For more information, visit http://www.worldbank.org/prospects October 5, 2018
Taking Stock
U.S. non-farm job growth slowed in September; manufacturing PMI edged down. U.S. non-farm payrolls increased by
134,000 in September, below expectations, while August figures were revised up to 270,000 from 201,000. Labor force
participation rate was stable at 62.7 percent, while the unemployment rate edged down to 3.7 percent in September. Average
hourly earnings rose 2.8 percent (y/y), slightly down from 2.9 percent in August. Separately, the U.S. Institute for Supply
Management (ISM) manufacturing purchasing managers’ index (PMI) fell from 61.3 in August to 59.8 in September; despite
the decline, the reading remains consistent with robust growth (Figure 1; a reading above 50 indicates expansion).
Meanwhile, the ISM services PMI rose to 61.6, its highest level on record, reflecting a pickup in new business orders.
New trade agreement announced. After 13 months of negotiations, Canada, Mexico, and the United States reached a new
trilateral trade deal. Mexico and the United had reached a preliminary accord late August, and Canada joined the other two
countries on September 30th in a trade agreement to be named the U.S.-Mexico-Canada Agreement (USMCA). It is an
update of NAFTA, with higher rules-of-origin requirements for the auto sector, greater U.S. access to the Canadian dairy
market, more stringent labor and intellectual property provisions, and scaled-back dispute settlement rules.
Euro Area composite PMI weakened in September; retail sales fell in August. The final reading of the Euro Area’s
composite PMI for September came in at 54.1, down from August’s 54.5 and below a previous flash estimate of 54.2, but
still pointing to a solid pickup in the pace of economic activity. The manufacturing PMI slowed to 53.2, the weakest since
September 2016 (Figure 1), while the services PMI increased to 54.7, the highest in three months. Separately, Euro Area
retail sales fell 0.2 percent (m/m) in August, following a 0.6 percent drop in July, reflecting the weakness in food turnover.
China’s manufacturing PMIs slowed in September. China’s official manufacturing PMI, which focuses on large-sized and
state-owned companies, fell from 51.3 in August to 50.8 in September (Figure 1), driven by weakness in new export orders
and employment. The Caixin manufacturing PMI—an independent gauge, which focuses on smaller and private companies—
dropped from 50.6 to a 16-month low of 50, suggesting that economic activity slowed down in September.
Renewed pressure on EMDE financial markets. Emerging market and developing economies’ (EMDEs) benchmark bond
and stock indexes resumed their declines (Figure 2) as U.S. 10-year Treasury yield increased to the highest level since May
