Global Monthly July 2016 Overview Table of Contents  The global economy remains fragile going into the third Monthly Highlights ............................................... 2 quarter of 2016, with limited buffers to withstand a major Special Focus......................................................... 6 shock. Key Prospects Group Publications .......................... 8  Commodity exporters continue to struggle to adjust to Recent World Bank Working Papers ...................... 8 persistently low commodity prices and domestic Recent World Bank Reports ................................... 8 uncertainties, while importers are generally more resilient. Table A: Major Data Releases ................................ 8  Risks to this outlook are decidedly tilted to the downside. In addition to existing risks, the United Kingdom’s referendum Table B: Economic Developments ........................... 9 decision to leave the European Union (Brexit) is generating Table C: Trade and Finance.................................. 9 uncertainty that is likely to weigh on global growth. Table D: Financial Markets ............................... 10 Table E: Commodity Prices.................................. 10 Chart of the Month Exchange rates  Currencies of major advanced economies were volatile in the days following the U.K. referendum, but sharp depreciations in some cases have been partly reversed subsequently.  The two-day, 11 percent drop in pound sterling that followed the referendum was the most pronounced since the global financial crisis.  The euro initially depreciated by 3 percent against the U.S. dollar, while the Japanese yen surged by 4 percent, the most since 2009.  Currencies of emerging markets and developing economies (EMDEs) fell by an average of 2.3 percent against the dollar in the first two days of trading after the Brexit vote, less than Sources: Haver Analytics. in previous episodes of financial market stress. Note: Last observation is July 15, 2016. Special Focus: Recent Credit Surge in Historical Context  Since the global financial crisis, credit to the private nonfinancial sector in EMDEs has risen rapidly, especially to the corporate sector.  In commodity-importing EMDEs, credit-to-GDP ratios are stable or declining, but remain at historically elevated levels. In commodity-exporting EMDEs, credit-to-GDP ratios are moderate, but they are rising at a pace associated with past credit booms.  Credit to the private sector in most EMDEs is still some distance away from the thresholds identified in the literature as early warning indicators. 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 John Baffes, Christian Eigen-Zucchi, Eung Ju Kim, Adriana Maximiliano, Trang Nguyen, Marc Stocker, Ekaterine Vashakmadze, Dana Vorisek, Peter Davis Williams, and Shu Yu. For more information, visit http:// www.worldbank.org/prospects. July 2016 Monthly Highlights FIGURE 1A Manufacturing PMIs Global economy: weak momentum in the first half of 2016. Global growth was only marginally above 2 percent (q/q saar) in 2016Q1, as weakness in the United States and the United Kingdom was only partially offset by stronger growth in the Euro Area and Japan. Among EMDEs, growth slowed in China and Indonesia, was negative in Brazil, Nigeria and Russia, and picked up in India and Mexico. Incoming data point to weak underlying momentum continuing in the second quarter, especially in manufacturing. In June, the global manufacturing PMI was 50.9 (marginally above that in May), and was well below the threshold indicating expansion in Japan and at a four-month low of 48.6 in China (Figure 1A). On balance, global growth is expected to remain slightly above 2 percent in Q2, broadly unchanged from the subdued pace in Q1. FIGURE 1B U.K.: Inflation and long-term interest Global economy: downside risks from Brexit. ffj e U.K. rates referendum on membership in the European Union (EU) held on June 23, 2016 resulted in a surprise victory of the “leave” camp. Beyond the initial financial market volatility, the regulatory and political uncertainty associated with the Brexit process is expected to hamper growth in the U.K. and EU. Medium-term effects will depend on the extent of financial market disruptions during the exit process, and the direction of political negotiations between the United Kingdom and EU. In the absence of additional financial market turmoil, the impact on the rest of the world could be manageable. However, Brexit