For more information, visit http://www.worldbank.org/prospects November 30, 2018 Taking Stock U.S. investment growth was revised up in Q3; trade deficit widened and core PCE inflation edged down in October. The second reading of U.S. GDP growth in 18Q3 came in at 3.5 percent (q/q, saar), unchanged from its initial estimate (Figure 1). Significant upward revisions to nonresidential fixed investment and stock-building were offset by a sharper drop in net exports. The U.S. goods trade deficit continued to widen in October, reaching $77.2 billion—up from $76.3 billion in September. Imports rose 0.1 percent (m/m) in October, while exports fell 0.6 percent. The U.S. core personal consumer expenditure (PCE) price index—which excludes food and energy—rose 1.8 percent (y/y), down slightly from 1.9 percent in September. Meanwhile, the headline PCE price index increased 2 percent (y/y) in October, the same pace as in September. Euro Area inflation eased in November; economic sentiment continued to decline. The preliminary estimate of Euro Area headline inflation for November came in at 2 percent (y/y), down from a six-year high of 2.2 percent in October (Figure 2), mainly reflecting a slower rise in energy and food prices. Core inflation—which excludes energy and food, alcohol, and tobacco—fell marginally, from 1.1 percent in October to 1 percent (y/y) in November. Separately, the Euro Area’s economic confidence index fell for the eleventh consecutive month in November, from 109.7 in October to 109.5 in November, dragged down by declining consumer sentiment. The November reading was the lowest since May 2017. Japan’s retail sales rose sharply in October; core inflation held steady. Japan’s retail sales rose 3.5 percent (y/y) in October, well above market expectations and markedly up from 2.2 percent in September, as consumer spending on fuel, cars, and medicine and cosmetics accelerated. Separately, Japan’s core consumer price index (CPI)—which excludes the cost of fresh food—rose 0.1 percent (y/y) in October, in line with expectations and at the same pace as in September. China’s official PMIs continued to deteriorate in November. China’s official manufacturing purchasing managers’ index (PMI), which focuses on large-sized and state-owned companies, edged down from 50.2 in October to 50 in November (the 50-point mark indicates no growth or contraction in activity), despite increased government spending and export subsidies. It was the lowest reading since July 2016. The non-manufacturing PMI also fell slightly from 53.9 to 53.4. U.S. crude oil price traded below $50 a barrel. West Texas Intermediate (WTI), the U.S. benchmark crude oil, fell briefly below $50 a barrel early Thursday for the first time since October 2017 amid higher-than-expected production. It rebounded later as the Russian government signaled the possibility of production cuts in tandem with Organization of the Petroleum Exporting Countries. WTI is down more than 20 percent over the past month. Figure 1. Second