2011. A renewed strength in the U.S. dollar since late September also weighed on the performance of EMDE assets. Some
EMDE currencies depreciated again, including by Turkish lira and South African rand.
Figure 1. Manufacturing activity in large economies softened Figure 2. EMDE financial markets were under renewed
in September. pressure.
Manufacturing PMI. EMDE benchmark bond and stock index.
Source: Bloomberg. Source: Bloomberg and JPMorgan.
Produced by DECPG.
Number 404 | October 5, 2018
Major Data Releases
(Percent change y-o-y) (Percent change y-o-y)
Recent releases: Friday, 28 September - Thursday, 4 October 2018 Upcoming releases: Friday, 5 October - Thursday, 11 October 2018
Country Date Indicator Period Actual Forecast Previous Country Date Indicator Period Previous
Euro Area 9/21/18 CPI Sep 2.1% 2.2% 2.0% South Korea 10/5/18 CPI Sep 1.4%
Japan 9/21/18 IP Aug 0.6% 2.2% Germany 10/8/18 IP Aug 1.1%
U.K. 9/21/18 GDP Q2 1.2% 1.3% 1.1% France 10/10/18 IP Aug 1.8%
South Korea 10/2/18 IP Sep 2.5% 1.2% 1.0% Romania 10/10/18 GDP Q3 4.1%
Turkey 10/3/18 CPI Sep 24.5% 17.9% U.S. 10/11/18 CPI Sep 2.7%
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 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
1
Industrial Production, sa
World 2.1 4.0 3.8 5.5 3.9 2.9 4.3 4.1 4.4 4.6 4.6 4.7 4.3 4.4 4.0 3.7 3.8 3.4
Advanced Economies 0.0 2.8 2.4 5.2 -0.2 2.8 3.0 3.1 3.5 3.6 2.7 3.0 3.2 2.5 2.6 2.5 2.0 -
Emerging Market and Developing Economies 4.2 5.2 5.3 5.7 8.2 3.1 5.7 5.1 5.4 5.5 6.6 6.4 5.3 6.3 5.3 5.0 5.6 4.8
Commodity-exporting EMDE 0.6 2.6 4.8 0.9 5.8 0.4 3.8 2.9 2.5 2.2 3.9 3.3 3.3 5.1 1.7 2.2 4.4 -
Other EMDE 5.3 6.0 5.4 7.0 8.8 3.7 6.2 5.7 6.2 6.5 7.3 7.3 5.9 6.7 6.3 5.7 5.9 5.2
East Asia and Pacific 5.9 6.1 5.1 5.4 10.3 4.8 6.4 5.8 5.7 5.8 7.2 7.1 5.7 7.1 6.7 5.4 6.3 6.0
East Asia excl. China 4.6 3.7 7.9 -0.1 15.5 -1.7 5.2 2.7 3.0 2.9 7.5 6.0 3.8 7.6 5.9 2.1 7.6 -
Europe and Central Asia 3.4 5.9 5.8 6.0 7.1 1.8 7.9 5.9 5.8 6.4 7.8 7.5 5.9 5.8 5.4 4.4 5.7 3.9
Latin America and Caribbean -2.2 0.7 3.9 2.4 3.4 -1.5 0.8 1.7 1.5 2.1 1.6 1.8 3.0 4.4 -1.3 3.0 2.2 -
Middle East and North Africa -1.1 5.9 17.1 1.1 -9.1 3.9 3.1 6.1 7.1 8.6 2.2 2.6 4.5 2.0 1.3 5.1 3.9 -
South Asia 5.3 4.7 7.2 12.5 4.9 -2.4 4.7 3.7 8.9 7.6 8.2 7.3 5.6 5.6 4.6 6.1 5.7 -
Sub-Saharan Africa 1.2 0.1 2.9 8.1 -7.4 0.2 -1.0 2.0 2.3 3.2 1.7 1.0 1.2 -1.2 1.7 2.0 2.6 -
Inflation, sa 2
World 1.4 2.2 2.2 2.2 2.3 2.3 2.2 2.3 2.3 2.3 2.4 2.3 2.4 2.3 2.1 2.4 2.4 2.4
Advanced Economies 0.3 1.4 1.4 1.4 1.3 1.8 1.5 1.4 1.5 1.5 1.5 1.4 1.4 1.6 1.9 2.1 2.1 2.1
Emerging Market and Developing Economies 2.6 3.2 3.0 2.8 3.0 2.7 3.2 3.0 2.9 2.9 2.9 3.0 2.7 2.6 2.8 2.9 2.9 3.1
Commodity-exporting EMDE 3.5 3.4 3.3 2.8 2.9 2.5 3.2 3.0 2.9 2.9 2.9 2.9 2.7 2.5 2.4 2.5 2.5 2.6
Other EMDE 1.3 2.9 2.7 2.8 3.7 3.2 3.0 2.8 2.9 3.0 3.7 3.5 3.1 3.2 3.0 3.2 3.5 3.5