is a significant downside risk to regional and global growth, which could be reinforced in the medium term by rising protectionist tendencies. United Kingdom: recession likely. Prior to the referendum, growth in the United Kingdom had already weakened, slowing to FIGURE 1C U.K.: Growth projections (Bloomberg 1.8 percent (q/q saar) in Q1. The prospects of a rebound in Q2 survey of economists) dimmed as both services and manufacturing confidence deteriorated. Following the referendum, the pound sterling dropped 10 percent, U.K. bank share prices declined by close to 16 percent, and the country lost its triple-A rating from S&P and was further downgraded or put on negative watch by other rating agencies. Brexit will likely result in a severe contraction of investment and activity in the second half of the year, and the flash composite PMI (Markit) fell to 47.7 in July, the lowest reading since April 2009, and down from 52.4 in June. A reversal of capital inflows as a result of a loss of confidence could increase financing and currency pressures. While the Bank of England left policy interest rates on hold in July, the authorities have signaled that policy may be eased in August, helping to lower long-term U.K. government bond yields (Figure 1B), and leave credit Source: Markit, World Bank, Haver Analytics. A. Last observation is June 2016. Index values above 50 indicate expansion. default swap (CDS) spreads barely higher. Growth projections for B. Last observation is May 2016 for inflation and July 2016 for 10-year bond 2016 and 2017 have been revised downwards significantly yield, end of period. following Brexit (Figure 1C). 2 July 2016 Euro Area: likely to slow. Growth in the Euro Area accelerated FIGURE 2A Euro Area: Consumer confidence and in 2016Q1 to 2.2 percent (q/q, saar), supported by strengthening economic sentiment activity in Germany and France, as well as continued robust growth in Spain. Domestic demand has been a key driver of the upturn, while net exports continued to dampen activity. Growth has been supported by exceptionally accommodative monetary policy by the European Central Bank (left unchanged in July), low oil prices, slightly expansionary fiscal policies, and improved labor market conditions. The Euro Area unemployment rate continues to decline, and reached 10.1 percent in May. However, faltering confidence following the U.K. Brexit vote will likely weaken growth momentum in the second half of the year (Figure 2A). This may encourage additional monetary policy accommodation, including an expansion of the asset purchase program and looser eligibility criteria for bond purchases. FIGURE 2B U.S.: Job creation United States: continued growth. Following unexpectedly weak growth in 2016Q1 of 1.1 percent (q/q saar), a rebound supported by robust consumer spending is expected for 2016Q2, and the GDPNow forecast for the second quarter has been revised slightly upwards to 2.4 percent (q/q saar). While year-on-year industrial production continues to contract, the flash manufacturing PMI improved to 52.9 in July from 51.3 in June. Labor market slack is generally diminishing, as reflected in a rebound in non-farm payroll gains from a low in May to 287,000 in June (Figure 2B). Nevertheless, the uncertainty associated with the outcome of the U.K. referendum has reduced the likelihood of an interest rate hike in the coming months and lowered interest rate expectations (Figure 2C). Reflecting benign policy rate expectations and flight to safety flows, U.S. 10-year Treasury yields have remained below 1.6 percent since mid-June. FIGURE 2C U.S.: Policy interest rate expectations Japan: weak momentum. GDP expanded by 1.9 percent (q/q, saar) in Q1 following a contraction of 1.8 percent in 2015Q4, but momentum is weak. The business climate remains depressed and a strong yen is exerting downward pressure on corporate profits and exports. Moreover, the Kumamoto earthquake in April disrupted activity in Q2, contributing to a sharp drop in the manufacturing PMI, which reached a 20-month low of 47.8 in June. In an effort to boost growth, the planned consumption tax hike has been postponed and the government is expected to undertake a new round of fiscal stimulus measures after its sweeping victory in the latest elections for the upper house. While the yen fell back again following the sharp appreciation immediately after the Brexit vote, foreign exchange interventions and further easing