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.




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Number 404 | October 5, 2018