Global Monthly July 2017

Sources: Federal Reserve Economic Data.

Note: Last observation is June 2017.

Asset holdings by the U.S. Federal Reserve and the

European Central Bank

Overview

• High-frequency data continue to suggest an ongoing

recovery in global activity.

• Global inflation has abated, reflecting subdued energy prices

and low core inflation in major economies.

• Following a rebound in 16Q4 and 17Q1, global trade

momentum continued in 17Q2.

• Capital inflows to EMDEs slowed in July, partly reflecting a

rise in global bond yields.

• Oil prices are fluctuating around $45/bbl, with global oil

stocks close to record highs.

Chart of the Month

• Unconventional monetary policies by the U.S. Federal

Reserve, and, later, by the European Central Bank (ECB),

led to a significant expansion of their balance sheets.

• In June, the Federal Reserve announced that it would start

reducing the size of its balance sheet this year, while the

ECB signaled in July that the ongoing recovery might

warrant a further unwinding of asset purchases over time.

• Prospects of diminished monetary policy support

contributed to an uptick in Euro Area and U.S. long-term

yields in July.

Special Focus: Arm’s-Length Trade: A Source of Post-Crisis Trade Weakness

• U.S. trade data highlight that arm’s-length trade—trade between unaffiliated firms—accounts disproportionately for the post-crisis trade slowdown.

• Compared to intra-firm trade, arm’s-length trade depends more heavily on emerging market and developing

economies (EMDEs), where output growth has slowed sharply, and on sectors that have languished after the crisis.

• Constrained access to finance, heightened policy uncertainty, and firm-level characteristics also played a role.

<e Global Monthly is a publication of the Global Macroeconomics Team of the Prospects Group in the Development Economics Vice Presidency. <is edition was prepared by Marc Stocker and Dana Vorisek, based on contributions from John Ba?es, Mai Anh Bui, Sinem Celik, Gerard Kambou, Eung Ju Kim, Seong Tae Kim, Csilla Lakatos, Yoki Okawa, Temel Taskin, Ekaterine Vashakmadze, Collette Wheeler, and Lei Sandy Ye. <is Global Monthly reDects information available as of July 25. For more information, visit: http://www.worldbank.org/en/research/brief/economic-monitoring

Table of Contents

Monthly Highlights .............................................. 2

Special Focus ....................................................... 6

Recent Publications of Prospects Group .................. 8

Recent World Bank Working Papers....................... 8

Recent World Bank Reports .................................. 8

Table A: Major Data Releases ............................... 8

Table B: Activity and Inflation.............................. 9

Table C: Trade and Finance ................................. 9

Table D: Financial Markets ............................... 10

Table E: Commodity Prices ................................. 10

2

July 2017

Global economy: positive momentum. Global GDP growth

moderated somewhat in 17Q1, to 2.6 percent (q/q saar) from an

average of 3 percent in the last two quarters of 2016. <e modest

deceleration was partly driven by weaker growth in the United

States, which was restrained by a temporary dip in consumer

spending. In contrast, growth strengthened in the Euro Area, was

resilient in China, remained positive in Russia, and rebounded in

Brazil. Eastern Europe and Central Asia continued to beneHt

from the recovery in the Euro Area, while an uptick in global

trade helped sustain robust growth in East Asia and PaciHc. In

Sub-Saharan Africa, activity remained soft, contracting for the

second consecutive quarter in South Africa. Recent high-

frequency data suggest strengthening global growth. Industrial

production showed positive momentum up to April, while the

global composite PMI remained close to a two-year high in May

and June. Global median inDation fell to around 2.1 percent in

May and June, largely driven by recent declines in oil prices and

continued low core inDation in major economies (Figure 1A).

Global trade: continued momentum. Global goods trade

remained unusually strong in 17Q1, growing by more than 7

percent (q/q saar) for the second consecutive quarter. Trade

growth accelerated in May, and new export orders strengthened

up to June, suggesting continued momentum in 17Q2 (Figure

1B). Protectionist tendencies have been rising, albeit moderately,

in 2017. G20 economies introduced 42 new trade-restrictive

measures (new or increased tari?s, customs regulations, and rules

of origin restrictions) between October 2016 and May 2017—a

slightly higher rate than during the same period one year earlier,

but below the trend observed since the Hnancial crisis.

United States: declining in�ation. Growth is expected to post a

modest rebound in 17Q2, following a temporary consumption-

led slowdown in 17Q1. Labor market conditions improved

further in 17Q2, with job creation accelerating in June, the labor

participation rate increasing, and the unemployment rate, at 4.4

percent, remaining close to its post-crisis low. Broad indicators of

labor market slack, such as the U-6 measure of unemployment,

showed signiHcant improvement since the start of the year. In the

past, the return of marginally attached and discouraged workers

in the labor market coincided with rising wage pressures.

Monthly Highlights

FIGURE 1B Global trade growth

FIGURE 1C U.S. unemployment and wage growth

Sources: CPB Netherlands Bureau for Economic Policy Analysis, Current

Population Survey, U.S. Bureau of Labor Statistics, World Bank.

A. Last observation is June 2017.

B. Last observation is May 2017.

C. Latest observation is June 2017. U6-U3 shows the difference, in percentage

points, between U6 unemployment and U3 unemployment.

FIGURE 1A Global inflation and oil price changes

3

July 2017

However, hourly earnings decelerated during 17Q2, to an annual

rate of 2.5 percent in June (Figure 1C). Coupled with moderating

core inDation up to June, the absence of rising wage pressure

contributed to a decline in market-based inDation expectations.

