99342 For more information, visit http://www.worldbank.org/prospects Overview Table of Contents  Recent indicators suggest a continued recovery in high- Monthly Highlights…………………………...2 income countries. The U.S. labor market improved Special Focus……………………………........6 further in the second quarter, while manufacturing and Major Data Releases……………………….....8 services growth in the Euro Area moved up. Other Reports from Prospects Group………...8 Recent World Bank country reports………….8  While growth in China in the second quarter was stronger Annex Table: Economic Developments……...9 than market expectations, activity in other emerging and Annex Table: Financial Markets……………..10 developing countries remained generally weak. Shanghai Stock Exchange Composite Index Index Chart of the Month 5,500  The Chinese stock market tumbled nearly 30 percent 5,000 since hitting a seven-year high in mid-June. 4,500  Despite the plunge, Shanghai shares are still valued 4,000 above their end-2014 levels. Authorities’ containment 3,500 measures helped stem the slide in July. 3,000 Jan-15 Jun-15 Jul-15 Feb-15 Mar-15 Apr-15 May-15 Source: Bloomberg. Special Focus: LICs after the Commodity Price Boom  Growth in low-income countries (LICs) doubled in the 2000s compared to its average for the previous three decades. For many countries, particularly commodity producers in Sub-Saharan Africa, faster growth was underpinned by the boom in global commodity prices.  Because of the plunge in commodity prices, commodity tailwinds have turned into headwinds for many LICs. Thus far, good harvests, robust remittances, and expansion in public investment have cushioned the impact of a sharp deterioration in terms-of-trade in commodity exporting LICs.  Medium term prospects are for a protracted adjustment to persistently lower commodity prices, as well as weaker exports and resource investment. The ability to navigate these headwinds will hinge on how well commodity exporters have invested dividends from the past commodity boom, and on successful structural reforms that may support other sources of growth. Prepared by Carlos Arteta (87512), with input from Christian Eigen-Zucchi and other DECPG staff and data support from Trang Nguyen and Xinghao Gong. DECPG - July 2015 July 2015 Monthly Highlights Global activity: a weak first quarter followed by an uneven recovery. With first-quarter GDP figures now available for major economies, global growth in the first quarter is estimated to have been 2 percent (quarter-on-quarter annualized rate), down from 2.3 percent in the fourth quarter of 2014 (Figure 1.A). Recent indicators suggest a recovery in the second quarter in high-income countries: the U.S. labor market continued to improve, while manufacturing and services growth in the Euro Area moved up. In contrast, although growth in China in the second quarter recovered appreciably, activity in other emerging and developing countries remained generally weak. The divergence between high-income and developing-country activity is also reflected in manufacturing PMIs: still firmly expansionary in high-income countries, but trending further down in developing countries (Figure 1.B). United States: a pickup in second-quarter activity. After a lackluster first quarter, economic activity picked up in the second quarter. The job market continues to strengthen (Figure 1.C). The U.S. economy added 223,000 jobs in June, and the unemployment rate edged down to 5.3 percent, its lowest level since April 2008. The outlook has been buoyed by rising consumer spending and confidence, although retail sales unexpectedly dropped in June following a strong reading in May. The strong dollar is weighing on exports, but the trade deficit in May widened less than expected. Excluding food and energy, June inflation was 1.8 percent (year-on-year). Amid ongoing improvement in labor market conditions, the Federal Reserve is expected to start gradually increasing policy interest rates in coming months. Euro Area: a gathering recovery. After expanding 1.5 percent (s.a.a.r.) in the first quarter, growth in the Euro Area appears to be firming, helped by a weaker euro. Growth has been particularly robust in Spain. The Euro Area