reading of U.S. GDP growth in 18Q3 Figure 2. Euro Area core-inflation remained subdued in remained unchanged at 3.5 percent. November. U.S. real GDP growth. Euro Area consumer price inflation. Source: U.S. Department of Commerce. Source: Eurostat. Produced by DECPG. Number 411 | November 30, 2018 Major Data Releases (Percent change y-o-y) (Percent change y-o-y) Recent releases: Friday, 23 November - Thursday, 29 November 2018 Upcoming releases: Friday, 30 November - Thursday, 6 December 2018 Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous Germany 11/23/18 GDP Q3 1.1% 1.1% 2.0% Brazil 11/30/18 GDP Q3 0.9% Malaysia 11/23/18 GDP Q3 4.4% 4.6% 4.5% Czech Republic 11/30/18 GDP Q3 2.4% Mexico 11/23/18 GDP Q3 2.5% 2.6% 2.6% India 11/30/18 GDP Q3 8.2% United States 11/28/18 GDP Q3 3.5% 3.5% 4.2% South Africa 12/4/18 GDP Q3 0.4% Sweden 11/29/18 GDP Q3 1.6% 2.3% 2.7% Australia 12/5/18 GDP Q3 3.4% Activity and Inflation (Percent change y-o-y, except quarterly data on industrial production, which are percent change q-o-q, annualized) 2017 2018 2017 2018 2016 2017 Q4 Q1 Q2 Q3 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 1 Industrial Production, sa World 2.1 4.0 5.5 3.7 2.7 1.8 4.1 4.4 4.6 4.6 4.7 4.2 4.4 3.9 3.5 3.7 3.4 3.2 Advanced Economies 0.0 2.8 5.3 -0.3 3.1 0.7 3.1 3.5 3.6 2.7 3.0 3.2 2.5 2.7 2.5 2.1 2.4 2.0 Emerging Market and Developing Economies 4.2 5.3 5.7 7.8 2.5 2.9 5.1 5.4 5.5 6.6 6.4 5.3 6.3 5.1 4.6 5.3 4.5 4.4 Commodity-exporting EMDE 0.5 2.6 1.2 5.2 -2.6 4.9 3.0 2.5 2.2 3.8 3.2 3.2 4.9 0.8 0.2 2.6 2.1 1.6 Other EMDE 5.3 6.0 7.0 8.5 3.7 2.5 5.7 6.2 6.5 7.3 7.3 5.9 6.6 6.2 5.8 6.0 5.1 5.1 East Asia and Pacific 5.9 6.1 5.5 9.9 3.8 3.0 5.8 5.7 5.8 7.2 7.0 5.7 7.0 6.4 4.8 5.7 5.6 5.2 East Asia excl. China 4.6 3.7 0.1 14.3 -8.2 5.6 2.7 3.0 2.9 7.5 6.0 3.7 7.3 3.7 -2.4 3.7 2.4 1.8 Europe and Central Asia 3.4 5.9 6.0 6.8 1.6 2.4 6.0 5.7 6.4 7.8 7.5 5.9 5.8 5.3 4.3 5.7 3.7 3.1 Latin America and Caribbean -2.2 0.8 2.8 2.8 -1.5 3.3 1.7 1.6 2.1 1.5 1.8 2.9 4.4 -1.3 2.9 2.2 1.9 1.4 Middle East and North Africa -1.1 5.9 2.9 -8.8 3.9 8.5 6.1 7.2 8.7 2.1 2.7 4.5 2.0 1.4 5.1 3.5 -4.2 5.1 South Asia 5.3 4.7 12.1 4.8 -2.1 2.1 3.7 8.9 7.6 8.1 7.3 5.5 5.6 4.5 6.3 5.7 2.1 4.6 Sub-Saharan Africa 1.2 0.1 7.0 -7.4 -0.2 7.5 2.1 2.0 3.0 1.4 0.7 0.9 -1.5 1.3 1.6 2.0 1.1 1.6 Inflation, sa 2 World 1.4 2.2 2.3 2.2 2.3 2.5 2.3 2.4 2.3 2.2 2.3 2.3 2.3 2.1 2.4 2.4 2.4 2.4 Advanced Economies 0.3 1.4 1.4 1.3 1.8 2.1 1.4 1.5 1.5 1.5 1.4 1.3 1.5 1.8 2.1 2.1 2.1 2.2 Emerging Market and Developing Economies 2.6 3.1 2.8 2.9 2.7 3.0 3.0 3.0 3.0 2.9 2.9 2.7 2.6 2.8 2.8 3.0 3.0 3.1 Commodity-exporting EMDE 3.4 3.3 2.8 2.9 2.7 2.9 3.2 3.0 3.1 2.9 2.9 2.7 2.5 2.7 2.5 2.5 2.6 2.9 Other EMDE 1.3 2.9 2.8 2.9 2.9 3.4 2.8 2.9 3.0 2.9 3.1 2.8 2.8 2.8 3.0 3.4 3.4 3.6 East Asia and Pacific 2.0 2.3 2.5 2.5 3.2 3.6 2.7 2.6 2.5 2.6 2.7 2.5 2.6 3.0 3.0 3.2 3.2 3.0 Europe and Central Asia 0.4 2.4 2.8 2.7 2.2 2.8 2.6 2.8 2.8 2.5 2.7 2.5 2.3 2.1 2.3 2.4 3.0 2.4 Latin America and Caribbean 2.4 2.6 2.5 2.6 2.4 3.2 2.3 2.5 2.6 2.6 2.5 2.7 2.7 2.1 2.5 2.6 3.1 3.3 Middle East and North Africa 2.1 1.6 2.2 2.8 2.7 2.2 2.1 1.7 1.9 2.9 2.9 2.6 2.6 2.8 2.8 2.7 2.3 2.1 South Asia 4.4 3.8 3.7 4.2 4.4 4.7 3.6 3.8 4.3 4.4 4.1 3.7 4.1 4.1 4.5 4.5 4.6 5.2 Sub-Saharan Africa 5.2 5.5 4.5 3.8 3.4 3.1 5.1 4.5 4.7 4.4 3.7 3.7 3.5 3.3 3.3 3.1 2.9 3.3 Sources: World Bank, Haver Analytics, and IMF International Financial Statistics. 