East Asia and Pacific 2.0 2.3 1.7 2.4 2.2 3.0 2.3 2.6 2.4 2.4 2.3 2.5 2.3 2.4 2.9 2.6 2.5 2.6
Europe and Central Asia 0.4 2.4 2.7 2.8 2.7 2.2 2.8 2.6 2.8 2.8 2.5 2.7 2.5 2.2 2.1 2.3 2.4 3.0
Latin America and Caribbean 2.4 2.6 2.5 2.5 2.9 3.1 2.6 2.3 2.5 2.6 2.9 2.9 3.1 3.0 3.0 3.2 2.9 3.2
Middle East and North Africa 2.1 1.6 1.1 2.2 2.8 2.7 1.6 2.1 1.7 1.9 2.9 2.9 2.6 2.6 2.8 3.0 3.2 2.3
South Asia 4.4 3.8 3.5 3.7 4.2 4.6 3.5 3.6 3.8 4.3 4.4 4.1 3.7 4.1 4.9 5.2 5.6 5.5
Sub-Saharan Africa 5.3 5.7 5.5 4.7 3.5 3.3 5.4 5.2 4.6 4.6 4.3 3.4 3.3 3.3 3.3 3.1 3.0 3.2
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 Q3 Q4 Q1 Q2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Exports, Nominal, US$, sa
World -3.0 10.3 14.5 14.6 24.3 -2.4 11.1 12.4 13.2 11.7 17.0 16.8 9.2 16.3 10.6 10.2 12.0 -
Advanced Economies -0.8 9.5 18.2 11.3 22.0 -3.5 10.9 12.0 12.9 11.3 17.5 12.0 10.8 16.5 9.2 9.3 10.2 -
Emerging Market and Developing Economies -6.4 11.7 8.0 20.9 28.6 -0.2 11.4 13.3 13.8 12.3 16.1 25.8 6.4 16.1 13.4 11.8 15.4 -
Commodity-exporting EMDE -8.8 17.7 19.5 26.7 31.3 -1.4 17.0 20.9 15.9 14.5 20.9 15.3 13.3 23.6 15.3 16.2 23.4 -
Other EMDE -4.5 9.5 3.6 18.5 27.5 -0.2 9.2 10.3 12.9 11.4 14.1 30.3 3.7 13.1 12.5 9.9 12.4 -
East Asia and Pacific -6.1 9.9 2.7 16.1 28.8 1.3 9.9 10.0 12.9 10.9 14.0 33.1 0.9 12.4 11.9 10.8 12.9 9.5
Europe and Central Asia -6.1 16.5 17.1 30.3 40.3 -1.9 16.5 22.3 19.5 16.2 26.6 21.0 15.1 27.8 19.8 14.0 23.8 -
Latin America and Caribbean -2.4 12.0 7.8 15.5 21.2 -6.0 10.5 15.8 9.3 8.7 12.0 11.8 10.4 13.9 7.0 6.6 12.6 -
Middle East and North Africa - - - - - - - - - - - - - - - - - -
South Asia 0.6 5.6 12.3 22.9 6.8 11.4 4.7 4.1 12.2 11.6 7.3 10.1 5.5 9.0 20.3 10.7 11.7 -
Sub-Saharan Africa -13.1 15.4 12.3 31.4 24.4 - 8.4 17.5 17.8 17.1 14.5 15.2 12.3 - - - - -
Imports, Nominal, US$, sa
World -5.3 12.2 1.7 31.2 16.1 3.1 5.8 18.2 13.3 19.6 16.3 21.4 9.1 24.9 4.3 10.0 12.3 -
Advanced Economies -3.4 9.1 14.2 18.0 23.1 -3.5 9.1 14.7 14.1 13.9 18.6 15.3 12.1 18.5 10.0 9.2 11.6 -
Emerging Market and Developing Economies -6.4 13.9 -4.4 38.8 12.6 6.8 4.0 20.2 12.8 22.7 15.1 24.7 7.5 28.5 1.6 10.4 12.6 -
Commodity-exporting EMDE -7.3 13.2 -8.8 46.0 3.2 12.5 -0.2 21.2 11.3 25.9 10.1 29.3 6.1 31.9 -2.3 9.9 - -
Other EMDE -3.0 16.3 12.3 17.1 50.3 -9.7 17.7 16.8 18.1 12.6 32.5 11.1 12.1 17.7 17.2 11.8 18.2 11.7
East Asia and Pacific -3.7 17.4 15.1 15.1 68.3 -12.6 19.2 18.0 18.8 9.7 37.8 9.3 12.0 21.8 20.9 11.9 21.5 14.9
Europe and Central Asia -1.2 18.6 20.3 17.3 38.8 -21.4 20.2 21.4 23.7 23.4 29.6 21.8 17.7 19.2 9.0 6.5 6.6 -
Latin America and Caribbean -7.3 8.3 9.9 17.8 23.8 6.7 5.0 16.3 9.2 6.8 13.9 14.3 4.1 21.4 12.8 9.6 23.8 -
Middle East and North Africa - - - - - - - - - - - - - - - - - -
South Asia -5.4 22.8 -8.2 32.0 23.5 10.7 18.6 11.0 20.8 19.1 24.3 11.9 7.8 4.3 16.0 20.7 22.2 21.4