composite PMI remained in July close to a four-year high despite the Greek crisis. Activity has been boosted by improved private consumption from lower oil prices and the reduced impact of fiscal consolidation in a number of countries. The ECB’s quantitative easing program is playing an important role in improving credit conditions, and the weaker euro is underpinning exports and manufacturing activity. China’s Q2 growth: above market expectations. Second quarter GDP was stronger than expected by markets but in line with World Bank projections, rising 7 percent year-on-year (versus a consensus forecast of 6.8 percent), as stimulus measures supported activity. On a quarterly basis, second-quarter GDP growth accelerated, to 7 percent (s.a.a.r.), from 5.3 percent in the first quarter (Figure 1.D). The improvement was broad-based, as suggested by the improvement in various indicators, including retail sales, industrial production, and exports. Chinese stocks: sharply down but still markedly up from last year. The Chinese stock market tumbled nearly 30 percent after hitting a seven-year high in mid-June. The authorities’ intensifying containment measures eventually stemmed the slide. The plunge reflects a market correction after a strong rally, tighter rules on margin finance, and a surge in initial public offerings. Despite the fall, the Shanghai Stock Exchange Composite Index is still up more than 70 percent compared to last November. However, there are concerns that, without continued policy actions, a disorderly correction could happen, with possible spillovers affecting financial stability and confidence. Emerging market activity: broad weakness. High-frequency indicators suggest that weakness in the first quarter in major emerging market and developing economies, excluding China, has extended into the second quarter (Figure 1.E). Momentum in industrial production in several countries has either struggled to gather pace (Mexico, South Africa, Indonesia, and Malaysia) or turned negative (Brazil, Russia, Philippines, Korea, and Thailand), with June PMI data pointing to further softness. Activity in Turkey strengthened in May, although June PMI data suggest that the improvement may not last. Lingering weakness reflects adjustment by commodity-exporting economies to lower levels of commodity prices, domestic factors including governance challenges (Brazil) and mining sector strikes and power shortages (South Africa), and subdued exports. Emerging market exports: sharp contractions in Asia. The external environment remains challenging for developing-country exports. The softness is concentrated in Asia, excluding China (Figure 1.F), particularly in manufacturing-oriented economies (Malaysia, Thailand, Philippines, Singapore, and India). Competitiveness pressures related to the weaker yen and soft demand from China weighed on exports. Weak domestic demand among developing economies has also been a drag, reflected in large contractions in developing-country imports since the start of the year. 2 July 2015 Greece: finally a deal. Nearly six months of negotiations between Greece and its international creditors culminated with the July 13 outline of an agreement that Greece will implement long-standing fiscal austerity and structural reform measures in return for negotiations on a third bailout package of an estimated €82– €86 billion. In addition, Eurogroup finance ministers agreed to provide Greece €7 billion of bridge financing that allowed the country to make a scheduled July 20 payment to the European Central Bank (ECB) and to clear its arrears with the IMF. Having experienced growing liquidity shortages in the weeks before the recent agreements, Greek banks were closed and account withdrawals from ATMs limited to €60 per day from the imposition of capital controls on June 28. On July 16, the ECB raised the ceiling on emergency liquidity assistance by €900 million. On July 20, Greek banks reopened, but withdrawal limits still remain in place. Financial contagion from Greece: mostly limited. Spillovers to developing Southeastern European countries most exposed to Greece through trade and financial (particularly, banking) linkages have been