However, the U.S. Federal Reserve hiked policy interest rates in

June, stressing the temporary nature of the inDation slowdown as

well as prospects of growth outpacing its potential rate over the

next two years. <e central bank also announced that it plans to

gradually reduce the size of its balance sheet.

Euro Area: further improvement. Growth reached a two-year

high of 2.3 percent (q/q saar) in 17Q1, with high-frequency

indicators suggesting continued strength in 17Q2. In June, the

composite PMI remained close to record highs, although it

declined marginally from May, while economic sentiment further

improved. Credit growth has been on an upward trend since mid-

2015, reDecting increased traction of exceptionally

accommodative monetary policy. It remained close to post-crisis

highs in April and May, albeit moderating somewhat (Figure 2A).

Headline inDation dropped to 1.3 percent in June, reDecting

receding energy prices, while core inDation recovered slightly to

1.1 percent. <e ECB left its policy stance unchanged in June,

but highlighted a shifting balance of risks. In July, it signaled that

the recovery might warrant further policy normalization. Policy

uncertainty diminished in June following the election results in

the Netherlands and France.

China: robust growth. GDP expanded by 6.9 percent y/y in

17Q2—the same rate as in 17Q1. In June, industrial production

and retail sales growth accelerated, while Hxed asset investment

growth was stable. Credit growth remained strong, at above 12

percent (y/y) throughout 17Q2, reDecting rapidly expanding

loans to households, but non-traditional banking activities

continued to moderate. Although regional divergences in the

housing market persist, the gap between prices in large cities and

that in medium-size cities has narrowed. Policy and regulatory

tightening have been calibrated to support market stability. In

July, the National Financial Work Conference emphasized the

importance of deepening Hnancial regulatory reforms and

containing Hnancial risks. Foreign exchange reserves rose for the

Hfth consecutive month in June (Figure 2B). Since the beginning

of the year, capital outDows have slowed as China tightened rules

FIGURE 2B China’s foreign currency reserves

FIGURE 2A Euro Area credit growth and inflation

FIGURE 2C New exports orders in EMDE

commodity exporters and importers

Source: European Central Bank, Haver Analytics, Markit Economics, World Bank.

A. Inflation is year-on-year change of consumer price indices. Private credit is total

loans and securities vis-a-vis euro area non-MFI excl. general gov. reported by

MFI in the euro area (stock). Last observation is June 2017 for inflation and May

2017 for private credit growth.

B. Change in reserves is month-on-month. Last observation is June 2017.

C.GDP-weighted average. Commodity exporters include Brazil, Russia, Indonesia,

and Malaysia. Commodity importers include India, China, Poland, Philippines,

Thailand, Vietnam, Mexico, and Turkey. Last observation is June 2017.

4

July 2017

on moving capital outside the country. MSCI introduced China’s

A-stocks in its global benchmark equity index in June.

Major commodity exporters: modest pickup. Export orders in

most commodity exporters continued to recover in 17Q2, partly

supported by continued strong global trade growth (Figure 2C).

GDP growth in Brazil rebounded strongly to 4.3 percent (q/q

saar) in 17Q1, after eight quarters of contraction, but remained

slightly negative on a y/y basis (Figure 3A). <e uptick reDected a

large, and likely temporary, expansion in the agricultural sector.

<e composite PMI remained above the 50-threshold from April

to June. Activity in Russia continued to expand in 17Q1. Recent

industrial production data (May) and PMI surveys (June)

indicate further improvement in 17Q2. In Indonesia and

Malaysia, both domestic demand and exports continued to

support robust activity in 17Q2, following strong growth in

17Q1. In Nigeria, PMI data as of June suggest manufacturing

activity is strengthening, although GDP in 17Q1 contracted 0.5

percent (y/y). In Saudi Arabia, GDP growth deteriorated to

negative 0.5 percent (y/y) in 17Q1, driven by oil production cuts,

while non-oil sector growth remained steady.

Major commodity importers: mixed. In India, GDP growth

slowed to 6.1 percent (y/y) in 17Q1, as expected (Figure 3.B).

Manufacturing PMI ticked up to 52.7 in June, the highest level

since 16Q2. In Mexico, industrial production fell 0.3 percent

(y/y, sa) in April, hindered by a mining sector contraction. In

Turkey, GDP growth was sustained at 5 percent (y/y) in 17Q1,

while activity indicators suggest momentum in 17Q2. Poland’s

manufacturing PMI in April indicates a pickup in both

investment and private consumption, following GDP growth of

4.4 percent (y/y) in 17Q1. In <ailand, manufacturing PMI and

exports improved in 17Q2, while business and consumer

conHdence dropped.

Global $nancing conditions: generally favorable. Global

Hnancing conditions continue to be primarily driven by shifting

expectations about monetary policy and inDation prospects in the

United States and Euro Area. U.S. long-term yields decreased

through much of 17Q2, mainly reDecting disappointing inDation

outcomes and diminished market expectations of substantial Hscal

stimulus. Despite an additional hike in U.S. policy interest rates

in June, long-term U.S. yields remained near levels prevailing at

FIGURE 3B GDP growth in major EMDE

commodity importers

FIGURE 3A GDP growth in major EMDE

commodity exporters

FIGURE 3C U.S. and German 10-year government

bond yields

Sources: Bloomberg, Haver Analytics, World Bank.

