Global Monthly July 2019

Source: New York Federal Reserve, World Bank. Note: Includes expansions after 1960, due to data limitations. Probability of a recession in 12 months derived from the U.S. yield curve model of the Federal Reserve Bank of New York. Historical probability is the average probability prior to past recessions. Last observation is June 2019.

Duration of expansions and probability of a recession in the United States

Overview

• �e weakness in global growth has continued, and incoming data suggest activity could remain subdued going into 19Q3.

• Recent indicators point to sluggish growth in emerging market and developing economies (EMDEs); however, some may bene%t from a recent further easing of external %nancing conditions and a recovery of portfolio (ows.

• Despite some easing of trade tensions between the United States and China following the June G20 meetings, trade policy uncertainty remains high amid growing tensions elsewhere.

Chart of the Month

• �e current U.S. expansion is now 121 months old, overtaking the 1991-2001 expansion as the longest period of sustained economic growth on record.

• A sharp fall in 10-year U.S. Treasuries, stemming from concerns about decelerating U.S. activity and growing trade policy uncertainty, has led to an inversion of the yield curve since late May.

• An inverted yield curve has preceded every post-war U.S. recession, with some models projecting the probability of a U.S. recession in the next 12 months at 33 percent.

• In mid-July, however, the yield curve inversion all but disappeared as short-term rates fell sharply amid rising expectations of a policy rate cut at the end of the month.

Special Focus. Debt: No Free Lunch

• Government borrowing may appear attractive in the current environment of low global interest rates and weak growth, as it can support long-term growth through investment and help stabilize short-term economic (uctuations.

• Debt-related costs possibly include crowding out of non-interest spending, increased vulnerabilities, and less e6ective %scal policy.

• EMDEs need to balance taking advantage of low interest rates and avoiding excessive debt accumulation.

�e Global Monthly is a publication of the Prospects Group. �is edition was prepared by Rudi Steinbach and Collette Wheeler, based on contributions from Csilla Lakatos, Peter Nagle, Julia Nor(eet, Shijie Shi, Naotaka Sugawara, Temel Taskin, Ekaterine Vashakmadze, Dana Vorisek, Jinxin Wu, and Sandy Ye. �is Global Monthly re(ects data available up to July 24. For more information, visit: www.worldbank.org/en/research/brief/economic-monitoring.

Table of Contents

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

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

Recent Prospects Group Publications ................... 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

Global Monthly July 2019

2

July 2019

Global activity: further softening. Global activity continued to

soften in June, with global trade and manufacturing showing

signs of marked weakness amid heightened economic policy

uncertainty (Figure 1.A). Global industrial production growth has

continued to be anemic, registering 2.0 percent (y/y) in May,

roughly half its rate a year ago. Incoming data suggest activity will

remain subdued going into 19Q3, with sustained deterioration in

both business con%dence and the global manufacturing PMI—in

June, the latter fell to its lowest level since October 2012, while

available (ash PMIs in July have declined even further. Trade

indicators also point to continued weakness, with new export

orders contracting to a six-year low. While the services sector had

been more resilient earlier in the year, activity has begun to slow

down in tandem with declining consumer con%dence and retail

sales growth. �e rising trend in global in(ation since January

masks divergence between advanced economies and EMDEs.

In(ation in advanced economies has fallen further below targets,

contributing to major central banks’ signaling of more

accommodative monetary policy. In contrast, rising food prices

have put upward pressure on prices in some EMDEs.

Global trade: continued weakness. Cyclical headwinds and

sustained trade policy uncertainty continued to weigh on global

trade growth in 19Q2. Weak global manufacturing activity, signs

of slowing services sectors, and the steady deceleration of new

export orders into June point to slowing momentum in 19Q3

(Figure 1.B). Despite some easing of trade tensions between the

United States and China at the G20 summit in Japan, trade

policy uncertainty was heightened by the escalation of trade

tensions between the United States and India, and between Japan

and South Korea. In contrast, trade agreements that were

concluded between the European Union and both the

MERCOSUR countries (Argentina, Brazil, Paraguay, and

Uruguay) and Vietnam in June, as well as the launch of the

African Continental Free Trade Area in July could help boost

trade and foster regional integration among signatory countries.

Global �nancing conditions: further easing. Bond yields in

advanced economies remained near multi-year lows in early July,

as the U.S. Federal Reserve and other major central banks

continued to signal more accommodative monetary policy stances

amid signs of weakening global activity and subdued in(ation

(Figure 1.C). In the United States and Japan, 10-year yields fell to

levels last seen in mid to late 2016, before rising somewhat, while

they reached an all-time low of negative 0.4 percent in Germany.

In Italy, 10-year yields fell by almost 50 basis points in early July

Monthly Highlights

FIGURE 1.B Global goods trade and new export orders

FIGURE 1.C Probability of Federal Funds rate cut at July FOMC meeting

Source: Bloomberg, CPB Bureau for Economic Policy Analysis, Haver Analytics, World Bank. A. Share of countries with Purchasing Managers’ Index (PMI) readings below 50; readings below 50 indicate contraction in activity. Sample includes 34 countries. Last observation is June 2019. B. New export orders measured by Purchasing Managers’ Index (PMI). PMI readings above 50 indicate expansion in economic activity; readings below 50 indicate contraction. Last observation is April 2019 for goods trade, May 2019 for container shipping and June 2019 for new export orders. C. Last observation is July 23, 2019.