limited, although central banks in Macedonia, Serbia, and Bulgaria have in recent weeks put in place measures to prevent or more closely monitor outflows from local subsidiaries of Greek banks. In the Euro Area, market reaction to the Greek turmoil has been orderly as well, with little sign of financial contagion or generalized risk aversion. Overall, the lack of financial spillovers, and the muted reaction of peripheral European bond markets (Figure 2.A), suggests that investors believe risks of cross-border contagion have been significantly reduced since the height of the 2011-12 Euro Area crisis. Emerging market bonds: remarkably resilient compared with past sell-off episodes. The reaction of emerging- market bonds to the Greek crisis and the collapse of Chinese equities has been mostly muted compared with the oil shock and the taper tantrum (Figure 2.B). Since the announcement of the Greek referendum on June 26, the EMBI Global sovereign bond spread widened by just 20 basis points, with Venezuela and Ecuador leading the sell-off (mostly on weaker oil prices). The Greece deal and the stabilization of China’s stock markets should support emerging bond markets in the near term. Capital flows to developing countries: slightly up in June. Gross capital flows to developing countries amounted to $63 billion in June, up from $58 billion in May and the $50 billion monthly average in January-April (Figure 2.C). The pickup in June was largely due to a surge in international bond issuance, reflecting large corporate issues from East Asia and Latin America. Syndicated bank lending was also relatively steady, amid large borrowings in Turkey, Thailand, and Brazil. In contrast, equity flows were down significantly due to a sharp drop in flows to China, mirroring the plunge of the Chinese stock markets since mid-June. Energy prices: down in June and July. Energy prices fell 2 percent in June (Figure 2.D), with similar declines in all fuel types. Crude prices continued falling in July, averaging $55 per barrel in the first half of the month and eliminating all the gains in April/May, as a large global surplus persists. The declines were exacerbated by the agreement with Iran over its nuclear program (although it needs to be ratified), which is expected to add 0.5 million of barrels per day in 2016 once it is implemented. (Iran’s oil production has declined for most of the past few years, Figure 2.E). Grain prices fell marginally and edible oil prices rose in June, as adverse weather conditions in the mid-western United States and El Niño fears counterbalanced the comfortable global outlook for 2015-16. Metals prices plunged 6 percent in June (down 45 percent form their early 2011 peaks), due to oversupply and slowing demand growth by China (Figure 2.F). The weakness in commodity prices is expected to continue for the rest of 2015, before a modest recovery in 2016. Oil prices are expected to average $57 per barrel in 2015 and $61 per barrel in 2016, slightly higher than the April Commodity Markets Outlook forecast but still much lower than the 2011-13 average of $105 per barrel. 3 July 2015 Figure 1: Selected Real Indicators A. Global GDP growth B. Manufacturing PMI Percent, Q/Q saar Index, +50: Expansion 58 Developing countries 4 High-income countries 56 3 54 2 52 50 1 14Q1 14Q2 14Q3 14Q4 15Q1 48 2010 2011 2012 2013 2014 2015 C. U.S. job creation (non-farm payroll D. China GDP growth employment) 12-month cumulative change, millions Percent Q/Q saar 4 11 Y/Y 10 2 9 0 8 -2 7 -4 6 Job creation 5 -6 Q4 2010 Q3 2011 Q2 2012 Q1 2013 Q4 2013 Q3 2014 Q2 2015 Latest observation -8 2000 2005 2010 2015 E. Industrial production in developing countries F. Developing-country trade Percent, 3m/3m saar Exports, Imports, 25 Developing Countries percent 3m/3m saar percent 3m/3m saar 20 Brazil 30 25 India 20 20 15 Russia 10 15 10 0 10 5 -10 5 0 -20 0 -30 -5 -5 -40 East Asia ex. China exports -10 -10 -50 India exports -15 -15 -60 Developing country imports (RHS) -20 Feb-15 Jan-15 Nov-14 May-14 Aug-14 May-15 Sep-14 Mar-15 May-15 Nov-14 Sources: World Bank, Bloomberg, Haver Analytics. B: The dotted lines show the trend. Last observation is June 2015. C,D: Last observation is 2015Q2. E,F: Last observation is May 2015. 