C. Vertical line indicates the value of the 10-year U.S. Treasury yield on

December 16, 2015, the date the Federal Reserve announced its first post-crisis

interest rate hike. Last observation is July 25, 2017.

5

July 2017

the start of the tightening cycle (Figure 3C). U.S. long-term

yields continue to be contained in part by spillovers from

quantitative easing policies in other major advanced economies

and strong global demand for safe liquid assets. In June, however,

the ECB shifted its forward guidance, signaling that further

monetary policy normalization is likely as the recovery continues.

<is led to upward movement in both Euro Area and U.S. long-

term yields.

EMDE $nancial markets: moderating capital �ows. After

posting solid gains throughout the Hrst half of 2017, returns on

EMDE assets fell at the start of July, reDecting an upward

movement in U.S. long-term yields and concerns about higher

borrowing costs. While equity markets have been somewhat

resilient, remaining near all-time highs, bonds and currencies

have su?ered from an unexpected tightening of borrowing

conditions, with the brunt of the adjustment taking place in

higher-risk and commodity exporters. In particular, Argentina,

Russia, Colombia, and Turkey have seen currency depreciations

in excess of 2 ½ percent in trade-weighted terms since the start of

June (Figure 4A). Capital Dows into EMDE bond funds

registered net outDows in July—the Hrst time this year—

contrasting with continued inDows into equity funds (Figure 4B).

Meanwhile, EMDE’s international bond issuances remained

robust in June.

Oil prices: downward pressures. Oil prices averaged over $50/

bbl from November 2016 to April 2017, mainly on expectations

that the OPEC/non-OPEC production cuts would accelerate

rebalancing on international oil markets. However, the rebound

in U.S. shale, with the U.S. rig count doubling within a year, and

increased oil supplies from Libya and Nigeria (non-participants of

the OPEC/non-OPEC agreement), have kept OECD and,

particularly, U.S. stocks still at high levels, exerting downward

pressure on prices (Figure 4C). As a result, oil prices traded at

around $47/bbl in the Hrst half of July. Metal prices have been

stable, while agricultural prices have softened on well-supplied

conditions.

FIGURE 4B Portfolio inflows to EMDEs

FIGURE 4A Change in nominal effective exchange

rates since June 1, 2017

FIGURE 4C OECD and U.S. oil stockpiles

Sources: Bloomberg, JP Morgan, International Energy Agency.

A. Nominal effective exchange rates (trade-weighted, 2010 = 100). Last

observation is July 24, 2017.

B. Last observation is July 19, 2017.

C. Last observation is April 2017.

6

July 2017

FIGURE 5B U.S. import growth

FIGURE 5A U.S. export growth

FIGURE 5C Share of arm’s-length trade in total U.S. trade

Sources: U.S. Census Bureau, World Bank.

A. B. U.S. exports and imports of goods based on data from the U.S. Census

Bureau. Global data is not available.

C. U.S. exports and imports of goods, average for 2002-14. The residual to 100

percent is the share of arm’s-length trade in total U.S. goods exports or goods

imports with the world, advanced consecutive events are identified within a five-

year period in a country, the one associated with the lowest real GDP growth is

used.

Global trade growth reached a post-crisis low of 2.4 percent in

2016—signiHcantly below the pre-crisis annual average of 7.6

percent. Both cyclical and structural factors contributed to the

trade deceleration. One of these structural factors is the maturing

of global value chains. Global value chains often involve

numerous cross-border operations, conducted either “intra-

Hrm”—that is, between Hrms related through ownership or

control—or between unaNliated Hrms at “arm’s-length”. A Hrm’s

decision between arm’s-length and intra-Hrm transactions has its

roots in the underlying motivation for vertical integration and

foreign direct investment.

A more pronounced slowdown in arm’s-length trade. U.S. trade

data highlight that arm’s-length trade accounted

disproportionately for the overall post-crisis trade slowdown. <is

reDected a higher pre-crisis average and a weaker post-crisis

rebound in arm’s-length trade growth compared with intra-Hrm

trade. During the crisis itself, the U.S. data suggest a broad-based

trade collapse, in which intra-Hrm and arm’s-length trade

contracted to similar degrees. By 2014, intra-Hrm trade growth

had returned close to its pre-crisis average (4.3 percent of exports

and 5.0 percent for imports). In contrast, arm’s-length trade

growth remained signiHcantly below its high pre-crisis average: its

growth slowed to a post-crisis annual average of 4.7 percent

compared to 11.3 percent during 2002-08 (Figures 5A and 5B).

)e importance of arm’s-length trade. Just over half (about 57

percent) of total U.S. trade is conducted at arm’s-length between

unrelated Hrms. <e share of arm’s-length trade is much lower for

U.S. imports (50 percent) than exports (70 percent), for U.S.

trade in capital goods (50 percent) than Hnal goods (60 percent),

and for U.S. trade with advanced economies (51 percent) than

with EMDEs (64 percent; Figure 5C). In general, higher per

capita income in a trading partner is associated with a lower share

of arm’s-length trade. <e share of intra-Hrm trade of total U.S.

trade remained broadly stable from 2002 until the global Hnancial

crisis but subsequently increased, especially for U.S. trade with

EMDEs.

Special Focus: Arm’s-Length Trade: A

Source of Post-Crisis Trade Weakness

7

July 2017

Country composition of arm’s-length and intra-$rm trade.