by the Bank of Japan remain possible. Sources: World Bank, Haver Analytics, Bloomberg. China: gradual slowdown. GDP expanded by 6.7 percent (y/y) A. Last observation for consumer confidence is July 2016, and for economic sentiment is June 2016. Percent balance equals perfent of respondents reporting in 2016Q2—the same pace as in the previous quarter (Figure an increase minus the present of respondents reporting a decrease over four questions related to financial situation, economic situation, unemployment, and 3A). Quarter-on-quarter, GDP growth accelerated sharply to 7.4 saving. B. Last observation is June 2016. percent (saar)—the highest rate since 2014Q3—reflecting the 3 July 2016 impact of policy stimulus. The expansion continued to be driven FIGURE 3A China: GDP growth by consumption, which accounted for roughly 75 percent of GDP growth in 2016H1. Capital spending by private enterprises fell sharply, and net exports remained a drag on growth. Retail sales growth strengthened to 10.6 percent (y/y) from 10 percent in May. Credit growth moderated to 13 percent (y/y) in the second quarter of 2016, and has recently become much more concentrated in the booming real estate market through mortgages. Headline inflation eased to 1.9 percent (y/y) in June. China’s foreign-currency reserves have been declining more slowly in recent months, but they are down by $120.2 billion in 2016H1. Brazil and Russia: still in recession but with signs of improvement. Brazil and Russia experienced severe recessions in 2015, but there are tentative signs of bottoming out (Figure 3B). In Brazil, GDP contracted by 5.4 percent (y/y) in 2016Q1, FIGURE 3B Brazil and Russia: GDP Growth easing from the 5.9 percent contraction of 2015Q4. Although confidence indicators are rebounding appreciably, tight monetary and fiscal policy, elevated unemployment, and policy uncertainty are expected to result in a contraction of about 4 percent in 2016. Russia’s economy contracted by 1.2 percent (y/y) in 2016Q1, but quarter-on-quarter growth has turned positive. In June, the services PMI rose for the fifth consecutive month, the ruble stabilized, and inflation remained moderate at 7.5 percent (y/y). The Russian government successfully returned to global capital markets for the first time since the imposition of sanctions in 2014, issuing $1.75 billion in 10-year Eurobonds. Commodity importers: stable. Several commodity importers (India, Mexico, Poland, among others) continued to benefit from tailwinds associated with low commodity prices and moderate growth in some advanced economies (Figure 3C). Growth in FIGURE 3C Commodity importers PMIs commodity-importing economies (excluding China) averaged 4.9 percent (y/y) in the first quarter—about 0.5 percentage point stronger than the 2014-15 average. For 2016Q2, high-frequency indicators point to mixed results. In India, the manufacturing PMI picked up to 51.7 in June, and the impact of the departure of the central bank governor and Brexit has been limited. In other commodity importers, activity is being set back by the impact of El Niño-related challenges to agricultural production (Vietnam, Thailand, the Philippines). In Hungary and Poland, weak absorption of EU-funded investment has constrained growth. In Turkey, the failed coup attempt on July 15, 2016 has increased policy uncertainty and is weighing on confidence. European banks: under pressure. EU bank stock prices have fallen sharply since the Brexit vote, with considerable differentiation (Figure 4A). In the United Kingdom, the FTSE Sources: Haver Analytics, China National Bureau of Statistics, World Bank. C. Last observation is June 2016. Index values above 50 indicate expansion. ORB Financials Index fell 16 percent in the two days following the vote, with domestically-focused banks (RBS, Lloyds, Barclays) 4 July 2016 suffering much larger losses than international ones (HSBC, FIGURE 4A EU: Bank stock prices Standard Chartered). In the Euro Area, bank stocks fell more than 20 percent (as of July 14) and bank CDS spreads moved 25 bps higher, on average—still well below crisis levels of 2011-12— on concerns about weak profitability amid lower-for-longer interest rates. The share prices of Italian banks have suffered especially on concerns about underlying vulnerabilities. Nevertheless, short-term funding and money markets have continued functioning normally. EMDE financial markets: mostly recovered from Brexit. EMDE financial