4 July 2015 Figure 2: Selected Financial and Commodity Market Indicators A. Peripheral European 10-year government bond B. Emerging-market sovereign bond spreads yields Percent Italy Basis points 3.5 Ireland 500 Taper tantrum Collapse of oil price Portugal 3.0 Spain 450 2.5 400 2.0 350 1.5 300 1.0 250 0.5 Jul-15 200 Mar-15 Apr-15 May-15 Jun-15 Feb-15 Jan-13 Jan-14 Jul-14 Oct-14 Jan-15 Jul-15 Apr-13 Jul-13 Oct-13 Apr-14 Apr-15 C. Capital flows to developing countries D. Brent and WTI crude oil futures US$, billions Bank US$/bbl 80 Bond 110 Equity WTI 70 100 Brent 60 90 50 80 40 30 70 20 60 10 50 0 40 Jun-14 Oct-14 Jun-15 Oct-13 Dec-13 Feb-14 Apr-14 Aug-14 Dec-14 Feb-15 Apr-15 Jan-14 Jan-15 Jul-15 Apr-14 Jul-14 Oct-14 Apr-15 E. Iran oil production F. Commodity price indices, monthly Million barrels per day US$ nominal, 2010=100 7 180 Energy Metals 6 160 Agriculture 5 140 4 120 100 3 80 2 60 1 40 0 Jan-07 Jan-11 Jan-13 Jan-15 Jan-09 1980 1990 1965 1970 1975 1985 1995 2000 2005 2010 Sources: World Bank, Bloomberg, Haver Analytics, JPMorgan EMBI Global Bond Index. A. Shaded area covers between June 27, when the Greek referendum was announced, and July 10, just before the announcement of the Greek deal on July 13. B. JPMorgan’s EMBIG spreads are defined as weighed average of bond yield spreads over U.S. government securities of ext ernal debt instruments issued by sovereign and quasi-sovereign entities in emerging market economies. The taper tantrum period covers early May through mid-July, and collapse of oil price period covers early November through late December. 5 July 2015 Special Focus: LICs after the Commodity Price Boom Accelerating growth: underpinned by rising commodity prices. Economic activity in low-income countries (LICs) began to surge in the early 2000s, averaging 6.2 percent per year during 2000-2014, double the pace of the previous three decades (Figure 3). Among metal and mineral exporting economies (which account for almost two-thirds of LICs), the improvement was even more marked: growth quadrupled compared to the previous decade, in part reflecting substantial terms of trade gains associated with rising commodity prices, and strong demand from China. Surging global resource exploration and investment. The commodity boom stimulated a steep increase in industry spending on exploration, mining and production investments. Higher prices, low financing cost and technological innovations increased the profitability and feasibility of investments in less explored regions, including Africa. These tailwinds were coupled with better domestic policies, reflected in greater macroeconomic stability and a decrease in conflicts. Resource exploration was also made more attractive by the fact that African discoveries were occurring closer to the surface than anywhere else except Latin America. Impact of the boom on LIC: stronger growth. For several LICs, the 2000s also marked a decade of discoveries, with major oil and gas finds that have transformed long-term prospects, notably in offshore East and West Africa. The commodity boom has helped accelerate growth of investment, exports, and output. Mining investment was particularly substantial in 2000-11 in several LICs; cumulative spending over this period amounted to more than 20 percent of 2010 GDP in the Democratic Republic of Congo, Sierra Leone, Mozambique, and Guinea. Rising revenues from the commodity sector meanwhile enabled expansion of growth-enhancing government investment. This led to increased jobs and incomes, with spillovers to consumption. On the negative side, it tended to cause an appreciation of the real exchange rate, and hence a loss of competitiveness for non-resource based activity. Commodity prices: from tailwinds to headwinds. Falling metal and energy prices have generated large negative terms of trade shocks in commodity exporting LICs, and increased pressure on fiscal revenues and exchange rates. The decline in prices has also disrupted new foreign investments and in some cases production in extractive-based industries (Sierra Leone). Near-term outlook: still robust. Thus far, good harvests, robust, remittances, and rising public