Geographical proximity and the North American Free Trade

Agreement (NAFTA) favor intra-Hrm transactions with two of

the United States’ largest trading partners, Mexico and Canada

(Figure 6A). Canada is the single largest destination of U.S. intra-

Hrm exports (almost one-third of total U.S. intra-Hrm exports)

and imports, followed by Mexico (about one-Hfth of total U.S.

intra-Hrm exports). More than half of U.S. imports from its main

non-NAFTA trading partners are also intra-Hrm transactions

(with the exception of China and Italy).

Factors contributing to arm’s-length trade weakness:

composition. First, compared to intra-Hrm exports, a greater

share of arm’s-length exports is shipped to EMDEs, especially

BRICS economies. Just as the rapid pre-crisis growth in EMDEs

lifted arm’s-length export growth, their sharp post-crisis growth

slowdown dampened it. Second, arm’s-length exports and

imports include a greater share of sectors that grew rapidly pre-

crisis but have struggled post-crisis (textiles and apparel,

machinery), as well as sectors that beneHted from the pre-crisis

commodity price boom (mining, metals, energy). <ese

compositional di?erences are the main reason behind the steeper-

than-average slowdown in arm’s-length trade growth. Had the

composition of arm’s-length trade matched that of average

exports and imports, arm’s-length export and import growth

would have slowed by 1.2 and 1.8 percentage points less,

respectively, between the pre- and post-crisis periods (Figures 6B

and 6C).

Other contributing factors. Firms engaged in outsourcing tend

to be smaller, less productive, less eNcient in inventory

management, and have more restricted access to Hnance than

Hrms integrated vertically. <ese Hrms are also less resilient to

severe demand and Hnancing shocks. Heightened Hnancial risks

and policy uncertainty may also have discouraged arm’s-length

transactions. Such factors may have accelerated the exit of Hrms

trading at arm’s-length during the global Hnancial crisis and its

aftermath.

FIGURE 6B Contribution to deviation from average

U.S. export growth, change 2002-08 to 2010-14

FIGURE 6A Main destinations and sources of U.S.

exports and imports

FIGURE 6C Contribution to deviation from average U.S. export growth, change 2002-08 to 2010-14

Sources: U.S. Census Bureau, World Bank.

A. Residual to 100 percent is the share of all other countries in total U.S. arm’s-

length or intra-firm exports or imports. B. C. “Country composition” measures the

extent to which growth in arm’s-length or related-party exports exceeded that of

total exports due to a higher initial share of fast-growing countries. It is defined as

the difference between hypothetical arm’s-length export growth if arm’s-length

exports to each country had grown at the same rate as total exports to each

country, and actual total export growth. “Sectoral composition” measures the

extent to which growth in arm’s-length or intra-firm exports exceeded that of total

exports because of a higher initial share of fast-growing sectors. It is defined as

the difference between hypothetical arm’s-length (intra-firm) export growth had

arm’s-length (intra-firm) sectoral exports grown at the same rate as total sectoral

exports, and actual total export growth. “Other” includes the contribution of faster-

than-average bilateral arm’s-length (intra-firm) trade growth within each sector.

8

July 2017

Recent Prospects Group Publications Global Economic Prospects - June 2017

Commodity Markets Outlook - April 2017

Global Economic Prospects - January 2017: Weak Investment in Uncertain Times

Commodity Markets Outlook - January 2017: Investment Weakness in Commodity Exporters

Recent World Bank Working Papers Arm's-Length Trade: A Source of Post-Crisis Trade Weakness

Cyclicality of Fiscal Policy in Sub-Saharan Africa: Magnitude and Evolution

On the Predictability of Growth

Tax Administration Practices and Firms’ Perceptions of Corruption: Evidence from Europe and Central Asia

Approximating Income Distribution Dynamics Using Aggregate Data

Services Trade and Global Value Chains

Exchange Rate and Inflation Dynamics in Zambia

Taxation without Representation? Experimental Evidence from Ghana and Uganda on Citizen Action toward Taxes, Oil, and Aid

Pension Funds, Capital Markets, and the Power of Diversification

Evidence for a Presource Curse? Oil Discoveries, Elevated Expectations, and Growth Disappointments

Productivity in the Non-Oil Sector in Nigeria: Firm-Level Evidence

Recent World Bank Reports World Development Report 2017: Governance and the Law

Doing Business 2017: Equal Opportunity for All

TABLE A: Major Data Releases (Percent change, y/y)

(Percent change y/y)

Recent releases: July 5, 2017 - July 24, 2017 Upcoming releases: July 25, 2017 - August 20, 2017

Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous

Brazil 7/7/17 CPI JUN 3.0 % 3.5 % 3.6 % Mexico 7/25/17 Retail sales MAY 1.4%

Mexico 7/7/17 CPI JUN 6.3 % 6.5 % 6.2 % United Kingdom 7/26/17 GDP Q2 2.0 %

China 7/9/17 CPI JUN 1.5 % 1.5 % 1.5 % Korea, Rep. of 7/26/17 GDP Q2 2.4 %

Turkey 7/10/17 IP MAY 3.5 % 6.4 % 6.7 % Austria 7/28/17 GDP Q2 2.3 %

Poland 7/11/17 CPI JUN 1.5 % 1.5 % 1.9 % France 7/28/17 GDP Q2 0.9 %

Euro Area 7/12/17 IP MAY 4.0 % 2.9 % 1.2 % Spain 7/28/17 GDP Q2 3.0 %

India 7/12/17 IP MAY 1.7 % 2.9 % 2.8 % Sweden 7/28/17 GDP Q2 2.2 %

Mexico 7/12/17 IP MAY 1.0 % 1.5 % -4.2 % United States 7/28/17 GDP Q2 2.1 %

Germany 7/13/17 CPI JUN 1.6 % 1.6 % 1.5 % Euro Area 8/1/17 GDP Q2 1.9 %

France 7/13/17 CPI JUN 0.7 % 0.7 % 0.8 % Indonesia 8/6/17 GDP Q2 5.0 %

Italy 7/14/17 CPI JUN 1.2 % 1.2 % 1.4 % Russia 8/11/17 GDP Q2 0.5 %

Ireland 7/14/17 GDP Q1 6.1 % 5.2 % 7.2 % Japan 8/14/17 GDP Q2 1.3 %

United States 7/14/17 IP JUN 2.0% 2.5% 1.4% Germany 8/15/17 GDP Q2 1.7 %

China 7/16/17 GDP Q2 6.9 % 6.8 % 6.9 % Italy 8/16/17 GDP Q2 1.2 %

Euro Area 7/17/17 CPI JUN 1.3 % 1.3 % 1.4 % Hungary 8/16/17 GDP Q2 4.2 %

Russia 7/17/17 IP JUN 3.5 % 4.0 % 5.6 % Czech Republic 8/16/17 GDP Q2 1.5 %

United Kingdom 7/18/17 CPI MAY 2.6 % 2.9 % 2.9 % Netherlands 8/16/17 GDP Q2 3.2 %

South Africa 7/19/17 CPI JUN 5.1 % 5.2 % 5.4 % Poland 8/16/17 GDP Q2 4.0 %

Poland 7/19/17 IP JUN 4.5 % 3.8 % 9.1 % Philippines 8/16/17 GDP Q2 6.4 %

South Africa 7/19/17 Retail sales MAY 1.7 % -0.3 % 2.0 % Malaysia 8/18/17 GDP Q2 5.6 %

Canada 7/21/17 CPI JUN 1.0 % 1.1 % 1.3 % Thailand 8/20/17 GDP Q2 3.3 %

9

July 2017

TABLE B: Activity and Inflation (Percent change y/y, except quarterly data on industrial production, which are percent change q/q, annualized)

1Industrial production is total production (may exclude construction). When data are unavailable, "industrial production, manufacturing" and "industrial production, manufacturing, non-durable manufacturing, petroleum and coal products, crude petroleum products" are used as proxies. 2Median inflation rate for each grouping.

TABLE C: Trade and Finance (Percent change y/y, except quarterly trade data, which are percent change q/q, annualized, and international reserves data, which are percent change over the previous period)

1Total reserves excluding gold are used as proxies when total reserves data are unavailable.

2017 2016 2017

2015 2016 Q2 Q3 Q4 Q1 June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Industrial production, sa 1

World 1.8 2.2 2.3 2.9 5.4 3.8 2.0 1.8 2.4 2.1 2.2 3.3 3.8 3.2 3.5 4.1 3.9 4.3

Advanced economies 0.2 0.2 0.4 1.7 3.9 1.4 -0.2 -0.4 0.6 0.3 0.2 1.9 2.5 1.1 2.2 2.3 2.3 2.9

Emerging market and developing economies 3.5 4.2 4.2 4.1 6.9 6.3 4.3 4.1 4.3 3.9 4.2 4.7 5.0 5.3 4.8 6.0 5.5 5.7

Commodity-exporting EMDEs 0.2 1.3 0.6 3.0 5.3 3.8 1.7 2.1 1.4 1.1 1.4 2.5 3.6 3.3 2.7 3.6 4.9 5.4

Other EMDEs 5.0 5.3 5.6 4.4 7.6 6.7 5.4 4.8 5.4 4.9 5.2 5.6 5.6 6.1 5.6 6.6 5.6 5.8

East Asia and Pacific 5.8 5.8 7.2 5.6 5.9 7.3 6.1 6.1 6.3 5.5 5.6 5.9 5.9 6.1 6.1 7.3 6.3 6.2

East Asia excl. China 3.5 4.5 8.6 3.5 3.1 4.5 6.8 6.8 5.9 2.2 2.5 4.3 6.1 4.7 4.7 5.3 4.7 3.8

Europe and Central Asia 1.5 2.0 0.4 -2.0 9.8 5.9 1.9 0.2 1.7 0.6 1.5 2.8 2.7 4.4 1.4 4.4 4.4 6.6

Latin America and the Caribbean -3.1 -2.6 -0.2 1.1 0.2 2.3 -2.3 -2.0 -2.7 -1.6 -2.4 -0.3 1.7 0.9 1.4 0.2 1.2 2.1

Middle East and North Africa 2.8 - -2.9 8.3 - - 2.9 3.7 3.1 4.3 6.5 - - - - - - -

South Asia 3.5 5.7 4.8 2.0 4.0 2.7 6.7 5.9 5.4 4.5 5.1 5.7 3.0 3.8 1.5 4.9 3.9 3.1

Sub-Saharan Africa 0.1 0.8 6.2 -6.3 -3.0 -3.0 4.4 1.5 0.1 0.0 -1.1 0.7 -0.8 0.1 -2.7 -2.2 -0.1 -1.6