FIGURE 1.A Share of countries with PMIs below expansion threshold

3

July 2019

after the government agreed to reduce its budget de%cit to avoid

breaching EU %scal rules. Despite investor concerns about

deteriorating global growth prospects, global equity markets

maintained their upward momentum in early July, particularly in

the United States, as market expectations of policy easing

continue to support equity valuations (Figure 2.A).

EMDE �nancing conditions: more benign. Borrowing costs in

EMDEs have mirrored declining bond yields in advanced

economies, with EMDE bond spreads falling to a near 12-month

low in early July. Amid benign borrowing costs, debt has risen to

historical highs in EMDEs in 19Q1. Investors’ search for yield

continued to support a recovery in EMDE portfolio (ows,

following notable weakness in May, and most currencies

strengthened (Figure 2.B). EMDE bond issuances also gathered

further momentum in June, as corporate borrowers tapped

international capital markets amid increasingly favorable

%nancing conditions.

Commodity markets: mixed performance. �e price of Brent

crude oil made a partial recovery in the %rst half of July, after

falling from $73/bbl to $60/bbl between May and early June.

Rising geopolitical tensions in the Middle East have boosted

prices since mid-June. Additionally, OPEC and its partners,

including Russia, agreed to extend their production cuts for nine

more months. Nevertheless, concerns about slowing global

demand, and trade tensions between the United States and China

have resulted in substantial downgrades to estimates for oil

demand this year, weighing on prices (Figure 2.C). Metals prices

were mixed in June, with a 9 percent increase in iron ore due to

ongoing supply concerns, while zinc and copper prices declined.

Agricultural prices edged up in June, on average, led by an

8-percent rise in grains prices, as weather-related concerns

continued to weigh on the production outlook in a number of

major producers.

United States: impending moderation. �e current economic

expansion is now 121 months old, marking the longest period of

uninterrupted growth on record. Forecasters expect that activity

will decelerate in 19Q2, however (Figure 3.A). Industrial activity

continues to slow, with industrial production contracting 1.2

percent (q/q saar) in 19Q2 and the manufacturing PMI falling to

the neutral threshold in July. Residential activity has also slowed,

with construction spending down 2.3 percent in May (y/y), and

growth in the Case-Shiller Home Price Index moderating to a

7-year low of 2.5 percent (y/y) in April. Despite a rebound in

employment in June—224 thousand jobs were added to the

FIGURE 2.B EMDE portfolio flows and sovereign bond spreads

FIGURE 2.A Global and EMDE equity markets

FIGURE 2.C Evolution of 2019 oil demand forecasts

Source: Bloomberg, Energy Information Administration, Institute of International Finance, International Energy Agency, J.P. Morgan, Organization of Petroleum Exporting Countries, World Bank. A. Figure shows MSCI Global and Emerging Markets Indices. Last observation is July 22, 2019. B. Cumulative weekly flows since January 1, 2018. Equity flows include Brazil, India, Indonesia, Pakistan, Philippines, Qatar, Sri Lanka, South Africa, Thailand, Turkey, and Vietnam. Debt flows include Hungary, India, Indonesia, Mexico, Poland, South Africa, Thailand, and Turkey. Sovereign spreads are measured by J.P. Morgan's Emerging Markets Bond Index. Last observation is July 23, 2019.

4

July 2019

nonfarm payroll—consumer con%dence has fallen to its lowest

level in nearly two years. In(ation remains subdued, with the

headline PCE rate declining slightly to 1.5 percent (y/y) in May.

Euro Area: continued weakness. �e Euro Area economy

remains weak. �e manufacturing PMI continued to contract in

July, registering 46.4—the lowest since December 2012.

Industrial production remains tepid after contracting 0.5 percent

in May (y/y), partly re(ecting continued weakness in Germany

(Figure 3.B). Until recently, consumer activity had been insulated

from the weakness of the manufacturing sector; however, this

may no longer be the case. Retail sales volumes shrank 0.3

percent in May (m/m sa), marking a second consecutive month of

contraction, while the European Commission’s consumer

expectations indicator fell to its lowest quarterly average since

2013 in 19Q2.

United Kingdom: Brexit uncertainty. Recent data suggest that

the U.K. economy was fragile in 19Q2. Retail sales dipped in

both April and May, and both the manufacturing PMI and

economic sentiment fell to their lowest readings since 2013.

Conservative Party members have elected Boris Johnson as the

head of the party and thus the next prime minister of the United

Kingdom. He has indicated that he will not seek further

extensions to the United Kingdom’s scheduled exit from the

European Union on October 31st. �e exact form of Brexit

remains unclear—the default option if no new agreement is

reached is of a potentially costly no-deal Brexit, with no

agreement in place to smooth the introduction of border controls.