investment have supported employment and cushioned the impact on activity of sharply weaker terms of trade among commodity exporting LICs. Growth should remain supported by rising output as past investments come onstream (Mozambique, Democratic Republic of Congo) and public infrastructure investments proceed (Kenya, Rwanda), in some cases supported by supported by Chinese financing (Côte d’Ivoire and Ethiopia). For 2015-17, growth in metal and mineral exporting LICs is expected to remain close to 6 percent, on average. Medium term outlook: increasingly challenging. Prospects are for a protracted adjustment to lower and more volatile commodity prices, weaker demand for exports, and reduced resource investment and production in the next few years. Over the medium term, persistently low commodity prices may reduce the attractiveness of mining, and oil and gas investment. Finally, the lasting effects of competitiveness losses and real appreciation induced by the commodity boom means that, for many commodity-exporting LICs, shifting growth away from a shrinking natural resource sector may prove hard. Risks: significant and tilted to the downside. Further falls in commodity prices could force deeper fiscal adjustments than currently planned. It may also prompt some companies to delay or even cancel planned investments in the resource sector. Headwinds associated with the upcoming tightening of monetary policy in the United States could put pressure on exchange rates, and on debt service costs of countries that have tapped international capital markets. Those with low policy and reserve buffers and large macro-imbalances could face potentially disruptive adjustments. Policy challenges. African resources are underdeveloped and in some areas more easily accessible than in longer- explored regions. Against the headwinds of lower commodity prices, such “below -ground” advantages need to be leveraged with “above-ground” improvements in the business environment. This would include building infrastructure and improving institutions. Policies that improve the conditions to do business and ease supply-side constraints will increase the return on capital in both the resource and the non-resource sectors. 6 July 2015 Figure 3. After the Boom: What next for Low-Income Countries (LICs)? Growth in low-income countries doubled during the 2000s, compared with the average for the previous three decades. For metals and minerals exporting LICs, faster growth was underpinned partly by a boom in commodity prices, which generated a large positive terms of trade shock and led to surging exports and investment. With the commodity cycle turning, prospects are for a protracted adjustment to lower exports and investment over the medium term. Downside risks have increased, particularly in economies with large fiscal or external imbalances. A. LICs: GDP Growth B. Commodity-exporting LICs: Terms of trade impact as a percent of 2010 GDP Percent Change in trade balances, 2000-2011, quantified as a percent of 8 GDP Growth GDP levels in 2010 80 7 60 6 40 5 20 4 0 3 -20 2 Average for period -40 Eritrea Gambia, The Niger Sierra Leone Tanzania Madagascar Liberia Rwanda Burundi Togo Mozambique Zimbabwe Guinea Congo, Dem. Rep. Chad C. African Rep. Myanmar Tajikistan 1 Last observation is 2014 0 -1 1970 1975 1980 1985 1990 1995 2000 2005 2010 C. LICs: Primary sector exports D. Cumulative investments in mining, 2000-11 Percent of GDP Percent of GDP Exports, US$bn 40 120 500 Lower Estimate Petroleum and Nat. Gas 100 400 Upper Estimate Metal Ores 9.3 80 30 300 60 Coal 200 7.8 40 Agr, Forestry, Fishing and Mining 100 20 20 2.1 0 0 Namibia Mauritania Tanzania Ghana Guinea Niger Burkina Faso Zambia Dem. Rep. of Congo Mozambique Sierra Leone Liberia (RHS) 10 17.3 0 1990 1995 2000 2005 2010 E. Average depth of cover for discoveries, 2012 F. LICs: Growth prospects Meters Percent 250 Excluding South Africa, 9 204 200 the depth of cover falls 8 from 55 to 12 meters 7 150 122 98 6 100 74 68 82 5 50 55 32 4 0 12 3 Canada Rest of world United States Western world Africa Latin America Australia Southeast Asia 2 LIC oil and metal exporters average LIC others Pacific/ 1 0 2007 2012 2004 2005 2006 2008 2009 2010 2011 2013 2014 2015 2016 2017 Sources: World Bank, Comtrade, IFS, Haver Analytics. B. Selected economies; includes both current exporters and prospective exporters such as Mozambique and Tanzania. C. Last observation is 2013. D. Includes investment in both mining construction and exploration. E: “Rest of world” includes Middle East, South West Asia (including India and Pakistan), and Mongolia. 