1 Industrial production is total production (may exclude construction). When data are unavailable, "industrial production, manufacturing" is used as a proxy. 2 Median inflation rate for each grouping. 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) 2017 2018 2017 2018 2016 2017 Q4 Q1 Q2 Q3 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Exports, Nominal, US$, sa World -2.9 10.4 14.3 24.5 -3.5 -2.2 12.8 13.7 12.0 17.4 17.4 9.8 16.7 10.8 10.1 12.0 6.9 4.3 Advanced Economies -0.9 9.7 11.4 22.9 -4.8 -5.1 12.4 13.7 12.0 18.3 13.0 11.9 17.2 9.5 9.4 10.4 5.1 1.1 Emerging Market and Developing Economies -6.2 11.7 19.8 27.4 -0.7 3.6 13.4 13.6 11.9 15.9 25.6 6.2 16.0 13.2 11.4 15.1 10.3 10.5 Commodity-exporting EMDE -8.2 17.5 24.3 30.8 -0.7 8.4 20.7 15.5 13.6 20.4 15.3 12.9 23.8 15.5 16.5 23.4 13.5 8.7 Other EMDE -4.5 9.5 17.9 26.1 -1.0 1.9 10.5 12.9 11.3 14.0 30.0 3.6 12.8 12.2 9.3 11.9 9.0 11.2 East Asia and Pacific -6.1 9.9 15.3 27.9 0.2 2.5 10.2 12.9 10.8 13.9 33.0 0.9 12.1 11.8 10.3 12.4 9.0 11.3 Europe and Central Asia -6.1 16.5 29.5 38.2 -0.9 1.6 22.3 19.5 16.2 26.4 20.8 14.9 27.5 19.9 14.0 23.6 13.4 11.3 Latin America and Caribbean -2.5 11.9 14.8 21.0 -6.2 9.3 15.8 9.3 8.7 12.0 11.7 10.4 13.8 7.0 6.4 12.6 9.6 5.8 Middle East and North Africa - - - - - - - - - - - - - - - - - - South Asia 0.6 5.6 24.9 6.0 6.2 20.1 4.0 12.2 11.6 7.3 10.1 5.4 8.9 20.1 4.8 14.3 13.1 14.6 Sub-Saharan Africa -8.4 14.8 21.9 27.0 -7.2 - 15.6 14.4 9.8 12.2 16.3 10.9 18.2 14.2 17.1 - - - Imports, Nominal, US$, sa World -5.3 12.2 31.7 16.5 5.1 0.4 18.3 13.2 19.5 16.3 21.3 9.1 25.2 4.4 10.1 12.6 2.2 24.7 Advanced Economies -3.4 9.1 17.4 22.9 -3.4 -4.5 14.7 14.1 13.8 18.7 15.3 12.1 18.5 10.0 9.2 11.9 6.8 3.7 Emerging Market and Developing Economies -6.4 13.9 40.0 13.3 9.9 2.9 20.2 12.8 22.6 15.0 24.6 7.4 28.8 1.7 10.6 12.9 -0.3 37.4 Commodity-exporting EMDE -7.3 13.2 48.2 4.0 16.8 2.5 21.2 11.3 25.8 10.0 29.1 6.0 32.3 -2.1 10.2 11.5 -4.0 47.9 Other EMDE -3.0 16.4 15.4 50.1 -9.6 3.7 17.0 18.0 12.5 32.5 11.2 12.2 17.9 17.0 11.7 18.0 12.3 8.7 East Asia and Pacific -3.7 17.5 12.6 67.7 -12.7 11.8 18.3 18.7 9.6 37.8 9.3 12.0 22.0 20.9 11.7 21.3 16.7 12.0 Europe and Central Asia -1.2 18.7 17.0 38.4 -20.2 -20.0 21.5 23.8 23.4 30.3 21.9 17.5 19.1 9.9 7.6 6.2 -1.3 -2.2 Latin America and Caribbean -7.3 8.3 17.0 24.7 6.0 10.8 16.4 9.1 6.8 13.9 14.3 4.2 21.3 12.7 9.6 23.4 13.9 6.4 Middle East and North Africa - - - - - - - - - - - - - - - - - - South Asia -5.4 22.7 33.6 22.7 10.5 3.8 11.2 20.6 19.1 24.4 11.8 7.9 4.3 16.0 20.7 23.6 20.0 8.3 Sub-Saharan Africa -12.6 4.7 29.1 - - - 9.2 4.3 15.2 - - - - - - - - - International Reserves, US$ 1 World -2.0 7.2 1.2 1.4 -1.2 -0.6 0.0 0.5 0.7 1.4 -0.5 0.5 -0.5 -0.5 -0.2 0.0 -0.1 -0.5 Advanced Economies 3.2 10.0 1.1 1.3 -0.8 0.0 -0.3 0.7 0.8 1.3 -0.5 0.5 -1.0 -0.2 0.4 -0.1 0.1 0.0 Emerging Market and Developing Economies -5.2 5.3 1.3 1.4 -1.5 -1.1 0.2 0.4 0.6 1.4 -0.5 0.5 -0.2 -0.7 -0.6 0.0 -0.3 -0.8 Commodity-exporting EMDE -4.4 3.5 1.2 2.1 -0.5 - 0.6 0.4 0.2 1.4 -0.3 1.0 0.7 -0.4 -0.8 -0.2 0.2 - Other EMDE -5.7 6.1 1.3 1.1 -2.0 -1.1 0.1 0.4 0.8 1.5 -0.6 0.3 -0.6 -0.8 -0.6 0.2 -0.5 -0.8 East Asia and Pacific -7.3 5.6 1.3 0.6 -1.4 -1.0 0.0 0.4 0.9 1.1 -0.8 0.4 -0.5 -0.5 -0.3 0.1 -0.2 -0.8 Europe and Central Asia 3.4 10.2 0.9 4.3 -3.3 -0.9 0.2 1.0 -0.3 3.5 0.2 0.6 -0.5 -1.2 -1.6 0.9 -1.1 -0.8 Latin America and Caribbean 1.4 2.1 -0.9 1.8 -2.0 -0.9 0.5 -0.4 -0.9 1.5 0.0 0.3 -0.3 -0.4 -1.4 0.4 -0.2 -1.1 Middle East and North Africa -10.7 - - - - - - - - - - - - - - - - - South Asia 3.6 11.8 2.3 2.5 -3.8 -2.1 -0.1 0.2 2.1 2.4 -0.2 0.3 -0.2 -2.4 -1.2 -0.7 -0.7 -0.8 Sub-Saharan Africa -2.9 10.4 6.3 8.5 1.0 - 1.3 3.3 1.5 1.7 0.9 5.7 1.1 2.1 -2.0 -0.2 -3.3 - Sources: World Bank, Haver Analytics, and IMF International Financial Statistics. 1 Total reserves excluding gold are used as proxies when total reserves data are unavailable. Produced by DECPG. Number 411 | November 30, 2018 Financial Markets 2017 2018 2017 2018 MRV 1 2016 2017 Q4 Q1 Q2 Q3 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Interest rates and LIBOR (percent) U.S. Fed Funds Effective 0.39 0.97 1.17 1.40 1.67 1.88 1.13 1.27 1.38 1.38 1.45 1.63 1.63 1.77 1.88 1.88 1.90 2.13 2.13 ECB repo 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 US$ LIBOR 3-months 0.74 1.26 1.47 1.93 2.34 2.34 1.43 1.61 1.73 1.87 2.18 2.35 2.34 2.33 2.34 2.32 2.35 2.46 2.74 EURIBOR 3-months -0.26 -0.33 -0.33 -0.33 -0.33 -0.32 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.32 -0.32 -0.32 -0.32 -0.32 -0.32 US 10-yr Treasury yield 1.84 2.33 2.37 2.76 2.92 2.92 2.35 2.41 2.58 2.86 2.84 2.87 2.97 2.91 2.89 2.89 3.00 3.16 3.03 German Bund, 10 yr 0.11 0.37 0.38 0.57 0.42 0.28 0.37 0.36 0.50 0.67 0.54 0.48 0.46 0.33 0.25 0.26 0.35 0.37 0.34 Spreads (basis points) JP Morgan Emerging Markets 410 325 313 309 351 378 320 312 299 309 319 322 353 377 366 383 386 377 419 Asia 221 164 151 157 185 189 153 151 146 156 168 171 186 197 193 185 189 190 206 Europe 302 243 233 221 275 313 244 229 212 217 234 246 277 301 291 329 318 299 333 Latin America & Caribbean 537 429 416 418 455 487 422 419 410 420 423 422 459 486 471 493 498 492 544 Middle East 517 385 400 367 429 464 421 398 359 366 374 385 432 472 451 464 478 453 526 Africa 518 376 350 320 385 440 359 332 305 317 337 342 379 436 420 445 455 445 509 Stock Indices (end of period) Global (MSCI) 424 508 508 500 505 524 505 508 502 517 500 510 509 505 520 524 524 484 481 Advanced Economies ($ Index) 1761 2086 2086 2042 2089 2184 2077 2086 2053 2113 2042 2087 2093 2089 2153 2179 2184 2019 2000 United States (S&P 500) 2258 2668 2668 2590 2718 