Japan: declining con�dence. Consumer con%dence has

plummeted in recent months, reaching its lowest level since 2014

(Figure 3.C). Other sectors show similar weakness. Core

machinery orders fell 7.8 percent (m/m sa) in May and real

exports fell 2.7 percent (y/y) in 19Q2, while housing starts

declined by nearly 9 percent (y/y) in May. Unemployment

remained at 2.4 percent in May, essentially unchanged from the

beginning of the year. Labor force participation continues to

climb, however, and rose another 0.1 percentage point to 79.6

percent, up from 78.8 percent at the beginning of the year.

In(ation excluding fresh food and energy remains low—it stood

at 0.3 percent in May, unchanged since the beginning of the year.

China: further deceleration, mixed data. Growth decelerated to

6.2 percent (y/y) in 19Q2, broadly as expected (Figure 4.A).

Recent high-frequency indicators are mixed, however. Activity

indicators point to some tentative stabilization. In June, %xed

asset investment growth rose to 5.8 percent (y/y), industrial

FIGURE 3.B Industrial production growth

FIGURE 3.A U.S. GDP growth

FIGURE 3.C Consumer confidence in Japan

Source: Consensus Economics, Federal Reserve Bank of Atlanta, Federal Reserve Bank of New York, Haver Analytics, Wall Street Journal, World Bank. A. Forecast average is the average of the 2019Q2 forecasts from Consensus Economics, Federal Reserve Bank of Atlanta, Federal Reserve Bank of New York, and the Wall Street Journal. Data are through July 24, 2019. Last observation is 2019Q2 for forecasts, and 2019Q1 for actual GDP releases. B. Last observation is May 2019. C. The 2010-19 average is the simple average from January 2010 to June 2019. Last observation is June 2019.

5

July 2019

production increased by 6.3 percent, and retail sales expanded by

9.8 percent—the highest rate since March 2018. Meanwhile,

trade (ows remain weak, and survey indicators continue to point

to subdued sentiment, especially in the manufacturing sector

amid trade related uncertainty. �e Caixin manufacturing PMI

plunged to 49.4 in June as new orders declined sharply, while the

services PMI dropped to a four-month low of 52. Despite the

ongoing weakness, asset prices rebounded in June and into early

July amid expectations of continued domestic policy support,

more accommodative external %nancing conditions, and the

reduced threat of further escalation in trade tari6s by the United

States following the G20 summit.

Major commodity exporters: fragile industrial activity. Activity

has deteriorated in some large commodity exporters (Figure 4.B).

In South Africa, the manufacturing PMI in June remained below

50 for its sixth consecutive month, pointing to continued

weakness going into 19Q3. Although the manufacturing PMI in

Brazil improved somewhat in June, the quarterly average was

signi%cantly weaker than in 19Q1. In Russia, the manufacturing

PMI continued to fall in June, to 48.6, while services contracted

for the %rst time since January 2016, pointing to subdued

conditions. �e manufacturing PMI in Nigeria fell slightly in

June, as new orders weakened. �e manufacturing PMI in

Indonesia dropped to 50.6 in June amid slowing output and new

orders. In contrast, the non-oil sector PMI in Saudi Arabia rose

slightly in June, to 57.4, the highest level since January 2018.

Major commodity importers: weakening activity. Activity in

some large commodity importers appears to have decelerated

further in 19Q2, while in(ationary pressures have persisted until

recently (Figure 4.C). In Poland, industrial production growth

slowed to a near 3-year low in June, while the manufacturing

PMI contracted for the eighth consecutive month. In Egypt, the

manufacturing PMI strengthened somewhat in June but

remained in contraction. �e manufacturing PMI in 1ailand fell

to 50.6 in June from an 11-month-high in April. In Mexico, the

manufacturing PMI, along with consumer con%dence,

deteriorated further in June, suggesting that activity will remain

tepid going into 19Q3. In India, indicators point to continuing

weakness, as the manufacturing PMI softened to 52.1 in June and

services contracted for the %rst time in over a year, registering

49.6. In Turkey, industrial activity continued to contract in May,

albeit less severely than in April, while in(ation eased to 15.7

percent (y/y) in June from 18.7 percent in May. However, policy

uncertainty remains elevated, with the lira depreciating 3 percent

against the U.S. dollar and Fitch downgrading the sovereign

credit rating following the removal of the central bank governor.

FIGURE 4.B Investment and manufacturing PMI in major EMDE commodity exporters

FIGURE 4.A GDP growth in China

FIGURE 4.C Inflation in EMDE commodity importers

Source: Haver Analytics, South Africa Bureau for Economic Research, World Bank. B. Unweighted averages. Investment is gross fixed capital formation. Sample includes Brazil, Colombia, Indonesia, Malaysia, Russia, and South Africa. Last observation is June 2019 for manufacturing PMI and 2019Q1 for investment. C. Figure shows the median for core and headline consumer price indexes. Sample includes 9 commodity-importing EMDEs. Last observation is June 2019.