7 July 2015 Major Data Releases Major Data Releases 24 Jun, 2015-22 July 2015 Upcoming releases: 23 July, 2015-15 August 2015 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous United States 6/24/2015 GDP (Q/Q) Q1 -0.2% -0.1% 2.2% Eurozone 7/31/2015 Unemployment Rate JUL 11.1% Malaysia 6/25/2015 Unemployment Rate APR 3.1% - 3.0% Argentina 7/31/2015 Industrial Production (Y/Y) JUN -0.3% Japan 6/25/2015 Unemployment Rate MAY 3.3% 3.3% 3.3% China 8/2/2015 PMI Manufacturing JUL 49.9 UK 6/30/2015 GDP (Q/Q) Q1 0.4% 0.4% 0.8% Indonesia 8/3/2015 CPI (Y/Y) JUL 7.3% Indonesia 6/30/2015 PMI Manufacturing JUN 47.8 - 47.1 Eurozone 8/3/2015 PMI Manufacturing JUL 52.5 Brazil 7/1/2015 PMI Manufacturing JUN 46.5 - 45.9 Brazil 8/4/2015 Industrial Production (Y/Y) JUN -8.8% United States 7/2/2015 Unemployment Rate JUN 5.3% 5.4% 5.5% Japan 8/4/2015 PMI Services JUL 51.8 Canada 7/2/2015 PMI Manufacturing JUN 51.3 - 49.8 China 8/4/2015 PMI Composite JUL 50.6 Turkey 7/3/2015 CPI (Y/Y) JUN 7.2% 7.6% 8.1% Indonesia 8/5/2015 GDP (Q/Q) Q2 -0.2% South Africa 7/3/2015 PMI Manufacturing JUN 49.2 - 50.1 Eurozone 8/5/2015 Retail Sales (Y/Y) JUN 2.4% Australia 7/8/2015 Unemployment Rate JUN 6.0% 6.2% 5.9% United States 8/5/2015 PMI Composite JUL 54.6 Mexico 7/9/2015 CPI (Y/Y) JUN 2.9% 2.9% 2.9% Australia 8/5/2015 Unemployment Rate JUL 6.0% India 7/10/2015 Industrial Production (Y/Y) MAY 2.7% 3.3% 3.4% Turkey 8/7/2015 Industrial Production (Y/Y) JUN 2.4% Canada 7/10/2015 Unemployment Rate JUN 6.8% 6.9% 6.8% Brazil 8/7/2015 CPI (Y/Y) JUL 8.9% China 7/14/2015 GDP (Q/Q) Q2 1.7% 1.6% 1.3% United States 8/7/2015 Unemployment Rate JUL 5.3% Turkey 7/15/2015 Unemployment Rate APR 9.9% - 10.0% Mexico 8/7/2015 CPI (Y/Y) JUL 2.9% South Africa 7/16/2015 Wholesale Sales (Y/Y) MAY 1.0% - -4.9% India 8/12/2015 Industrial Production (Y/Y) JUN 2.7% United States 7/17/2015 CPI (Y/Y) JUN 0.1% 0.1% 0.0% United States 8/13/2015 Retail Sales (Y/Y) JUL 1.4% South Africa 7/22/2015 CPI (Y/Y) JUN 4.7% - 4.6% Eurozone 8/14/2015 GDP (Q/Q) Q2 0.4% Mexico 7/22/2015 Retail Sales (M/M) MAY 0.2% - -0.3% Argentina 8/14/2015 CPI (Y/Y) JUL 15.0% 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 Recent World Bank Country Updates Economic Update – Indonesia: Constraints Prompt Slower than Expected Growth Economic Update – Tanzania: Tax Reforms Necessary to Finance Development and Solidify Growth Economic Update - Angola: Coping with Sharp Decline in Crude Oil and Promote Economic Diversification 8 July 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 Industrial Production, S.A. World 8.8 4.7 3.0 2.6 3.7 2.4 2.5 3.9 1.5 3.5 3.5 2.7 3.4 3.1 2.9 3.3 2.7 2.5 2.5 2.2 2.2 - High Income Countries 7.6 2.9 1.1 0.6 2.9 0.4 0.6 3.2 2.1 2.4 2.5 1.3 1.8 1.9 1.5 2.0 1.8 1.5 1.5 1.2 0.8 - Developing Countries 10.9 7.9 6.2 5.5 4.9 5.4 5.2 4.8 0.8 5.3 5.0 4.8 5.8 5.0 5.0 5.3 4.0 4.1 4.0 3.7 4.0 - East Asia and Pacific 14.3 11.3 9.0 8.9 5.1 8.2 6.4 8.4 1.6 8.6 7.8 6.6 7.6 7.1 6.6 7.4 6.5 6.2 5.7 5.5 5.8 6.4 East Asia x. China 8.9 0.7 4.1 4.6 -0.8 8.5 3.9 6.2 -0.7 4.8 1.1 4.6 5.7 4.4 4.0 4.8 4.2 2.6 6.4 2.8 3.5 - Europe and Central Asia 11.0 13.1 8.9 2.2 5.0 1.9 2.3 -0.2 2.2 3.6 4.2 2.6 3.0 2.8 2.3 1.6 -0.1 1.9 2.9 1.6 1.4 - Latin America and Caribbean 6.2 2.6 -0.1 1.0 0.6 -2.7 -0.9 -3.3 -4.2 -3.0 -1.7 -1.1 -1.5 -1.0 -2.1 -1.6 -2.5 -2.8 -3.0 -3.2 -2.7 - Middle East and N. Africa 2.0 -8.5 5.6 -6.6 19.0 2.0 28.6 -2.4 -17.1 -4.5 -0.1 11.3 16.2 12.0 13.2 8.1 -0.3 -0.3 5.2 4.4 6.8 - South Asia 9.3 5.5 1.1 1.7 7.4 5.0 1.3 -1.9 12.2 4.5 1.6 2.0 3.5 -1.5 5.9 4.3 3.4 5.1 3.6 4.5 3.7 - Sub-Saharan Africa 4.3 3.4 3.2 1.6 -4.1 1.4 -4.8 9.2 -2.1 1.1 -6.4 -0.2 6.3 1.5 -0.8 0.2 -1.5 0.2 3.8 -1.4 0.1 - Inflation, S.A. 1 High Income Countries 1.6 2.8 2.0 1.5 1.4 1.9 1.7 1.4 0.9 1.9 1.8 1.7 1.7 1.7 1.4 1.1 0.8 0.9 1.1 0.8 0.9 1.0 