Sub-Saharan Africa -13.7 - - - - - - - - - - - - - - - - -
International Reserves, US$ 1
World -2.0 7.2 1.7 1.2 1.4 -1.2 0.3 0.0 0.5 0.7 1.4 -0.5 0.5 -0.5 -0.5 -0.2 0.0 -0.1
Advanced Economies 3.2 10.0 1.7 1.1 1.3 -0.8 0.3 -0.3 0.7 0.8 1.3 -0.5 0.5 -1.0 -0.2 0.4 -0.1 -
Emerging Market and Developing Economies -5.2 5.3 1.7 1.3 1.4 -1.5 0.4 0.2 0.4 0.6 1.4 -0.5 0.5 -0.2 -0.7 -0.6 0.0 -0.2
Commodity-exporting EMDE -4.4 3.5 0.7 1.2 2.1 - 0.1 0.6 0.4 0.2 1.4 -0.3 1.0 - - - - -
Other EMDE -5.7 6.1 2.2 1.3 1.1 -1.9 0.5 0.1 0.4 0.8 1.5 -0.6 0.3 -0.6 -0.8 -0.6 0.2 -0.5
East Asia and Pacific -7.3 5.6 2.1 1.3 0.6 -1.4 0.6 0.0 0.4 0.9 1.1 -0.8 0.4 -0.5 -0.5 -0.3 0.1 -0.2
Europe and Central Asia 3.4 10.2 3.1 0.9 4.3 -3.3 0.3 0.2 1.0 -0.3 3.5 0.2 0.6 -0.5 -1.2 -1.6 0.9 -1.1
Latin America and Caribbean 1.4 2.1 0.9 -0.9 1.8 -1.7 -0.1 0.5 -0.4 -0.9 1.5 0.0 0.3 -0.3 -0.4 -1.2 0.4 -0.2
Middle East and North Africa -10.7 - - - - - - - - - - - - - - - - -
South Asia 3.6 11.8 2.5 2.3 2.5 -3.5 0.1 -0.1 0.2 2.1 2.4 -0.2 0.3 -0.2 -2.5 -1.2 -0.8 -0.3
Sub-Saharan Africa -2.9 10.2 1.1 6.1 8.7 - 0.9 1.3 3.3 1.4 1.8 0.9 5.8 1.2 - - - -
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 404 | October 5, 2018
Financial Markets
2017 2018 2017 2018 MRV 1
2016 2017 Q3 Q4 Q1 Q2 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Interest rates and LIBOR (percent)
U.S. Fed Funds Effective 0.39 0.97 1.13 1.17 1.40 1.67 1.13 1.13 1.27 1.38 1.38 1.45 1.63 1.63 1.77 1.88 1.88 1.90 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 1.32 1.47 1.93 2.34 1.36 1.43 1.61 1.73 1.87 2.18 2.35 2.34 2.33 2.34 2.32 2.35 2.41
EURIBOR 3-months -0.26 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.33 -0.32 -0.32 -0.32 -0.32 -0.32
US 10-yr Treasury yield 1.84 2.33 2.24 2.37 2.76 2.92 2.36 2.35 2.41 2.58 2.86 2.84 2.87 2.97 2.91 2.89 2.89 3.00 3.15
German Bund, 10 yr 0.11 0.37 0.46 0.38 0.57 0.42 0.43 0.37 0.36 0.50 0.67 0.54 0.48 0.46 0.33 0.25 0.26 0.35 0.35
Spreads (basis points)
JP Morgan Emerging Markets 410 325 322 313 309 351 306 320 312 299 309 319 322 353 377 366 383 386 368
Asia 221 164 161 151 157 185 148 153 151 146 156 168 171 186 197 193 185 189 181
Europe 302 243 234 233 221 275 226 244 229 212 217 234 246 277 301 291 329 318 298
Latin America & Caribbean 537 429 428 416 418 455 407 422 419 410 420 423 422 459 486 471 493 498 479
Middle East 517 385 383 400 367 429 381 421 398 359 366 374 385 432 472 451 464 478 443
Africa 518 376 380 350 320 385 360 359 332 305 317 337 342 379 436 420 445 455 428
Stock Indices (end of period)
Global (MSCI) 424 508 487 508 500 505 497 505 508 502 517 500 510 509 505 520 524 524 523
Advanced Economies ($ Index) 1761 2086 2001 2086 2042 2089 2037 2077 2086 2053 2113 2042 2087 2093 2089 2153 2179 2184 2184