6

July 2019

FIGURE 5.B Total debt

FIGURE 5.A EMDE long-term government bond yields

FIGURE 5.C Long-term sovereign debt ratings during crises

Source: Kose, Kurlat, et al. (2017, data available at http://www.worldbank.org/en/research/brief/fiscal-space); Laeven and Valencia (2018), World Bank. A. Average long-term government bond yields (with maturity of 10 years or close) for EMDEs with long-term foreign-currency sovereign ratings below investment grades and above investment grades in each year. Dotted lines show averages over 2002-07. Sample includes 61 EMDEs. B. Averages computed with current U.S. dollar GDP as a weight, based on 35 advanced economies and 117 EMDEs. C. Simple averages, as well as interquartile ranges, based on balanced samples. Crises refer to debt crises, as defined in Laeven and Valencia (2018). When there are multiple crises identified within five years, the one with the lowest real GDP growth is counted as an event. Sample includes 16 crisis episodes. The sovereign ratings are converted to a numerical scale ranging from 1 to 21 (higher = better rating).

Current macroeconomic environment: Low global interest rates,

weak growth. Government debt has risen sharply in both

advanced economies and EMDEs following the global %nancial

crisis. Yet, in the current environment of low borrowing costs

and weak growth, additional government borrowing to %nance

growth-enhancing spending may appear to be an attractive

option. EMDE government bond yields are below long-term

averages, while EMDE growth is slowing (Figure 5.A).

Evolution of EMDE debt: Post-crisis deterioration. Prior to the

global %nancial crisis, rapid growth helped narrow %scal de%cits

and reduce government debt ratios, especially in EMDEs. EMDE

%scal positions have weakened since the crisis, however, pushing

government debt up by an average of 15 percentage points of

GDP to 51 percent of GDP by 2018 (Figure 5.B). In many

EMDEs, the %nancing of debt has shifted toward higher-risk

sources, including debt held by nonresidents, issued on non-

concessional terms, or at shorter maturity. For low-income

countries (LICs), the increasingly non-concessional composition

of debt re(ects greater access to capital markets and increased

borrowing from non-Paris Club creditors. In tandem with

mounting government debt, private sector debt has risen in

EMDEs, leading total debt to amount to 169 percent of GDP in

2018.

Bene�ts of debt: Long-term growth and short-term counter-

cyclical policy. Additional debt accumulation by EMDEs could

be justi%ed because of their need to invest in growth-enhancing

projects, such as infrastructure, health and education, and to

protect vulnerable groups. Government investment in physical

and human capital could help stem the expected slowdown in

potential growth and ful%l large investment needs to meet the

Sustainable Development Goals. At the same time, temporary

debt accumulation to %nance %scal expansion can help stabilize

short-term macroeconomic (uctuations. During recessions,

borrowing for government spending or tax cuts can provide the

necessary %scal stimulus to support activity.

Costs of debt: Deteriorating debt sustainability and increasing

vulnerability to crises. When debt is high, the rollover costs can

increase sharply during periods of %nancial stress and trigger

%nancial stress—even when growth rates exceed interest rates,

which would typically help set debt on a declining trajectory. An

increase in global borrowing cost, due for example to a decline in

global savings rates, could test the sustainability of high debt in

Special Focus: Debt: No free lunch

7

July 2019

FIGURE 6.B Government debt and interest payments in EMDEs, 2018

FIGURE 6.A Long-term interest rates during crises

FIGURE 6.C Fiscal multipliers after 2 years

Source: Huidrom et al. (2019), International Monetary Fund, World Bank. A. Long-term interest rates refer to nominal 10-year government bond yields, or bond yields with similar maturities. B. General government gross debt on the horizontal axis and interest payments on the vertical axis. Sample includes 104 EMDEs, excluding small states as defined by the World Bank. C. Bars show the conditional fiscal multipliers for different levels of government debt after two years. Fiscal multipliers are defined as cumulative change in output relative to cumulative change in government consumption in response to a 1-unit government consumption shock. They are based on estimates from the interacted panel VAR model, where model coefficients are conditioned only on government debt. Values shown on the x-axis correspond to the 10th to 90th percentiles in the sample. Bars represent the median, and vertical lines are the 16-84 percent confidence bands.

some countries. A growing debt level could erode investor

con%dence, requiring governments to pay a rising risk premium

on their debt. �ese pressures can culminate in a debt crisis if

investors fear that the accumulation of debt is no longer

sustainable (Figure 5.C and 6.A).

Costs of debt: Limiting size and e-ectiveness of �scal policy.

High debt constrains governments’ ability to respond to

downturns, in part because debt service crowds out other

government spending needs (Figure 6.B). �is was seen during

the global %nancial crisis: %scal stimulus during 2008-09 was

considerably smaller in countries with high debt than in those

with low government debt. High government debt tends to

render %scal policy less e6ective (Figure 6.C). High government

debt can reduce the size of %scal multipliers through two

channels. First, when a government with a high level of debt

implements %scal stimulus, consumers expect that tax increases

will eventually follow. �is expectation leads consumers to cut

consumption and save more. Second, when the level of debt is

higher, %scal stimulus can increase creditors’ concerns about

sovereign credit risk. �is raises sovereign bond yields and, hence,

borrowing costs across the whole economy. �is, in turn, crowds

out private investment and consumption, reducing the size of the

%scal multiplier.

Policy implications: Balance trade-o-s. EMDE governments

need to strike a careful balance between taking advantage of the

present low interest rate environment and avoiding the risks posed

by excessive debt accumulation. For countries with sound %scal

positions and with frameworks that help ensure long-term

sustainability, the balance may tip toward debt-%nanced spending

to boost growth prospects if the cyclical position is appropriate.