Developing Countries 5.8 7.5 6.5 7.5 7.5 7.8 8.0 8.0 7.9 7.8 8.1 8.1 8.0 7.9 7.9 8.3 7.8 8.0 8.0 7.8 7.6 7.4 East Asia and Pacific 3.4 5.6 2.8 3.0 2.9 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 2.1 1.9 2.0 Europe and Central Asia 7.3 8.2 8.8 6.2 5.7 7.3 7.9 8.1 8.2 7.4 7.6 8.0 8.0 8.2 8.3 7.8 7.5 8.1 9.0 10.2 10.2 9.4 Latin America and Caribbean 6.5 7.6 6.8 10.0 12.9 14.3 16.0 17.4 17.4 14.7 15.4 16.0 16.5 16.8 17.2 18.2 17.7 17.5 16.9 15.6 14.8 14.1 Middle East and N. Africa 6.9 11.9 13.5 18.7 12.9 9.6 9.9 10.6 10.6 9.0 9.8 10.1 10.0 10.4 10.4 11.1 10.2 10.7 10.9 11.1 11.6 - 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 Sub-Saharan Africa 7.3 10.2 11.1 8.1 8.6 9.3 9.8 8.4 7.5 9.8 10.0 10.2 9.3 8.3 8.4 8.5 7.6 7.4 7.5 7.9 8.3 - 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 Exports, Nominal, US$, S.A. World 21.9 19.2 0.3 1.8 -1.9 3.6 2.4 -15.8 -28.2 3.3 5.4 0.7 2.7 -1.4 -4.5 -4.0 -11.1 -7.2 -13.3 -13.9 -13.9 - High Income Countries 19.5 18.5 -1.1 1.2 1.2 0.6 -1.6 -19.2 -29.2 2.6 5.0 -0.5 1.0 -3.4 -6.3 -5.7 -12.8 -13.3 -13.7 -15.4 -15.6 - Developing Countries 28.2 20.8 3.5 3.1 -8.7 10.6 11.7 -8.1 -26.1 5.0 6.2 3.3 6.8 3.2 -0.4 0.0 -7.4 7.6 -12.4 -10.4 -9.9 - East Asia and Pacific 30.8 19.7 6.3 6.5 -11.9 17.7 18.8 1.8 -18.2 7.9 11.2 8.2 12.7 8.3 3.4 5.7 -3.3 29.3 -11.6 -6.6 -4.4 1.4 Europe and Central Asia 15.5 20.3 -0.1 -0.2 8.5 -4.9 -7.3 -28.5 -17.8 5.2 5.6 -4.0 -0.9 -6.5 -9.4 -11.3 -13.1 -15.4 -16.9 -16.1 -20.4 - Latin America and Caribbean 28.1 23.2 1.7 0.6 -9.2 9.1 3.5 -25.6 -19.6 1.7 5.8 -0.5 0.0 -4.3 -8.8 -6.6 -8.7 -13.4 -5.7 -12.8 -15.8 - Middle East and N. Africa 23.7 15.9 5.0 -11.2 -8.3 -0.7 27.7 -10.6 -61.3 -9.7 -18.0 -1.9 1.9 16.5 -3.3 -10.4 -15.8 -22.0 -18.0 - - - South Asia 34.4 31.4 -1.8 6.2 -7.6 10.3 3.2 -2.2 -46.7 10.7 0.1 1.5 -0.4 -5.5 8.6 -0.7 -7.6 -11.6 -17.7 -11.2 -16.6 -12.7 Sub-Saharan Africa 32.4 19.7 -2.5 -1.1 -3.0 -8.7 -1.2 -18.4 -56.7 -2.8 -1.5 -10.1 -2.1 -8.3 -7.8 -8.1 -27.3 -27.0 -19.8 - - - Imports, Nominal, US$, S.A. World 21.0 19.6 0.7 1.5 4.2 -1.2 0.9 -15.8 -31.6 5.3 3.2 0.5 3.8 -1.9 -4.2 -3.8 -13.9 -13.3 -11.6 -14.9 -15.7 - High Income Countries 17.9 17.7 -1.0 0.4 5.0 1.1 -3.3 -18.4 -29.3 6.4 5.4 0.5 2.2 -3.1 -5.3 -4.6 -13.9 -13.4 -12.8 -15.7 -15.7 - Developing Countries 29.7 24.5 4.7 4.0 2.3 -6.1 10.8 -9.8 -36.3 2.7 -1.5 0.7 7.5 0.6 -1.7 -2.0 -13.9 -13.1 -9.0 -13.1 -15.9 - East Asia and Pacific 37.3 24.1 5.7 6.2 4.6 -13.3 13.0 -9.7 -41.1 3.1 -2.4 -0.7 7.1 2.9 -5.2 -3.4 -17.6 -17.3 -9.6 -14.2 -15.7 -5.3 Europe and Central Asia 20.6 27.1 -0.4 2.9 -10.4 -4.6 -7.5 -9.9 -30.9 -0.1 -7.4 -4.3 -4.4 -7.2 -8.4 -8.8 -15.1 -13.5 -13.1 -17.7 -19.1 - Latin America and Caribbean 29.0 22.3 3.8 2.9 3.3 -2.4 6.8 -7.8 -18.1 2.8 -0.5 -1.7 7.8 -4.2 0.3 3.6 -8.1 -8.5 -0.7 -11.2 -15.2 - Middle East and N. Africa 14.9 17.4 10.8 3.9 0.0 -4.0 17.1 -20.3 -26.4 -2.6 0.9 11.0 7.6 -1.4 -4.0 -2.7 -11.2 -7.1 -11.2 - - - South Asia 33.9 31.4 4.0 -4.0 10.1 9.9 33.9 -12.7 -54.3 8.4 4.0 6.9 23.7 7.1 21.5 -1.2 -12.3 -12.8 -12.3 -7.9 -13.3 -10.7 Sub-Saharan Africa 13.2 25.1 4.0 6.2 -1.1 15.9 2.2 3.0 -28.3 3.2 3.6 6.9 9.0 4.7 2.6 7.2 -2.0 2.0 -9.8 - - - International Reserves, US$ High Income Countries 10.2 11.3 9.2 3.6 0.8 0.7 -1.8 -1.5 -0.4 0.5 -0.4 -0.1 -1.3 -0.6 0.0 -0.9 0.2 -0.1 -0.6 0.7 -0.3 - Developing Countries 15.6 10.5 5.2 8.2 1.8 1.5 -2.0 -1.7 -2.6 0.4 -0.2 -0.1 -1.7 -0.7 -0.3 -0.7 -0.7 -0.3 -1.6 0.8 -0.6 - East Asia and Pacific 19.3 11.9 4.5 12.2 3.0 1.2 -2.5 -1.4 -2.9 0.3 -0.5 0.1 -2.1 -0.8 -0.3 -0.4 -0.8 -0.2 -1.9 0.6 -0.9 - Europe and Central Asia 9.3 5.5 7.8 3.6 -2.9 3.4 -1.7 -7.2 -6.1 1.0 -1.1 1.1 -1.7 -2.0 -1.1 -4.2 -0.9 -3.2 -2.1 1.4 -0.3 - Latin America and Caribbean 16.2 16.3 8.4 -1.1 0.2 3.4 1.2 -1.2 -0.3 1.2 1.1 0.0 0.1 -0.1 0.7 -1.8 0.5 -0.3 -0.4 0.7 -0.3 -0.1 Middle East and N. Africa 6.1 3.0 5.9 3.0 -1.9 -2.2 -3.8 -3.2 -7.4 -0.6 -0.4 -1.1 -2.3 -0.2 -1.0 -2.1 -3.7 -0.8 -2.9 - - - 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 1.6 1.5 1.4 9 July 2015 Financial Markets 1 2014 2015 2014 2015 MRV 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 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 0.10 0.09 0.09 0.09 0.09 0.09 0.12 0.12 0.11 0.11 0.12 0.12 0.13 0.13 ECB repo 1.00 1.25 0.88 