markets slumped with the sell-off following the Brexit vote, but markets rallied subsequently as central banks in advanced market economies assured liquidity and signaled a readiness to ease monetary policy further as needed. EMDE stocks and currencies erased losses (Figure 4B), with some assets reaching their highest levels since late last year. The largest post- FIGURE 4B EMDEs: Stock prices and currencies Brexit losses were concentrated in a few countries (Czech Republic, Hungary, Poland) that are directly exposed to the expected Brexit-induced slowdown in U.K. and EU growth. South Africa has also been adversely affected as it has a large current account deficit and significant financial linkages to the United Kingdom. In general, the Brexit impact to date on EMDEs has been modest, suggesting that downside risks of increased capital outflows and tighter financial conditions may yet lie ahead if there is market turbulence associated with monetary tightening in the United States. Commodity prices: volatility amid recovery. Most commodity price indexes rebounded in the second quarter of 2016, continuing their upward climb from January lows on improved market sentiment and tapering supplies. Oil prices averaged FIGURE 4C Crude oil stocks $47.50 per barrel (bbl) in June, 37 percent above their first- quarter average. The oil price rebound reflects supply disruptions that removed up to 2.5 million barrels per day of production during May and June, with losses in Canada due to wildfires and in Nigeria due to militant attacks on infrastructure. Continued year-on-year declines in non-OPEC production, led by the United States, were partly offset by higher OPEC production, mainly from Iran. Although global inventories are at very high levels (Figure 4C), they began to ease as the market moved toward equilibrium. Non-energy commodity prices have gained ground as well, with metals and agriculture up 4.6 and 8 percent (q/q), respectively, in the second quarter. Gains in agriculture were concentrated in edible oils and meals due to poor harvests in South America. Metal price gains were concentrated in iron ore, zinc, and tin on production cuts and stronger demand. Precious metals prices rose 8 percent (q/q) in the second quarter on Source: IMF, World Bank, Dealogic, Bloomberg International Energy Agency. A. Last observations are July 14, 2016. anticipated delays in the normalization of monetary policy in the B. Last observations are July 14, 2016. United States and concerns about the global economy. C. Last observations are May 2016. 5 July 2016 Special Focus: Recent Credit Surge in FIGURE 5A Credit to the private nonfinancial Historical Context sector Recent surge in credit to the nonfinancial private sector. Since the global financial crisis, credit to the nonfinancial private sector has surged in several EMDEs. A Special Focus in the June 2016 Global Economic Prospects: Divergences and Risks shows that, within this overall surge, there has been considerable divergence between commodity-exporting and -importing economies. Between 2010 and 2015Q3, credit to the private nonfinancial sector increased from an average of 43 percent to 53 percent of GDP in commodity-exporting EMDEs, and from 56 percent to 59 percent of GDP in commodity-importing EMDEs (excluding China; Figure 5A). Rising from a moderate level in 2010, credit to the nonfinancial private sector reached post-crisis peaks by 2015 in most commodity-exporting EMDEs. In contrast, credit FIGURE 5B Contribution to private sector credit to the nonfinancial private sector in commodity-importing growth, annual average 2010-2015Q3 countries has begun to ease from 2013-14 peaks. Evolution of private sector credit. Corporate borrowing accounted for much of the recent increase in credit to the nonfinancial private sector (Figure 5B). As a result, credit to corporates now accounts for about two-thirds of credit to the nonfinancial private sector in EMDEs. The composition of credit to EMDE corporates has gradually shifted. While the share of foreign currency-denominated credit to non-financial corporates has increased, it remains moderate at around 20 percent in most EMDEs. Bond issuances became an increasingly important source of credit to nonfinancial corporates since 2004, while the bulk of corporate credit growth continued to be contributed by non-securities credit. Despite a modest increase since 2010, the FIGURE 5C Credit to corporates by creditor share