However, if debt-%nanced spending is not feasible due to

constraints, %scal resources could be expanded for %nancing

growth-friendly policies by shifting spending and broadening the

revenue base. Even if the cost of debt is currently low, it could

increase sharply during periods of %nancial stress. Excessive debt

burdens may make governments more vulnerable to crises, limit

the size and e6ectiveness of %scal stimulus during future cyclical

downturns, and weigh on investment and longer-term growth.

Debt cannot be treated as a free lunch.

8

July 2019

Recent Prospects Group Publications Global Economic Prospects - June 2019: Heightened Tensions, Subdued Investment

Commodity Markets Outlook - April 2019: Food Price Shocks: Channels and Implications

Global Economic Prospects - January 2019: Darkening Skies

Inflation in Emerging and Developing Economies: Evolution, Drivers and Policies

Recent World Bank Working Papers Casting a Shadow: Productivity of Formal Firms and Informality

Inflation in Low-Income Countries

Corruption, Regulatory Burden and Firm Productivity

Determinants of Participation in Manufacturing GVCs in Africa: The Role of Skills, Human Capital Endowment and Migration

The Extent of GVC Engagement in Sub-Saharan Africa

Better Policies from Policy-Selective Aid?

How Much Would China Gain from Power Sector Reforms? An Analysis Using TIMES and CGE Models

Taking Another Look at Policy Research on China's Accession to the World Trade Organization

Effects of Trade Liberalization on Textile and Apparel Exports from Sub-Sahara Africa

Beyond the S-curve: Insurance Penetration, Institutional Quality and Financial Market Development

Recent World Bank Reports Beyond the Gap: How Countries Can Afford the Infrastructure They Need while Protecting the Planet

Fiscal Policies for Development and Climate Action

Doing Business 2019: Training for Reform

World Development Report 2019: The Changing Nature of Work

Atlas of Sustainable Development Goals 2018

Fair Progress? Economic Mobility Across Generations Around the World

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

Recent releases: June 24, 2019 - July 23, 2019 Upcoming releases: July 24, 2019 - August 23, 2019

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

Germany 6/27/19 CPI JUN 1.6 % 1.4 % South Africa 7/24/2019 CPI JUN 4.4%

South Korea 6/27/19 IP MAY -0.2% 0.2% South Korea 7/24/2019 GDP Q2 1.7%

Euro Area 6/28/19 CPI JUN 1.2% 1.3% United States 7/26/2019 GDP Q2 3.2%

United Kingdom 6/28/19 GDP Q1 1.8% 1.4% Spain 7/29/2019 CPI JUL 0.4%

Indonesia 7/1/19 CPI JUN 3.3% 3.3 % Japan 7/29/2019 IP JUN 0.1%

Brazil 7/2/19 IP MAY 7.2% -3.9 % Australia 7/30/2019 CPI Q2 1.3%

Turkey 7/3/2019 CPI JUN 15.7% 18.7% France 7/30/2019 GDP Q2 1.2%

Germany 7/8/19 IP MAY -3.7% -2.3% Euro Area 7/31/2019 GDP Q2 1.2%

Mexico 7/9/19 CPI JUN 4.0% 4.3% Italy 7/31/2019 GDP Q2 -0.1%

United Kingdom 7/10/19 IP MAY 0.9% -1.2% Mexico 7/31/2019 GDP Q2 1.3%

France 7/11/19 CPI JUN 1.2% 0.9% Turkey 8/5/2019 CPI JUL 15.7%

Indonesia 7/11/19 IP MAY 2.6% 8.2% Brazil 8/8/2019 CPI JUL 3.4%

United States 7/11/19 CPI JUN 1.7% 1.8 % Indonesia 8/8/2019 GDP Q2 5.1%

India 7/12/19 CPI JUN 3.2% 3.0% India 8/9/2019 IP JUN 3.1%

Turkey 7/12/19 IP MAY -0.1% -1.2% United Kingdom 8/9/19 GDP Q2 1.8%

Euro Area 7/12/19 IP MAY -0.5% -0.3% United States 8/13/2019 CPI JUL 1.7%

Mexico 7/12/19 IP MAY -3.3% -2.8% Euro Area 8/14/19 IP JUN -0.5%

China 7/14/19 IP JUN 6.3% 5.0% Germany 8/14/19 GDP Q2 0.7%

United States 7/16/19 IP JUN 1.3% 2.1% Turkey 8/16/2019 IP JUN -0.1%

China 7/16/19 GDP Q2 6.2% 6.4 % Poland 8/21/19 IP JUL -2.7%

Japan 7/18/19 CPI JUN 0.7% 0.7% Canada 8/21/19 CPI JUL 2.1%

(Percent change y/y)

9

July 2019

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

Sources: Haver Analytics, IMF International Financial Statistics, World Bank. 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.

TABLE C: Trade and Finance

Sources: Haver Analytics, IMF International Financial Statistics, World Bank. 1Total reserves excluding gold are used as proxies when total reserves data are unavailable.