0.55 0.12 0.05 0.05 0.05 0.16 0.15 0.15 0.06 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 0.23 0.23 0.23 0.25 0.25 0.26 0.27 0.28 0.28 0.28 0.29 EURIBOR 3-months 0.75 1.34 0.49 0.15 0.13 0.00 0.00 0.00 0.21 0.17 0.16 0.06 0.06 0.06 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 2.59 2.53 2.41 2.52 2.29 2.32 2.20 1.88 1.98 2.04 1.92 2.19 2.35 2.35 German Bund, 10 yr 2.78 2.65 1.57 1.63 1.07 0.77 0.35 0.53 1.35 1.19 1.01 1.00 0.87 0.79 0.64 0.45 0.35 0.26 0.16 0.58 0.83 0.79 Spreads (basis points) JP Morgan Emerging Markets 301 341 342 319 301 367 425 380 282 282 310 312 349 350 402 443 420 411 388 369 384 391 Asia 206 218 216 219 195 202 219 201 189 195 202 187 207 193 206 233 215 208 206 195 203 211 Europe 247 301 320 267 262 319 399 336 236 244 274 270 295 293 368 417 396 384 350 327 330 320 Latin America & Caribbean 360 404 393 379 366 471 537 487 343 336 373 390 443 455 516 560 531 521 488 471 504 520 Middle East 342 366 449 435 369 398 449 420 360 372 379 358 395 388 411 452 452 443 441 409 410 417 Africa 274 364 337 322 280 319 373 355 278 278 292 270 307 306 343 385 364 371 361 345 358 365 Stock Indices (end of period) 2 Global (MSCI) 331 300 340 409 417 417 425 424 429 423 432 417 419 426 417 410 432 425 436 435 424 431 High-Income ($ Index) 1280 1183 1339 1661 1698 1710 1741 1736 1743 1714 1749 1698 1708 1740 1710 1678 1773 1741 1778 1779 1736 1778 United States (S&P-500) 1258 1258 1426 1848 1972 2059 2068 2063 1960 1931 2003 1972 2018 2068 2059 1995 2105 2068 2086 2107 2063 2119 Euro Area (S&P-350$) 1124 1005 1143 1339 1411 1401 1624 1552 1401 1380 1404 1411 1382 1425 1401 1502 1603 1624 1618 1630 1552 1639 Japan (Nikkei-225) 10229 8455 10395 16291 16174 17674 19207 20236 15162 15621 15425 16174 16414 17460 17451 17674 18798 19207 19520 20563 20236 20594 Developing Markets (MSCI) 1151 916 1055 1003 1005 956 975 972 1051 1066 1088 1005 1016 1005 956 962 990 975 1048 1004 972 940 EM Asia 468 379 447 446 460 457 481 475 472 485 489 460 467 467 457 468 479 481 514 499 475 457 EM Europe 529 395 473 438 374 297 302 311 435 403 399 374 369 353 297 286 313 302 338 320 311 302 EM Europe & Middle East 450 336 402 372 321 257 258 266 360 340 337 321 314 303 257 247 269 258 286 271 266 260 EM Latin America & Caribbean 4614 3602 3798 3201 3171 2728 2451 2517 3370 3399 3664 3171 3158 3008 2728 2555 2654 2451 2693 2496 2517 2430 Exchange Rates (LCU / USD) High Income Euro Area 0.76 0.72 0.78 0.75 0.76 0.80 0.89 0.90 0.74 0.74 0.75 0.78 0.79 0.80 0.81 0.86 0.88 0.92 0.92 0.90 0.89 0.92 Japan 87.76 79.74 79.85 97.61 104.04 114.62 119.16 121.38 102.07 101.75 102.98 107.39 108.02 116.40 119.44 118.33 118.78 120.37 119.53 120.87 123.74 124.09 Developing Brazil 1.76 1.67 1.95 2.16 2.28 2.55 2.87 3.07 2.23 2.22 2.27 2.34 2.45 2.55 2.65 2.64 2.82 3.15 3.04 3.06 3.11 3.19 China 6.77 6.46 6.31 6.15 6.16 6.15 6.24 6.20 6.23 6.20 6.15 6.14 6.13 6.13 6.19 6.22 6.25 6.24 6.20 6.20 6.21 6.21 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 7.15 7.15 7.15 7.27 7.59 7.60 7.60 7.62 7.63 7.84 India 45.73 46.67 53.41 58.55 60.59 61.96 62.24 63.43 59.76 60.06 60.83 60.87 61.40 61.70 62.77 62.20 62.06 62.48 62.69 63.76 63.84 63.47 Russia 30.37 29.41 31.06 31.86 36.31 47.98 62.87 52.69 34.37 34.75 36.17 38.01 40.96 46.30 56.67 64.33 64.16 60.13 52.82 50.65 54.60 56.95 South Africa 7.32 7.26 8.21 9.65 10.77 11.22 11.74 12.08 10.68 10.66 10.66 10.99 11.06 11.09 11.51 11.56 11.58 12.08 11.99 11.97 12.29 12.36 Memo: USA nominal effective rate 100.19 98.53 102.00 104.76 110.57 114.05 119.74 121.50 109.31 109.43 110.61 111.67 112.66 113.83 115.67 117.82 119.65 121.73 121.39 121.04 122.06 123.45 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 2014 2015 MRV 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June 1 Oil price, $/b, nominal 79 104 105 104 100 75 52 60 108 105 100 96 86 77 61 47 55 53 57 63 61 55 Non - Oil Index 2 .. 97 87 80 74 71 66 64 77 76 75 72 71 72 70 67 66 64 64 65 63 63 3 Metals and Minerals Index 103 117 99 94 89 83 74 73 87 90 90 87 84 84 80 75 74 73 73 76 72 67 Baltic Dry Index 4 2755 1545 916 1215 954 1105 614 629 912 796 944 1123 1101 1332 881 727 539 576 591 596 699 1048 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