of cross-border credit remains low at less than 20 percent in 2015Q3, well below the 2000-07 average (Figure 5C). Since 2010, credit from the domestic banking system has continued to be the main source of corporate credit growth. Recent credit growth in light of past credit booms. During a typical credit boom, credit to the nonfinancial private sector grows by more than 6 percentage points of GDP per annum and peaks at around 52 percent of GDP. In the run-up to the 2015 peak, current account deficits rose by almost 2 percentage points of GDP above their long-run trend, and real GDP rose by 1-2 percent above trend (Figure 6A). Since 2012, levels of credit in commodity importing EMDEs have been considerably higher than during previous credit booms, but credit growth has been well below levels seen in the past. In contrast, commodity Sources: Bank for International Settlements, International Monetary Fund‘s exporting countries’ credit levels and growth have been near those International Financial Statistics, World Bank. A. Unweighted average credit in 55 EMDEs. associated with past credit booms. B. Unweighted average credit in 14 major EMDEs. See the June 2016 GEP for detailed sample description. C. Unweighted averages in 14 major EMDEs. See the June 2016 GEP for detailed sample description and data availability. 6 July 2016 Characteristics of past deleveraging episodes. Over the FIGURE 6A GDP Growth during credit booms past quarter-century, about one-third of credit booms were followed by at least a mild deleveraging episode within three years of the end of the boom. During a deleveraging episode, credit to the nonfinancial private sector typically contracted by almost 2 percentage points of GDP per year, falling to 35 percent of GDP on average. Deleveraging episodes were associated with considerable current account improvements (by about 2 percentage points of GDP). Real GDP fell, on average, by almost 2 percent below trend during deleveraging episodes (Figure 6B). Current credit levels: warning signs. A large literature examines potential thresholds for private sector credit growth that may be an early warning indicator of impending macroeconomic and financial stress. In most FIGURE 6B GDP growth during deleveraging episodes EMDEs, credit levels are still some distance away from the thresholds (estimated at 8.6-10 percentage points of GDP above long-term trend) that previous studies have identified as being associated with financial stress (Figure 6C). The few EMDEs where private sector credit exceeded these thresholds in 2015Q3 were mostly energy exporters. Policy options. Policy buffers are considerably stronger now than in the 1990s. However, weak post-crisis growth and recent U.S. dollar appreciation are eroding these buffers. There are a number of policy options that could help contain risks from rapid credit growth while still maintaining an accommodative monetary policy stance. Measures that have been effective in slowing household FIGURE 6C Comparison: Credit and early warning credit growth include tighter ceilings on the debt service-to- indicators, 1997 and 2015Q3 income ratios of lower-income households, better risk-based pricing of household lending, and differential loan-to-value ceilings on first and second mortgages. To contain risks from corporate credit growth, increased stress testing of corporates’ balance sheets and legislative and regulatory steps to facilitate restructuring of nonperforming loans and corporate resolution are available options. Measures to contain foreign currency risks in lending to corporates, such as more intensive stress tests, more intrusive monitoring of liquidity ratios in foreign currencies, and additional hedging requirements, could also be pursued. Sources: Bank for International Settlements, Drehman (2013), Gourinchas and Obstfeld (2012), Haver Analytics, International Monetary Fund, World Bank. Notes: See GEP June 2016 for data availability and detailed definitions on credit booms and deleveraging episodes. “0” is the trough/peak year of a credit boom or a deleveraging episode. A. and B. The median of the cyclical component of real GDP in percent of its HP- filtered trend (red) and its corresponding upper and lower quartiles (dashed blue line). The sample means for 2012-2015 for commodity exporters (orange) and for commodity importers (solid blue line). C. Orange lines indicate the threshold identified by Drehman (2013). See the June 2016 GEP for detailed sample descriptions. 