Inflation, sa 2

World 1.4 1.3 1.6 1.3 1.6 2.4 1.6 1.5 1.3 1.4 1.5 1.6 1.8 2.3 2.5 2.5 2.2 2.1

Advanced economies 0.1 0.4 0.2 0.4 0.8 1.6 0.4 0.4 0.4 0.5 0.6 0.7 1.1 1.5 1.8 1.6 1.9 1.5

Emerging market and developing economies 2.5 2.3 2.9 2.8 2.5 3.4 2.6 2.8 2.7 2.9 2.4 2.4 2.7 3.1 3.4 3.5 3.5 3.4

Commodity-exporting EMDE 3.9 3.5 3.6 3.2 3.2 3.5 3.5 3.5 3.2 3.1 2.9 2.9 3.1 3.4 3.5 3.6 3.7 3.6

Other EMDE 1.0 1.1 2.0 1.7 1.7 3.1 1.8 1.8 1.5 1.6 1.5 1.6 1.8 2.6 3.3 3.5 3.2 3.1

East Asia and Pacific 1.2 1.6 1.9 2.1 2.3 3.1 1.8 2.0 1.8 2.2 2.0 2.1 2.4 3.0 3.5 3.5 3.2 3.1

Europe and Central Asia 1.9 0.4 0.3 0.5 1.0 2.4 0.4 1.2 0.5 0.5 0.9 0.9 1.6 2.3 2.5 2.7 2.6 2.3

Latin America and the Caribbean 2.7 2.4 3.5 3.0 3.2 3.4 3.3 2.9 3.1 3.1 3.0 3.2 3.2 3.1 3.3 3.2 3.5 3.1

Middle East and North Africa 1.9 2.2 2.3 2.3 1.9 2.5 2.4 2.3 2.1 2.5 1.9 2.0 1.8 2.2 2.5 2.9 2.0 2.0

South Asia 4.5 4.9 5.3 5.3 3.9 4.3 5.6 5.7 5.2 5.0 4.2 3.7 3.7 3.7 4.2 5.0 4.8 5.0

Sub-Saharan Africa 3.6 5.3 5.0 5.7 5.5 6.7 5.4 4.9 5.9 5.8 5.8 4.9 6.5 6.7 6.7 6.8 6.7 6.5

2016

2017 2016 2017

2015 2016 Q2 Q3 Q4 Q1 June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Exports, nominal, US$, sa

World -11.5 -3.0 15.0 -0.3 7.9 20.4 -4.2 -6.8 2.8 -0.8 -3.1 5.0 4.0 11.0 7.6 12.8 3.7 10.6

Advanced economies -11.3 -0.8 15.8 -0.4 4.4 19.2 -2.3 -5.5 5.5 1.4 -1.5 6.3 5.6 10.1 8.0 10.4 0.7 9.3

Emerging market and developing economies -12.0 -6.5 13.4 0.0 14.6 22.5 -7.3 -9.1 -1.7 -4.4 -5.6 3.0 1.6 12.7 6.9 17.5 9.4 13.0

Commodity-exporting EMDEs -24.2 -9.3 16.8 5.2 27.5 47.5 -13.6 -15.1 -1.9 -1.7 -5.6 7.7 7.7 26.7 19.5 24.0 13.6 21.0

Other EMDEs -3.7 -4.6 12.2 -1.8 10.0 14.2 -3.4 -5.6 -0.9 -4.9 -5.0 1.8 -0.5 7.8 2.5 15.2 7.8 10.1

East Asia and Pacific -3.5 -6.1 12.8 -1.9 11.0 15.8 -5.7 -6.8 -1.6 -6.9 -5.9 1.8 -2.2 9.1 2.5 16.2 9.7 11.7

Europe and Central Asia -20.7 -6.1 21.8 -1.8 20.4 36.4 -4.2 -8.8 0.7 -1.1 -3.5 6.5 7.6 22.5 12.4 20.7 5.7 17.9

Latin America and the Caribbean -11.9 -2.4 9.7 6.7 13.3 31.3 -8.0 -7.5 2.6 2.9 -4.5 10.0 10.9 14.7 12.5 17.4 9.7 11.3

Middle East and North Africa -27.1 - - - - - - - - - - - - - - - - -

South Asia -4.8 1.6 3.7 -17.8 32.3 6.1 5.0 -4.1 5.9 -3.2 10.6 3.3 0.2 2.9 -0.1 11.3 8.0 -1.0

Sub-Saharan Africa -26.9 -14.7 21.6 -3.8 31.1 47.3 -18.6 -22.5 -13.0 -2.7 -9.5 1.0 3.5 22.6 25.7 19.8 - -

Imports, nominal, US$, sa

World -6.8 -5.2 19.2 -19.2 21.7 20.6 -4.4 -10.9 -6.8 -5.6 -9.6 3.7 -1.6 11.5 5.3 10.4 -6.2 25.7

Advanced economies -12.5 -3.4 9.2 -2.7 2.3 21.3 -4.6 -8.2 1.7 -1.9 -4.9 2.5 1.3 9.5 3.2 9.0 1.7 9.6

Emerging market and developing economies -3.3 -6.2 25.4 -27.8 35.1 20.2 -4.3 -12.4 -11.5 -7.8 -12.1 4.4 -3.2 12.7 6.6 11.3 -10.4 35.4

Commodity-exporting EMDEs -0.9 -7.0 28.1 -34.6 40.2 14.2 -3.9 -12.7 -15.4 -9.8 -14.9 4.1 -5.2 12.0 2.3 8.9 -15.4 -

