latin America and Caribbean 19.6 20.0 9.9 1.8 0.7 3.3 1.5 -1.8 -0.1 1.3 1.2 0.1 0.2 -0.1 0.4 -2.2 0.4 -0.6 0.0 0.7 -0.1 0.0 -0.4 Middle East and N. Africa 6.1 3.0 5.9 3.0 -1.9 -2.2 -3.8 -2.8 -5.9 -0.6 -0.4 -1.1 -2.3 -0.2 0.3 -2.9 -3.3 -0.4 -2.3 1.7 -0.64 - - South Asia 6.1 -0.9 0.4 -0.2 3.8 5.6 -0.6 2.1 5.9 1.5 1.3 -0.4 -1.4 0.5 -0.3 1.9 1.8 3.2 0.8 1.5 1.7 1.4 -0.1 9 September 2015 Financial Markets 2014 2015 2014 2015 MRV 1 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Interest rates and LIBOR (%) U.S. Fed Funds Effective 0.18 0.10 0.14 0.11 0.09 0.10 0.11 0.13 0.09 0.09 0.09 0.12 0.12 0.11 0.11 0.12 0.12 0.13 0.13 0.15 0.14 ECB repo 1.00 1.25 0.88 0.55 0.12 0.05 0.05 0.05 0.06 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 US$ LIBOR 3-months 0.34 0.34 0.43 0.27 0.23 0.24 0.26 0.28 0.23 0.23 0.23 0.25 0.25 0.26 0.27 0.28 0.28 0.28 0.29 0.32 0.33 EURIBOR 3-months 0.75 1.34 0.49 0.15 0.13 0.00 0.00 0.00 0.06 0.06 0.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.06 US 10-yr Treasury yield 3.20 2.77 1.79 2.33 2.49 2.27 1.96 2.15 2.52 2.29 2.32 2.20 1.88 1.98 2.04 1.92 2.19 2.35 2.32 2.14 2.05 German Bund, 10 yr 2.78 2.65 1.57 1.63 1.07 0.77 0.35 0.53 1.00 0.87 0.79 0.64 0.45 0.35 0.26 0.16 0.58 0.83 0.76 0.66 0.73 Spreads (basis points) JP Morgan Emerging Markets 301 341 342 319 301 367 425 380 312 349 350 402 443 420 411 388 369 384 397 423 Asia 206 218 216 219 195 202 219 201 187 207 193 206 233 215 208 206 195 203 212 229 Europe 247 301 320 267 262 319 399 336 270 295 293 368 417 396 384 350 327 330 328 353 Latin America & Caribbean 360 404 393 379 366 471 537 487 390 443 455 516 560 531 521 488 471 504 527 558 Middle East 342 366 449 435 369 398 449 420 358 395 388 411 452 452 443 441 409 410 420 427 Africa 274 364 337 322 280 319 373 355 270 307 306 343 385 364 371 361 345 358 374 421 2 Stock Indices (end of period) Global (MSCI) 331 300 340 409 417 417 425 424 417 419 426 417 410 432 425 436 435 424 427 391 High-Income ($ Index) 1280 1183 1339 1661 1698 1710 1741 1736 1698 1708 1740 1710 1678 1773 1741 1778 1779 1736 1766 1627 United States (S&P-500) 1258 1258 1426 1848 1972 2059 2068 2063 1972 2018 2068 2059 1995 2105 2068 2086 2107 2063 2104 1983 Euro Area (S&P-350$) 1124 1005 1143 1339 1411 1401 1624 1552 1411 1382 1425 1401 1502 1603 1624 1618 1630 1552 1614 1454 Japan (Nikkei-225) 10229 8455 10395 16291 16174 17674 19207 20236 16174 16414 17460 17451 17674 18798 19207 19520 20563 20236 20585 18771 Developing Markets (MSCI) 1151 916 1055 1003 1005 956 975 972 1005 1016 1005 956 962 990 975 1048 1004 972 902 791 EM Asia 468 379 447 446 460 457 481 475 460 467 467 457 468 479 481 514 499 475 440 386 EM Europe 529 395 473 438 374 297 302 311 374 369 353 297 286 313 302 338 320 311 293 263 EM Europe & Middle East 450 336 402 372 321 257 258 266 321 314 303 257 247 269 258 286 271 266 253 228 EM Latin America & Caribbean 4614 3602 3798 3201 3171 2728 2451 2517 3171 3158 3008 2728 2555 2654 2451 2693 2496 2517 2305 1993 Exchange Rates (LCU / USD) High Income Euro Area 0.76 0.72 0.78 0.75 0.76 0.80 0.89 0.90 0.78 0.79 0.80 0.81 0.86 0.88 0.92 0.92 0.90 0.9 0.91 0.00 0.87 Japan 87.76 79.74 79.85 97.61 104.04 114.62 119.16 121.38 107.39 108.02 116.40 119.44 118.33 118.78 120.37 119.53 120.87 123.7 123.39 0.00 118.76 Developing Brazil 1.76 1.67 1.95 2.16 2.28 2.55 2.87 3.07 2.34 2.45 2.55 2.65 2.64 2.82 3.15 3.04 3.06 3.1 3.23 0.00 3.62 China 6.77 6.46 6.31 6.15 6.16 6.15 6.24 6.20 6.14 6.13 6.13 6.19 6.22 6.25 6.24 6.20 6.20 6.2 6.21 0.00 6.41 Egypt 5.63 5.94 6.07 6.87 7.15 7.15 7.49 7.61 7.15 7.15 7.15 7.15 7.27 7.59 7.60 7.60 7.62 7.6 7.81 0.00 7.82 India 45.73 46.67 53.41 58.55 60.59 61.96 62.24 63.43 60.87 61.40 61.70 62.77 62.20 62.06 62.48 62.69 63.76 63.8 63.65 0.00 66.10 Russia 30.37 29.41 31.06 31.86 36.31 47.98 62.87 52.69 38.01 40.96 46.30 56.67 64.33 64.16 60.13 52.82 50.65 54.6 57.53 0.00 69.22 South Africa 7.32 7.26 8.21 9.65 10.77 11.22 11.74 12.08 10.99 11.06 11.09 11.51 11.56 11.58 12.08 11.99 11.97 12.3 12.46 0.00 13.18 Memo: USA nominal effective rate 100.19 98.53 102.00 104.76 110.57 114.05 119.74 121.50 111.67 112.66 113.83 115.67 117.82 119.65 121.73 121.39 121.04 122.1 123.49 125.39 125.91 1 MRV = Most Recent Value. 2 MSCI Indices for Asia, Africa, and Europe and C. Asia, for 2008 are calculated from February-December, due to data availability. 3 Change expressed in levels for interest rates and spreads; percent change for stock market and exchange rates. Commodity Prices 2014 2015 2015 MRV 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Oil price, $/b, nominal 1 79 104 105 104 100 75 52 60 96 86 77 61 47 55 53 57 63 61 54 45 41 2 Non - Oil Index .. 97 87 80 74 71 66 64 72 71 72 70 67 66 64 64 65 63 62 0 57 3 Metals and Minerals Index 103 117 99 94 89 83 74 73 87 84 84 80 75 74 73 73 76 72 67 64 63 4 Baltic Dry Index 2755 1545 916 1215 954 1105 614 629 1123 1101 1332 881 727 539 576 591 596 699 975 1064 942 1 Simple average of Brent, Dubai and WTI. 2 Base Date = Jan 3, 2011 due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. 3 Base Date = Jan 4, 2010 due to data availability. The Index component combination in the Weekly tables differs from that of the Pink Sheet. 4 Base Date = May 1, 1985 10