2018 2019 2018

2017 2018 Q2 Q3 Q4 Q1 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Industrial production, sa 1 World 4.1 3.6 2.5 2.7 1.8 1.9 3.5 3.8 3.5 3.4 3.8 2.2 1.7 2.2 1.9 2.6 1.8 2.0

Advanced economies 2.8 2.2 2.4 1.7 0.5 -2.1 2.5 2.2 2.4 2.3 2.4 0.7 0.2 1.2 0.6 0.0 0.0 0.6

Emerging market and developing economies 5.3 5.0 2.6 3.7 3.0 5.8 4.6 5.5 4.5 4.5 5.1 3.7 3.3 3.1 3.1 5.0 3.6 3.4

Commodity-exporting EMDEs 2.5 2.6 -2.2 4.6 1.1 0.2 0.6 2.9 2.3 1.4 3.6 2.0 1.3 0.9 0.6 1.2 1.5 2.3

Other EMDEs 6.1 5.7 3.9 3.4 3.4 7.3 5.7 6.2 5.1 5.3 5.5 4.1 3.8 3.7 3.7 6.0 4.2 3.6

East Asia and Pacific 6.3 6.0 4.2 3.8 5.7 9.2 4.9 5.9 5.7 5.4 6.1 5.4 5.4 5.0 4.5 7.7 5.1 4.4

East Asia excl. China 4.7 4.6 -2.5 6.5 5.4 -1.3 -1.2 5.2 3.2 2.6 7.3 4.5 3.1 3.1 -0.6 3.4 3.4 0.9

Europe and Central Asia 6.0 4.5 2.8 2.1 -3.2 4.7 4.7 5.8 3.8 3.4 3.0 1.8 -0.1 0.5 1.9 2.3 1.7 0.7

Latin America and Caribbean 0.9 1.0 -2.4 1.2 -4.7 -2.3 2.2 1.6 1.3 0.2 0.5 -0.7 -2.6 -2.0 -1.4 -2.8 -2.7 1.2

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

South Asia 4.6 5.5 -2.7 8.1 5.4 -4.6 6.3 7.8 2.7 6.3 8.7 1.5 2.4 2.1 1.2 0.8 4.4 3.2

Sub-Saharan Africa 0.2 1.7 0.0 9.5 4.5 -9.7 2.2 3.0 2.0 2.5 3.5 1.7 0.6 1.0 0.9 0.6 5.0 1.0

Inflation, sa 2

World 2.3 2.4 2.3 2.6 2.2 1.9 2.4 2.4 2.5 2.4 2.6 2.3 2.0 1.9 1.9 2.1 2.2 2.4

Advanced economies 1.4 1.7 1.8 2.1 2.0 1.5 2.1 2.1 2.1 2.1 2.2 2.0 1.6 1.5 1.5 1.7 1.8 1.7

Emerging market and developing economies 3.2 2.9 3.0 3.0 2.8 2.6 3.0 3.0 3.1 3.0 3.3 2.8 2.2 2.2 2.4 2.8 3.0 2.9

Commodity-exporting EMDEs 3.3 2.8 2.9 2.9 2.7 2.6 2.6 2.6 2.9 2.9 2.7 2.7 2.2 2.4 2.6 2.6 2.8 2.8

Other EMDEs 2.9 3.1 3.0 3.1 3.2 2.5 3.1 3.4 3.3 3.3 3.7 2.9 2.3 2.1 2.4 2.9 3.0 3.1

East Asia and Pacific 2.9 3.2 3.8 4.1 3.3 2.2 3.8 3.8 3.6 3.5 3.2 2.5 1.8 1.7 2.0 2.4 2.7 2.8

Europe and Central Asia 2.4 2.6 2.2 2.8 2.1 2.5 2.4 2.4 3.0 2.4 2.2 1.9 1.8 2.1 2.4 2.9 3.3 3.4

Latin America and Caribbean 2.6 2.3 2.3 2.8 2.4 2.4 2.5 2.6 2.5 2.2 3.0 2.4 2.3 2.2 2.2 2.5 2.8 3.0

Middle East and North Africa 1.6 2.5 2.7 2.2 1.8 0.7 2.8 2.8 2.3 2.1 2.0 2.1 2.1 1.0 0.3 0.8 0.6 0.4

South Asia 3.8 3.9 4.4 4.1 4.1 5.5 4.5 4.4 4.0 3.9 4.7 3.8 5.4 5.4 5.5 5.6 5.6 5.6

Sub-Saharan Africa 5.4 3.6 3.6 3.3 4.1 3.9 4.0 3.1 3.3 3.8 4.1 3.9 3.5 3.9 3.9 3.9 4.0 3.7

2019

2018 2019 2018

2017 2018 Q2 Q3 Q4 Q1 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Exports, nominal, US$, sa

World 10.4 9.5 -2.6 -1.7 -2.2 -3.4 10.1 11.9 6.9 4.5 10.8 2.4 -2.2 -0.3 -5.2 -2.0 -2.9 -1.1

Advanced economies 9.7 8.3 -3.6 -4.3 -2.0 -3.9 9.4 10.1 5.1 1.4 9.1 0.8 -3.1 -2.6 -3.0 -4.7 -3.7 -1.9