7 July 2016 Key Prospects Group Publications Commodity Markets Outlook—July 2016 (forthcoming July 26, 2016) Global Economic Prospects - June 2016: Divergences and Risks Commodity Markets Outlook – April 2016 Global Economic Prospects – January 2016: Spillovers amid Weak Growth Policy Research Note No.4: Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness? Recent World Bank Working Papers A Comparative Analysis of Subsidy Reforms in the Middle East and North Africa Region Euro Currency Risk and the Geography of Debt Flows to Peripheral European Monetary Union Members Financial Regulation and Government Revenue: the Effects of a Policy Change in Ethiopia Do Fiscal Multipliers Depend on Fiscal Positions? Challenges of Fiscal Policy in Emerging and Developing Economies Financial Systems, Growth, and Volatility: Searching for the Perfect Fit Inflation Targeting and Exchange Rate Volatility in Emerging Markets Openness, Specialization, and the External Vulnerability of Developing Countries Recent Credit Surge in Historical Context Recent World Bank Reports Monitoring Macro-financial Vulnerability: A Primer The Ghost of a Rating Downgrade: What Happens to Borrowing Costs When a Government Loses its Investment Grade Credit Rating? Malawi Economic Monitor: Absorbing Shocks, Building Resilience TABLE A: Major Data Releases (Percent, y-o-y)                     (Percent y-o-y)             Recent releases: June 26, 2016 - July 20, 2016 Upcoming releases: July 21, 2016 - August 30, 2016 Country Date Indica- Period Actual Fore- Previ- Country Date Indica- Period Previ- Iceland 6/28/201 CPI JUN 1.6% 1.8% 1.7% South Korea 7/25/16 GDP Q2 2.7% United States 6/28/201 GDP Q1 2.1% 2.0% Belgium 7/28/16 GDP Q2 1.5% UK 6/30/201 GDP Q1 2.0% 2.0% 1.8% Austria 7/29/16 GDP Q2 1.3% South Korea 6/30/201 CPI JUN 0.8% 0.9% 0.8% Spain 7/29/16 GDP Q2 3.4% Japan 6/30/201 CPI MAY -0.4% -0.5% -0.3% Sweden 7/29/16 GDP Q2 4.2% Indonesia 7/1/2016 CPI JUN 3.5% 3.4% 3.3% Indonesia 8/1/2016 CPI JUL 3.5% Thailand 7/1/2016 CPI JUN 0.4% 0.6% 0.5% Thailand 8/1/2016 CPI JUL 0.4% Czech Republic 7/1/2016 GDP Q1 3.0% 4.0% South Korea 8/1/2016 CPI JUL 0.8% Brazil 7/1/2016 IP MAY -7.8% -8.6% -7.2% Turkey 8/3/2016 CPI JUL 7.6% India 7/12/201 IP MAY 1.2% -1.3% Philippines 8/4/2016 CPI JUL 1.9% Germany 7/12/201 CPI JUN 0.3% 0.2% 0.1% Indonesia 8/5/2016 GDP Q2 4.9% Czech Republic 7/12/201 CPI JUN 0.1% 0.1% China 8/8/2016 CPI JUL 1.9% Japan 7/13/201 IP MAY -0.4% -3.3% Hungary 8/9/2016 CPI JUL -0.2% France 7/13/201 CPI JUN 0.2% 0.0% Mexico 8/9/2016 CPI JUL 2.5% Hungary 7/13/201 IP MAY 4.2% 1.5%    Czech Republic 8/10/201 CPI JUL 0.1% China 7/14/201 GDP Q2 6.7% 6.6% 6.7% Brazil 8/10/201 CPI JUL 8.8% China 7/14/201 IP MAY 6.2% 6.0%    Malaysia 8/12/201 GDP Q2 4.2% United States 7/15/201 CPI JUN 1.0% 1.0% 1.0% Hungary 8/12/201 GDP Q2 0.4% United States 7/15/201 IP JUN -0.7% -1.4%    Czech Republic 8/16/201 GDP Q2 3.0% UK 7/19/201 CPI JUN 0.5% 0.4% 0.3% Philippines 8/17/201 GDP Q2 6.9% South Africa 7/20/201 CPI JUN 6.3% 6.1%    Thailand 8/18/201 GDP Q2 3.2% 8 July 2016   TABLE B: 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 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Industrial Production, sa 1 World 3.2 2.0 2.0 1.5 1.2 2.3 1.9 2.5 1.7 2.1 1.5 0.8 1.8 1.3 1.3 1.7 1.6 Advanced Economies 2.0 0.4 1.0 -1.4 0.0 0.7 0.6 1.2 0.5 0.6 -0.2 -1.4 0.3 -1.0 -0.9 0.1 -0.4 Emerging Market and 4.6 3.6 3.0 4.6 2.4 3.9 3.4 3.9 2.9 3.6 3.3 3.0 3.4 3.6 3.6 3.3 3.7 Commodity-exporting EMDE   0.1 0.1 -2.4 0.9 1.0 1.2 -0.2 0.0 -0.9 -0.5 -0.2 -1.1 -0.1 0.9 -0.9 -0.4 0.3 Other EMDE 6.8 5.1 5.4 6.0 3.0 5.0 4.9 5.6 4.6 5.4 4.7 4.8 4.9 4.7 5.5 4.8 4.9 East Asia and Pacific 7.5 5.8 4.9 8.2 3.5 6.1 5.6 5.8 5.1 5.3 5.8 5.3 5.5 5.5 6.4 5.7 5.9 East Asia excl. China 3.0 3.6 3.5 7.7 6.4 3.1 4.0 3.8 2.0 3.8 4.3 2.0 5.7 5.7 3.9 3.4 5.0 Europe and Central Asia 2.6 0.6 1.3 4.4 2.1 0.8 -0.7 0.9 0.4 1.1 1.3 1.2 1.5 2.3 1.5 2.4 2.2 Latin America and -0.7 -3.2 -4.6 -6.6 -2.9 -1.7 -2.8 -3.2 -4.0 -4.8 -5.2 -4.5 -4.1 -4.8 -4.3 -4.3 -3.5 Middle East and North Africa 1.3 4.0 3.1 7.2 1.7 2.8 2.8 4.0 3.0 5.0 5.5 3.2 5.7 5.7 1.5 - - South Asia 2.6 4.3 4.3 -8.2 4.6 4.6 5.2 7.7 3.6 10.3 -1.3 0.9 0.3 3.5 2.5 -0.4 2.0 Sub-Saharan Africa -0.1 0.4 5.4 -1.1 0.3 -1.1 4.8 1.2 0.9 -0.4 -1.3 0.2 -0.8 1.5 -1.3 2.2 3.7 Inflation, sa 2 World 2.1 1.4 1.2 1.5 1.4 1.4 1.3 1.3 1.5 1.5 1.5 1.5 1.6 1.4 1.3 1.4 1.5 Advanced Economies 0.6 0.1 0.1 0.1 0.3 0.2 0.2 