Other EMDEs -11.5 -3.3 16.3 1.6 19.3 42.6 -5.9 -11.3 3.5 -0.3 -0.3 5.3 3.8 15.3 22.1 19.8 11.1 18.1

East Asia and Pacific -13.1 -3.6 20.8 5.2 21.3 51.9 -6.9 -10.8 5.7 0.0 -0.7 6.0 5.6 17.1 33.5 20.7 12.6 18.0

Europe and Central Asia -20.7 -1.4 12.4 -3.4 7.2 48.7 0.2 -9.7 8.9 1.4 0.8 5.8 6.3 21.9 8.3 14.5 5.8 22.7

Latin America and the Caribbean -9.8 -7.4 6.2 3.0 5.2 26.9 -9.1 -15.5 1.5 -3.3 -8.4 1.6 3.9 11.1 5.2 13.6 -1.4 14.3

Middle East and North Africa 1.5 - - - - - - - - - - - - - - - - -

South Asia -13.2 -5.3 6.9 7.3 58.9 33.9 -6.5 -14.9 -9.4 0.4 9.4 11.9 2.7 14.8 21.5 40.4 41.3 29.4

Sub-Saharan Africa -7.6 - - - - - - - - - - - - - - - - -

International reserves, US$ 1

World -5.9 -1.1 0.8 0.4 -3.3 1.7 0.8 0.3 -0.1 0.2 -1.1 -1.7 -0.6 0.7 0.3 0.7 0.8 0.8

Advanced economies 0.6 4.4 1.7 1.4 -2.5 3.4 1.4 0.5 0.1 0.9 -0.7 -1.5 -0.2 1.5 0.4 1.5 1.2 1.0

Emerging market and developing economies -9.9 -4.8 0.2 -0.2 -3.9 0.5 0.5 0.2 -0.2 -0.2 -1.4 -1.8 -0.9 0.1 0.2 0.1 0.5 0.7

Commodity-exporting EMDEs -11.1 - -0.7 -0.2 - - 0.0 0.4 -0.5 -0.1 -1.7 -1.1 - - - - - -

Other EMDEs -9.1 -5.7 0.7 -0.3 -4.5 0.5 0.7 0.1 -0.1 -0.2 -1.2 -2.1 -1.2 0.0 0.2 0.3 0.6 0.8

East Asia and Pacific -11.3 -7.3 0.3 -0.7 -4.9 0.4 0.9 0.0 -0.3 -0.4 -1.3 -2.4 -1.2 -0.1 0.4 0.1 0.8 0.8

Europe and Central Asia -6.3 4.4 2.7 1.2 -3.8 2.7 1.4 0.5 0.5 0.3 -0.8 -1.7 -1.4 2.1 0.4 0.2 0.0 1.1

Latin America and the Caribbean -5.3 1.1 0.7 1.6 -0.9 0.8 0.1 1.6 0.0 -0.1 -0.6 -0.6 0.1 0.5 0.4 0.0 0.9 0.1

Middle East and North Africa -17.1 - -2.6 -2.0 - - -1.3 -0.7 -0.8 -0.5 -2.6 - - - - - - -

South Asia 11.6 3.5 2.0 3.3 -2.8 1.7 0.8 1.4 0.6 1.4 -1.0 -0.9 -0.9 -0.1 0.5 1.3 0.6 1.8

Sub-Saharan Africa -12.0 - -1.9 - - - - - - - - - - - - - - -

2016

10

July 2017

© 2017 International Bank for Reconstruction and Development / <e World Bank

1818 H Street NW, Washington, DC 20433

Telephone: 202-473-1000; Internet: www.worldbank.org

Some rights reserved

<is work is a product of the sta? of <e World Bank with external contributions. <e Hndings, interpretations, and conclusions expressed in this work do not necessarily reDect the views of <e World Bank, its

Board of Executive Directors, or the governments they represent. <e maps were produced by the Map Design Unit of <e World Bank. <e World Bank does not guarantee the accuracy of the data included in this

work. <e boundaries, colors, denominations, and other information shown on these maps do not imply, on the part of <e World Bank Group, any judgment on the legal status of any territory, or any endorse-

ment or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of <e World Bank, all of which are speciHcally reserved.

TABLE D: Financial Markets (Percent change y/y, except quarterly trade data, which are percent change q/q, annualized, and international reserves data, which are percent change over the previous period )

2016 2017 2016 MRV 1

2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June

Interest rates and LIBOR (percent)

U.S. federal funds effective 0.13 0.40 0.39 0.45 0.70 0.95 0.39 0.40 0.40 0.41 0.41 0.55 0.66 0.66 0.79 0.91 0.90 1.04 1.16

ECB repo 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

US$ LIBOR 3-months 0.32 0.74 0.79 0.92 1.07 1.20 0.70 0.81 0.85 0.88 0.91 0.98 1.03 1.04 1.13 1.16 1.19 1.26 1.30

EURIBOR 3-months -0.02 -0.26 -0.30 -0.31 -0.33 -0.33 -0.29 -0.30 -0.30 -0.31 -0.31 -0.32 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33

U.S. 10-year Treasury yield 2.12 1.84 1.56 2.12 2.44 2.25 1.48 1.56 1.63 1.74 2.12 2.50 2.44 2.42 2.47 2.29 2.29 2.18 2.32