Emerging market and developing economies 11.8 11.8 -0.6 3.1 -2.6 -2.6 11.6 15.3 10.3 10.5 14.2 5.3 -0.6 4.1 -8.9 3.3 -1.4 0.4

Commodity-exporting EMDEs 17.5 14.9 -0.3 8.6 2.9 -19.6 16.5 22.8 13.4 9.7 18.5 8.8 3.7 -1.9 -1.3 -4.8 -2.1 -4.0

Other EMDEs 9.5 10.5 -1.0 1.0 -4.8 5.0 9.5 12.2 9.0 10.8 12.5 3.9 -2.3 6.6 -11.7 6.7 -1.1 2.2

East Asia and Pacific 10.0 10.4 -0.1 1.3 -8.2 1.9 10.5 12.6 9.0 11.1 13.6 3.0 -3.6 6.4 -16.4 8.4 -2.3 0.2

Europe and Central Asia 16.5 16.6 0.8 1.2 5.6 -4.8 14.1 23.7 13.5 11.1 16.5 10.8 3.7 -1.3 4.7 -1.4 -1.1 -3.1

Latin America and Caribbean 12.0 9.2 -6.5 9.2 4.8 -10.4 6.8 12.4 9.5 6.0 10.2 7.6 3.2 3.3 -1.4 -4.9 0.9 5.8

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

South Asia 5.6 10.3 9.3 18.0 5.3 1.7 5.5 14.1 3.3 22.6 18.2 6.2 4.6 8.7 11.5 5.0 2.3 3.8

Sub-Saharan Africa 14.7 11.9 -5.5 12.5 -5.2 -13.8 16.2 16.7 12.5 9.8 14.5 5.2 0.3 0.0 -3.8 -6.5 - -

Imports, nominal, US$, sa

World 12.5 11.8 1.9 4.0 -0.7 -27.8 10.4 13.3 2.3 27.0 14.5 3.1 1.5 -5.1 -12.1 -2.3 -5.8 -8.5

Advanced economies 9.7 9.7 -1.6 -0.6 3.9 -12.2 9.4 13.3 7.7 4.8 12.5 3.3 0.0 -1.8 -3.4 -3.2 -1.3 -1.8

Emerging market and developing economies 13.8 12.7 3.5 5.9 -2.5 -33.8 10.8 13.3 0.0 38.0 15.3 3.1 2.1 -6.5 -15.7 -2.0 -7.7 -11.2

Commodity-exporting EMDEs 13.0 12.7 7.7 6.3 1.3 -42.7 10.4 11.9 -3.7 48.5 15.6 3.0 4.2 -8.0 -18.8 -1.0 -10.6 -

Other EMDEs 16.5 12.7 -9.3 4.7 -14.7 5.9 12.2 18.5 12.4 9.2 14.6 3.3 -5.2 -1.9 -4.6 -5.0 2.4 -4.6

East Asia and Pacific 17.5 14.8 -11.3 10.0 -19.0 6.3 12.4 21.6 16.7 11.9 19.4 4.6 -5.4 -0.7 -6.7 -5.8 3.4 -7.6

Europe and Central Asia 18.7 7.9 -14.8 -16.5 -0.8 9.9 8.0 6.9 -0.7 -1.3 1.8 -2.2 -8.6 -7.1 -3.7 -7.6 -1.2 -4.8

Latin America and Caribbean 6.0 12.3 5.8 10.0 -0.5 -6.5 10.2 23.3 13.7 6.3 16.2 11.6 1.5 6.9 -0.1 -0.7 0.5 2.1

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

South Asia 22.7 13.1 7.9 12.1 -14.2 -13.3 20.3 24.8 20.9 12.6 16.7 3.5 -0.1 -1.3 -6.0 -0.6 2.2 0.9

Sub-Saharan Africa 4.4 12.3 -12.5 5.1 6.0 - 9.3 22.2 9.0 9.5 19.2 14.0 -3.2 - - - - -

International reserves, US$1

World 7.0 -0.3 -1.2 -0.6 0.2 1.6 -0.2 0.0 -0.1 -0.5 -0.7 0.5 0.5 0.6 0.2 0.8 0.2 -0.1

Advanced economies 10.0 0.6 -0.8 0.0 0.1 1.5 0.4 -0.1 0.1 0.0 -0.7 0.4 0.4 0.8 -0.1 0.8 0.2 -0.9

Emerging market and developing economies 5.1 -0.9 -1.4 -1.0 0.3 1.6 -0.6 0.0 -0.2 -0.8 -0.8 0.5 0.6 0.5 0.4 0.7 0.1 0.4

Commodity-exporting EMDEs 3.7 1.5 - - - - - - - - - - - - - - - -

Other EMDEs 5.8 -1.9 -1.9 -1.1 0.1 1.4 -0.5 0.1 -0.5 -0.8 -1.0 0.4 0.7 0.6 0.3 0.5 0.0 0.3

East Asia and Pacific 5.6 -2.0 -1.4 -1.0 -0.1 1.2 -0.3 0.1 -0.2 -0.8 -1.0 0.4 0.6 0.6 0.2 0.3 -0.1 0.0