0.1 0.0 0.1 0.1 0.2 0.5 0.3 0.1 0.1 0.1 Emerging Market and 3.3 2.1 2.2 2.1 2.8 2.1 2.3 2.5 2.2 2.1 2.2 2.4 2.6 3.0 3.0 2.9 2.6 Commodity-exporting EMDE   3.6 3.4 3.2 3.0 3.4 3.3 3.2 3.3 3.4 3.0 3.0 3.2 3.4 3.7 4.0 4.2 3.7 Other EMDE 2.9 1.3 0.8 1.1 1.5 0.9 0.9 1.1 0.9 1.2 1.2 1.2 1.8 1.7 1.1 1.0 1.2 East Asia and Pacific 3.1 1.2 0.8 1.1 1.5 0.9 1.2 0.8 0.8 1.3 1.4 1.4 1.7 2.0 2.2 2.3 2.1 Europe and Central Asia 1.6 1.6 1.8 1.4 1.2 1.9 1.2 2.0 2.2 1.5 1.3 1.4 1.8 0.9 0.4 0.3 0.3 Latin America and 3.4 2.6 2.4 2.3 3.0 2.2 2.1 2.5 2.1 2.3 2.1 2.3 3.1 3.4 3.3 3.6 3.0 Middle East and North Africa 2.7 1.8 1.9 1.5 2.5 2.1 2.2 1.7 1.6 2.1 1.5 1.6 2.4 2.6 2.6 2.5 2.2 South Asia 6.8 2.5 1.6 2.5 3.8 3.1 1.9 1.7 1.3 1.7 3.1 3.1 3.4 4.1 4.0 5.5 5.4 Sub-Saharan Africa 4.4 3.5 4.5 4.1 4.5 3.7 3.3 4.3 3.9 4.0 4.6 4.2 4.0 6.6 6.1 5.9 6.0 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. TABLE C: 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 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Exports, Nominal, US$, sa World 1.1 -11.8 -6.9 -7.1 -12.4 -8.4 -13.7 -14.1 -12.9 -12.7 -11.4 -10.2 -11.7 -8.8 -3.7 -2.9 -3.0 Advanced Economies 1.3 -11.3 -6.4 -7.6 -5.7 -8.3 -12.3 -13.0 -11.5 -11.6 -9.7 -9.9 -9.3 -4.1 -3.8 -0.3 -1.0 Emerging Market and 0.8 -12.5 -7.6 -6.5 -22.0 -8.7 -15.9 -15.7 -14.9 -14.2 -13.9 -10.6 -15.3 -15.4 -3.8 -7.0 -6.2 Commodity-exporting EMDE   -4.8 -24.6 -24.9 -13.9 -28.1 -19.3 -27.8 -29.3 -28.1 -24.8 -23.5 -21.0 -24.7 -13.9 -17.2 -15.7 - Other EMDE 4.8 -4.6 2.9 -2.5 -17.7 -1.7 -7.9 -6.8 -6.7 -7.8 -8.2 -4.7 -10.2 -15.6 5.0 -1.9 -1.8 East Asia and Pacific 4.6 -3.3 1.7 -2.3 -22.3 0.6 -7.8 -6.4 -5.5 -8.1 -7.7 -4.1 -11.8 -19.7 7.4 -3.2 -4.0 Europe and Central Asia -0.8 -20.5 -18.3 -9.1 -20.2 -17.5 -27.8 -24.1 -19.2 -20.3 -17.5 -14.7 -21.7 -12.6 -12.9 -8.0 - Latin America and -0.8 -11.9 -8.8 -10.6 -5.6 -9.2 -12.7 -16.4 -13.6 -11.8 -11.6 -11.4 -11.6 -3.6 -8.8 -5.4 -2.2 Middle East and North Africa -5.2 -27.5 -19.5 -9.9 - -22.1 -27.4 -31.2 -33.8 -25.8 -24.6 -22.1 -23.4 - - - - South Asia 2.6 -14.4 -8.8 -6.4 -6.8 -10.1 -10.1 -15.5 -22.5 -14.5 -22.6 -12.3 -11.3 -3.2 -3.9 -4.6 0.4 Sub-Saharan Africa -6.1 -26.9 -27.2 -20.9 - -21.4 -29.6 -27.5 -32.1 -28.5 -28.4 -29.1 -26.3 -23.3 - - - Imports, Nominal, US$, sa World 1.2 -12.6 -5.2 -7.3 -15.3 -9.1 -13.2 -12.8 -15.1 -13.2 -10.3 -11.3 -12.0 -5.4 -7.7 -6.1 -2.4 Advanced Economies 2.1 -12.4 -4.4 -7.5 -10.7 -10.0 -14.5 -12.2 -13.0 -11.7 -8.7 -11.3 -9.9 -2.4 -6.9 -4.4 -1.9 Emerging Market and -0.3 -12.9 -6.7 -7.1 -22.9 -7.7 -10.9 -13.6 -18.4 -15.8 -12.9 -11.3 -15.5 -10.4 -8.8 -9.1 -3.0 Commodity-exporting EMDE   -2.2 -15.0 -11.4 -11.2 -21.6 -11.9 -16.3 -15.9 -19.6 -17.3 -16.0 -17.5 -19.4 -17.0 -14.2 -14.1 - Other EMDE 0.9 -11.6 -4.0 -4.7 -24.6 -5.2 -7.7 -12.3 -17.7 -14.9 -11.1 -7.6 -13.1 -6.8 -6.2 -7.2 -0.2 East Asia and Pacific -0.4 -13.0 -5.9 -2.5 -29.9 -5.6 -8.8 -14.3 -19.7 -18.2 -8.8 -8.3 -16.5 -11.4 -5.4 -8.2 0.5 Europe and Central Asia -3.7 -20.9 -8.6 -9.9 4.5 -20.2 -22.4 -20.0 -21.4 -19.2 -18.9 -18.7 -14.7 -5.2 -4.0 -3.5 - Latin America and -0.7 -10.0 -5.9 -15.9 -16.7 -3.8 -9.3 -11.5 -12.9 -12.9 -11.3 -15.6 -16.6 -10.1 -14.7 -9.6 -6.2 Caribbean Middle East and North Africa 3.1 -6.3 -8.0 -2.0 - -2.0 -4.6 -8.7 -14.2 -5.3 -10.7 -8.9 -12.5 - - - - South Asia 1.1 -13.2 -2.5 -13.9 -32.0 -9.3 -8.9 -10.9 -24.6 -18.1 -25.2 -3.3 -7.0 -3.8 -19.0 -19.2 -9.1 Sub-Saharan Africa 3.0 -10.2 -12.7 -9.3 - -4.6 -12.3 -11.9 -14.4 -17.9 -13.5 -16.1 -26.7 - - - - International Reserves, US$1 World -1.2 -6.3 -2.2 -2.8 -0.1 -0.1 -0.8 -0.8 -0.6 -0.2 -1.7 -0.9 -1.0 -0.1 1.0 0.7 -0.5 Advanced Economies -0.2 1.5 0.3 -1.0 2.4 0.2 -0.6 0.6 0.3 -0.6 -1.1 0.7 0.5 0.2 1.7 0.8 0.0 Emerging Market and -1.6 -9.9 -3.5 -3.7 -1.4 -0.3 -1.0 -1.5 -1.0 0.0 -2.0 -1.8 -1.8 -0.2 0.6 0.6 -0.6 Commodity-exporting EMDE   -6.1 - -1.9 - - -0.3 -0.7 -0.4 -0.9 - - - - - - - - Other EMDE 1.0 -10.2 -4.2 -4.2 -1.7 -0.3 -1.1 -2.0 -1.1 0.3 -2.2 -2.3 -2.1 -0.3 0.7 0.7 -0.7 East Asia and Pacific 0.2 -12.5 -4.9 -4.4 -2.3 -0.4 -1.3 -2.4 -1.2 0.4 -2.3 -2.6 -2.7 -0.3 0.6 0.3 -1.0 Europe and Central Asia -16.8 -5.9 1.0 -3.0 4.0 0.5 -1.0 1.6 0.4 -0.3 -1.6 -1.0 1.0 1.6 1.3 1.6 -0.5 Latin America and 3.5 -5.4 -3.0 -2.3 -0.2 -0.2 -0.2 -1.0 -1.8 -1.6 -1.5 0.7 0.0 -0.6 0.4 1.6 -0.1 Middle East and North Africa -2.0 - - - - -0.8 - - - - - - - - - - - South Asia 11.3 11.5 -0.8 1.1 0.9 1.5 -0.5 -0.3 0.0 0.9 -0.4 0.7 -1.1 -0.3 2.3 2.0 -0.7 Sub-Saharan Africa -7.9 - - - - -1.0 1.0 - - - - - - - - - - 1Total reserves excluding gold are used as proxies when total reserves data are unavailable. 