German Bund, 10 year 0.54 0.14 -0.07 0.18 0.35 0.30 -0.09 -0.07 -0.05 0.03 0.22 0.30 0.34 0.32 0.39 0.25 0.36 0.28 0.58

Spreads (basis points)

JP Morgan Emerging Markets 415 410 372 369 340 325 387 367 361 357 380 370 354 338 329 331 320 325 326

Asia 224 221 197 197 175 169 210 190 191 192 201 198 185 173 166 173 167 166 164

Europe 348 302 282 283 261 242 290 282 273 274 294 282 272 258 253 250 237 240 243

Latin America and the Caribbean 540 537 477 475 445 427 496 473 463 453 491 481 463 442 431 431 420 430 430

Middle East 456 517 508 467 396 362 540 492 493 487 475 438 416 396 377 350 353 382 384

Africa 415 518 461 436 389 386 494 448 440 441 444 422 401 387 380 400 376 383 398

Stock indexes (end of period)

Global (MSCI) 399 424 418 424 449 465 414 417 418 413 413 424 433 445 449 455 464 465 471

Advanced economies ($ index) 1663 1761 1726 1761 1854 1916 1713 1720 1726 1697 1712 1761 1792 1839 1854 1878 1912 1916 1937

United States (S&P 500) 2044 2258 2168 2258 2363 2423 2170 2171 2168 2139 2199 2258 2279 2364 2363 2384 2421 2423 2448

Europe (S&P Euro 350) 1474 1475 1388 1475 1547 1534 1376 1390 1388 1377 1388 1475 1463 1501 1547 1564 1576 1534 1562

Japan (Nikkei 225) 18817 19302 16450 19302 18909 20033 16556 16887 16450 17050 18604 19302 19035 19342 18909 19197 19836 20033 20138

Emerging market and developing economies (MSCI)

794 861 903 861 958 1011 879 894 903 908 863 861 909 936 958 978 1005 1011 1041

EM Asia 404 419 448 419 474 512 431 442 448 444 426 419 443 459 474 484 505 512 525

EM Europe 244 295 273 295 301 304 264 269 273 274 273 295 302 296 301 313 308 304 312

EM Europe and Middle East 211 248 233 248 252 251 227 232 233 232 230 248 253 249 252 259 255 251 258

EM Latin America & Caribbean 1830 2341 2381 2341 2611 2544 2359 2402 2381 2608 2330 2341 2516 2600 2611 2601 2532 2544 2688

Exchange rates (LCU / USD)

Advanced economies

Euro Area 0.90 0.90 0.90 0.93 0.94 0.91 0.90 0.89 0.89 0.91 0.93 0.95 0.94 0.94 0.94 0.93 0.91 0.89 0.87

Japan 121.00 108.80 102.36 109.63 113.63 111.10 104.09 101.31 101.69 103.72 108.90 116.28 115.03 112.96 112.91 110.02 112.36 110.91 113.37

Emerging market and developing economies

Brazil 3.33 3.49 3.25 3.28 3.14 3.21 3.28 3.21 3.25 3.18 3.33 3.35 3.20 3.10 3.13 3.14 3.20 3.30 3.21

China 6.29 6.65 6.67 6.84 6.89 6.86 6.68 6.65 6.67 6.74 6.85 6.92 6.89 6.87 6.90 6.89 6.88 6.81 6.79

Egypt 7.70 10.12 8.87 14.71 17.82 18.10 8.87 8.87 8.88 9.25 16.34 18.56 18.68 17.01 17.76 18.09 18.10 18.11 17.95

India 64.14 67.19 66.94 67.39 66.97 64.48 67.18 66.91 66.74 66.73 67.60 67.86 68.06 67.01 65.83 64.52 64.46 64.45 64.54

Russia 61.34 67.06 64.61 62.95 58.67 57.17 64.43 64.93 64.48 62.57 64.25 62.03 59.76 58.42 57.83 56.53 56.88 58.10 59.97

South Africa 12.77 14.71 14.07 13.92 13.24 13.21 14.40 13.79 14.01 13.92 13.96 13.88 13.60 13.17 12.95 13.46 13.25 12.91 13.25

Memo: U.S. nominal effective rate (index)

114.7 119.7 118.4 122.5 123.4 120.7 118.9 117.8 118.6 119.7 122.9 124.9 124.8 123.0 122.5 121.6 121.0 119.4 117.7

1 MRV = most recent value.

2017

TABLE E: Commodity Prices 2016 2017 2016 2017 MRV 1

2015 2016 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June

Energy 2

65 55 57 64 68 64 57 58 58 64 59 68 69 69 65 67 64 60 60

Non-energy 2

82 80 82 83 86 83 82 82 81 81 83 84 85 87 85 83 83 82 82

Agriculture 2

89 89 91 90 91 88 92 91 90 90 90 89 91 91 89 88 89 88 88

Metals and minerals 2

68 64 64 71 78 74 64 65 64 65 73 75 76 79 79 75 73 72 74

Memo items:

Crude oil, average ($/bbl) 51 43 45 49 53 50 44 45 45 49 45 53 54 54 51 52 50 46 47

Gold ($/toz) 1161 1249 1334 1221 1219 1258 1337 1340 1327 1267 1238 1157 1192 1234 1231 1267 1246 1260 1260

Baltic Dry Index 711 676 736 994 938 1023 707 675 826 870 1080 1031 913 760 1142 1229 979 861 859

Source: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg

1 MRV = most recent value.

2 Indexes, 2010 = 100.