United States (S&P 500) 2258 2668 2519 2668 2590 2718 2575 2648 2668 2631 2711 2590 2648 2729 2718 2816 2902 2923 2900
Europe (S&P Euro 350) 1475 1558 1571 1558 1493 1533 1600 1563 1558 1518 1522 1493 1556 1545 1533 1581 1547 1548 1551
Japan (Nikkei 225) 19302 22530 20356 22530 21203 22305 22198 22730 22530 21650 21794 21203 22488 22095 22305 22554 22788 24021 23976
Emerging Market and Developing Economies (MSCI) 861 1139 1082 1139 1167 1070 1119 1121 1139 1158 1202 1167 1164 1121 1070 1087 1055 1048 1035
EM Asia 419 577 543 577 589 552 571 572 577 584 603 589 587 582 552 553 546 537 526
EM Europe 295 341 331 341 350 312 330 330 341 354 370 350 335 316 312 319 294 313 312
EM Europe & Middle East 248 275 268 275 280 253 268 265 275 285 295 280 271 257 253 263 246 259 258
EM Latin America & Caribbean 2341 2811 2917 2811 3008 2477 2809 2719 2811 2945 3095 3008 2988 2561 2477 2702 2466 2577 2695
Exchange Rates (LCU / USD)
Advanced Economies
Euro Area 0.90 0.89 0.85 0.85 0.81 0.84 0.85 0.85 0.84 0.82 0.81 0.81 0.81 0.85 0.86 0.86 0.87 0.86 0.87
Japan 108.80 112.11 110.96 112.75 107.94 109.16 112.93 112.81 112.51 109.83 107.96 106.02 107.62 109.72 110.13 111.45 111.03 112.09 114.48
Emerging and Developing Economies
Brazil 3.49 3.19 3.16 3.24 3.24 3.61 3.19 3.26 3.28 3.19 3.25 3.28 3.41 3.64 3.79 3.82 3.93 4.10 3.90
China 6.65 6.76 6.67 6.61 6.35 6.38 6.62 6.62 6.59 6.41 6.32 6.32 6.30 6.37 6.47 6.72 6.85 6.86 6.87
Egypt 10.12 17.85 17.77 17.71 17.68 17.80 17.64 17.68 17.81 17.74 17.67 17.63 17.68 17.83 17.88 17.90 17.88 17.92 17.91
India 67.19 65.11 64.29 64.71 64.40 66.99 65.07 64.85 64.20 63.72 64.44 65.06 65.69 67.49 67.79 68.74 69.62 72.22 73.34
Russia 67.06 58.31 58.93 58.47 56.96 62.03 57.76 58.97 58.70 56.93 56.81 57.15 61.01 62.28 62.81 62.83 66.48 67.60 65.89
South Africa 14.71 13.31 13.19 13.62 11.93 12.65 13.71 14.06 13.11 12.15 11.82 11.84 12.10 12.52 13.33 13.39 14.13 14.75 14.64
Memo: U.S. nominal effective rate (index) 119.7 119.6 116.6 117.5 114.1 116.6 117.5 117.7 117.4 114.7 113.7 113.9 113.9 117.0 118.9 119.6 120.6 120.9 121.0
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 Q3 Q4 Q1 Q2 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Aug
Energy 2 55 68 65 75 82 90 71 76 78 85 81 81 86 92 91 92 90 95 95
Non-energy 2 79 84 83 84 88 89 84 85 84 87 88 88 90 90 88 84 83 81 81
Agriculture 2 87 87 86 85 88 91 85 85 85 87 88 90 92 92 89 86 85 83 83
Metals and minerals 2 64 79 81 84 88 88 84 84 85 89 89 85 87 88 88 81 79 79 82
Memo items:
Crude oil, average ($/bbl) 43 53 50 59 64 71 55 60 61 66 63 64 69 73 72 73 71 75 81
Gold ($/toz) 1249 1258 1278 1275 1329 1307 1280 1282 1264 1331 1331 1325 1335 1303 1282 1238 1202 1198 1198
Baltic Dry Index 676 1152 1138 1509 1171 1256 1484 1455 1589 1234 1130 1149 1126 1289 1352 1649 1710 1447 1574
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 404 | October 5, 2018