9 July 2016 TABLE D: Financial Markets (Percent change y-o-y, except quarterly trade data, which are percent change q-o-q, annualized, and international reserves data, which are percent change over the previous period ) 2015 2016 2015 2016 MRV 1 2014 2015 Q3 Q4 Q1 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.09 0.13 0.14 0.16 0.37 0.15 0.14 0.12 0.12 0.24 0.36 0.37 0.37 0.37 0.36 0.38 0.40 ECB repo 0.16 0.05 0.05 0.05 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.00 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.23 0.32 0.31 0.41 0.62 0.32 0.33 0.32 0.37 0.54 0.62 0.62 0.63 0.63 0.65 0.65 0.70 EURIBOR 3-months 0.06 -0.02 -0.03 -0.09 -0.19 -0.03 -0.04 -0.05 -0.09 -0.13 -0.15 -0.18 -0.23 -0.25 -0.26 -0.27 -0.30 US 10-yr Treasury yield 2.53 2.12 2.20 2.18 1.92 2.14 2.14 2.04 2.26 2.23 2.11 1.77 1.88 1.79 1.80 1.64 1.57 German Bund, 10 yr 1.24 0.54 0.70 0.56 0.32 0.66 0.68 0.55 0.55 0.59 0.51 0.23 0.21 0.17 0.16 0.01 -0.02 Spreads (basis points) JP Morgan Emerging Markets 330 426 423 431 478 431 442 437 413 442 485 507 443 421 418 418 401 Asia 206 232 233 245 264 237 250 246 235 253 268 282 243 224 223 233 223 Europe 287 348 345 311 339 359 347 332 294 308 338 359 319 308 305 303 294 Latin America & Caribbean 407 559 560 577 645 567 585 582 553 595 662 687 588 559 552 541 515 Middle East 388 471 447 506 555 444 479 502 503 512 542 580 545 539 530 545 560 Africa 323 449 425 509 626 428 472 490 482 555 644 661 573 546 552 546 523 Stock Indices (end of period) Global (MSCI) 417 399 382 399 395 403 382 411 407 399 375 372 395 403 403 399 411 Advanced Economies ($ Index) 1710 1663 1582 1663 1638 1659 1582 1706 1694 1663 1562 1547 1638 1671 1675 1653 1699 United States (S&P 500) 2059 2044 1920 2044 2051 1992 1920 2079 2080 2044 1940 1932 2051 2065 2097 2099 2164 Europe (S&P Euro 350) 1401 1474 1405 1474 1352 1478 1405 1523 1558 1474 1381 1347 1352 1379 1399 1339 1368 Japan (Nikkei 225) 16292 16292 17388 18817 16555 18812 17388 19083 19921 18817 17518 15989 16555 16407 17235 15576 16723 Emerging Market and 956 794 792 794 821 882 792 848 814 794 742 740 821 840 807 834 868 Developing Economies (MSCI) EM Asia 457 404 391 404 404 433 391 422 408 404 374 369 404 405 400 407 424 EM Europe 297 244 259 244 272 285 259 273 263 244 237 241 272 288 268 265 269 EM Europe & Middle East 257 211 226 211 230 246 226 235 222 211 202 208 230 243 225 225 230 EM Latin America & Caribbean 2728 1830 1895 1830 2121 2206 1895 2007 1919 1830 1744 1804 2121 2292 2038 2269 2381 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.75 0.90 0.90 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 0.91 Japan 105.89 121.00 122.06 121.41 115.23 122.71 120.10 120.01 122.61 121.62 118.37 114.44 112.87 109.57 108.97 105.34 106.17 Emerging and Developing Economies Brazil 2.35 3.33 3.55 3.84 3.91 3.53 3.89 3.88 3.78 3.87 4.06 3.97 3.70 3.56 3.54 3.42 3.25 China 6.16 6.29 6.31 6.39 6.54 6.34 6.38 6.35 6.37 6.45 6.57 6.55 6.51 6.48 6.53 6.59 6.70 Egypt 7.08 7.70 7.82 7.88 8.04 7.83 7.83 7.91 7.91 7.83 7.83 7.82 8.47 8.87 8.86 8.87 8.88 India 61.03 64.14 64.97 65.91 67.50 65.09 66.16 65.04 66.15 66.54 67.31 68.22 66.95 66.49 66.93 67.29 67.11 Russia 38.58 61.34 63.62 66.17 74.84 66.23 67.10 63.31 65.01 70.19 77.36 77.23 69.93 66.54 65.96 65.01 63.59 South Africa 10.85 12.77 13.03 14.22 15.83 12.94 13.67 13.48 14.14 15.04 16.30 15.79 15.39 14.62 15.36 15.05 14.34 Memo: U.S. nominal effective rate 102.2 114.7 116.2 118.1 120.3 116.6 117.4 116.4 118.3 119.4 121.8 120.7 118.4 116.5 117.8 118.2 119.2 (index) 1 MRV = Most Recent Value. Table E: Commodity Prices 2015 2016 2015 2016 MRV 1 2014 2015 Q3 Q4 Q1 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Energy 2 118 65 63 54 43 59 60 60 55 48 40 41 47 51 57 59 59 Non-energy 2 97 82 81 78 76 80 79 79 77 76 75 76 78 80 81 83 83 Agriculture 2 103 89 88 86 85 87 86 87 86 85 83 84 86 88 91 94 94 Metals and minerals 2 87 68 65 60 59 64 65 63 59 57 56 58 62 63 61 61 64 Memo items: Crude oil, average ($/bbl) 96 51 48 42 33 45 46 47 43 37 30 31 37 41 46 48 44 Gold ($/toz) 1266 1161 1124 1107 1181 1118 1125 1159 1086 1076 1098 1200 1245 1242 1261 1276 1276 Baltic Dry Index 1103 711 975 627 363 1061 889 790 582 510 391 307 390 608 623 608 746 Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg. 1MRV = Most Recent Value. 2Indexes, 2010 = 100. 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