2923 2648 2668 2631 2711 2590 2648 2729 2718 2816 2902 2923 2712 2744 Europe (S&P Euro 350) 1475 1558 1558 1493 1533 1548 1563 1558 1518 1522 1493 1556 1545 1533 1581 1547 1548 1454 1448 Japan (Nikkei 225) 19302 22530 22530 21203 22305 24021 22730 22530 21650 21794 21203 22488 22095 22305 22554 22788 24021 21920 22177 Emerging Market and Developing Economies (MSCI) 861 1139 1139 1167 1070 1048 1121 1139 1158 1202 1167 1164 1121 1070 1087 1055 1048 954 980 EM Asia 419 577 577 589 552 537 572 577 584 603 589 587 582 552 553 546 537 476 495 EM Europe 295 341 341 350 312 313 330 341 354 370 350 335 316 312 319 294 313 293 294 EM Europe & Middle East 248 275 275 280 253 259 265 275 285 295 280 271 257 253 263 246 259 247 248 EM Latin America & Caribbean 2341 2811 2811 3008 2477 2577 2719 2811 2945 3095 3008 2988 2561 2477 2702 2466 2577 2684 2538 Exchange Rates (LCU / USD) Advanced Economies Euro Area 0.90 0.89 0.85 0.81 0.84 0.86 0.85 0.84 0.82 0.81 0.81 0.81 0.85 0.86 0.86 0.87 0.86 0.87 0.88 Japan 108.80 112.11 112.75 107.94 109.16 111.52 112.81 112.51 109.83 107.96 106.02 107.62 109.72 110.13 111.45 111.03 112.09 112.76 113.77 Emerging and Developing Economies Brazil 3.49 3.19 3.24 3.24 3.61 3.95 3.26 3.28 3.19 3.25 3.28 3.41 3.64 3.79 3.82 3.93 4.10 3.76 3.87 China 6.65 6.76 6.61 6.35 6.38 6.81 6.62 6.59 6.41 6.32 6.32 6.30 6.37 6.47 6.72 6.85 6.86 6.93 6.95 Egypt 10.12 17.85 17.71 17.68 17.80 17.90 17.68 17.81 17.74 17.67 17.63 17.68 17.83 17.88 17.90 17.88 17.92 17.92 17.95 India 67.19 65.11 64.71 64.40 66.99 70.19 64.85 64.20 63.72 64.44 65.06 65.69 67.49 67.79 68.74 69.62 72.22 73.59 70.79 Russia 67.06 58.31 58.47 56.96 62.03 65.64 58.97 58.70 56.93 56.81 57.15 61.01 62.28 62.81 62.83 66.48 67.60 65.86 67.14 South Africa 14.71 13.31 13.62 11.93 12.65 14.09 14.06 13.11 12.15 11.82 11.84 12.10 12.52 13.33 13.39 14.13 14.75 14.54 13.94 Memo: U.S. nominal effective rate (index) 119.7 119.6 117.5 114.1 116.6 120.4 117.7 117.4 114.7 113.7 113.9 113.9 117.0 118.9 119.6 120.6 120.9 121.7 123.4 Sources: World Bank, Bloomberg, Haver Analytics, and J.P. Morgan. 1 MRV = Most Recent Value. Commodity Prices 2017 2018 2017 2018 MRV 1 2016 2017 Q4 Q1 Q2 Q3 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2 Energy 55 68 75 82 82 90 77 78 85 81 81 86 92 91 92 90 96 97 97 Non-energy 2 79 84 84 88 88 89 85 84 87 88 88 90 90 88 84 83 81 82 82 2 Agriculture 87 87 85 88 88 91 85 85 87 88 90 92 92 89 86 85 83 83 83 2 Metals and minerals 64 79 84 88 88 88 84 85 89 89 85 87 88 88 81 79 79 81 77 Memo items: Crude oil, average ($/bbl) 43 53 59 64 64 71 60 61 66 63 64 69 73 72 73 71 75 77 56 Gold ($/toz) 1249 1258 1275 1329 1329 1307 1282 1264 1331 1331 1325 1335 1303 1282 1238 1202 1198 1215 1215 Baltic Dry Index 676 1152 1509 1171 1171 1256 1455 1589 1234 1130 1149 1126 1289 1352 1649 1710 1447 1545 1339 Sources: World Bank, World Bank Commodities Price Data (The Pink Sheet), and Bloomberg. 1 MRV = Most Recent Value. 2 Indexes, 2010 = 100. Produced by DECPG. Number 411 | November 30, 2018