Europe and Central Asia 10.1 3.7 -3.3 -1.0 3.9 1.6 -1.6 0.9 -1.1 -0.8 -0.2 1.5 2.6 0.7 0.9 -0.1 0.3 0.9

Latin America and Caribbean 1.5 -0.5 -1.3 -0.9 0.3 2.4 -1.0 0.1 -0.1 -1.0 -0.1 0.5 -0.1 0.9 0.7 0.8 0.0 0.5

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

South Asia 11.8 -4.8 -3.8 -2.1 -1.3 4.7 -1.2 -0.7 -0.7 -0.8 -1.9 -0.1 0.6 0.9 0.6 3.1 0.9 0.2

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

2019

(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)

10

July 2019

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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)

TABLE E: Commodity Prices

2019 2018 2019 MRV 1

2017 2018 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Interest rates and LIBOR (percent)

U.S. Fed Funds Effective 0.97 1.78 1.88 2.16 2.38 2.38 1.88 1.88 1.90 2.13 2.13 2.22 2.38 2.38 2.38 2.38 2.38 2.38 2.38

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 1.26 2.31 2.34 2.63 2.69 2.51 2.34 2.32 2.35 2.46 2.65 2.79 2.78 2.68 2.61 2.59 2.53 2.40 2.28

EURIBOR 3-months -0.33 -0.32 -0.32 -0.32 -0.31 -0.32 -0.32 -0.32 -0.32 -0.32 -0.32 -0.31 -0.31 -0.31 -0.31 -0.31 -0.31 -0.33 -0.37

US 10-yr Treasury yield 2.33 2.91 2.92 3.03 2.65 2.33 2.89 2.89 3.00 3.16 3.12 2.83 2.71 2.68 2.57 2.53 2.39 2.07 2.05

German Bund, 10 yr 0.37 0.39 0.28 0.29 0.04 -0.21 0.25 0.26 0.35 0.37 0.32 0.19 0.12 0.02 -0.03 -0.10 -0.17 -0.35 -0.44

Spreads (basis points)

JP Morgan Emerging Markets 325 360 378 402 382 372 366 383 386 377 405 423 402 373 371 364 377 374 355

Asia 164 183 189 202 189 183 193 185 189 190 204 211 199 185 183 177 185 186 171

Europe 243 281 313 316 312 329 291 329 318 299 316 334 319 303 314 324 334 328 295

Latin America & Caribbean 429 471 487 523 500 500 471 493 498 492 528 549 519 493 488 486 505 510 514

Middle East 385 439 464 497 438 284 451 464 478 453 497 541 562 400 351 293 287 272 232

Africa 376 407 440 481 460 471 420 445 455 445 485 515 489 444 445 444 482 487 440

Stock Indices (end of period)

Global (MSCI) 508 456 524 456 509 523 520 524 524 484 491 456 491 503 509 525 492 523 528

Advanced Economies ($ Index) 2086 1884 2184 1884 2108 2178 2153 2179 2184 2019 2041 1884 2028 2086 2108 2179 2046 2178 2198

United States (S&P 500) 2668 2507 2923 2507 2830 2942 2816 2902 2923 2712 2760 2507 2702 2798 2830 2939 2752 2942 2993

Europe (S&P Euro 350) 1558 1368 1548 1368 1535 1556 1581 1547 1548 1454 1450 1368 1452 1507 1535 1583 1493 1556 1562

Japan (Nikkei 225) 22530 20019 24021 20019 21206 21276 22554 22788 24021 21920 22351 20019 20773 21580 21206 22163 20601 21276 21467

Emerging Market and Developing Economies (MSCI)

1139 966 1048 966 1058 1055 1087 1055 1048 954 995 966 1050 1051 1058 1079 998 1055 1052

EM Asia 577 485 537 485 538 527 553 546 537 476 503 485 521 529 538 548 498 527 522

EM Europe 341 292 313 292 314 344 319 294 313 293 301 292 325 318 314 321 324 344 339

EM Europe & Middle East 275 246 259 246 259 276 263 246 259 247 252 246 270 263 259 266 263 276 275

EM Latin America & Caribbean 2811 2566 2577 2566 2746 2844 2702 2466 2577 2684 2600 2566 2948 2821 2746 2749 2684 2844 2934

Exchange Rates (LCU / USD)

Advanced Economies

Euro Area 0.89 0.85 0.86 0.88 0.88 0.89 0.86 0.87 0.86 0.87 0.88 0.88 0.88 0.88 0.88 0.89 0.89 0.88 0.89

Japan 112.11 110.34 111.52 112.74 110.17 109.86 111.45 111.03 112.09 112.76 113.40 112.06 108.96 110.43 111.11 111.65 109.87 108.05 107.30

Emerging and Developing Economies

Brazil 3.19 3.65 3.95 3.81 3.77 3.92 3.82 3.93 4.10 3.76 3.80 3.89 3.74 3.72 3.84 3.90 4.00 3.86 3.72

China 6.76 6.61 6.81 6.92 6.75 6.82 6.72 6.85 6.86 6.93 6.94 6.88 6.79 6.74 6.71 6.72 6.86 6.90 6.88

Egypt 17.85 17.82 17.90 17.92 17.61 17.00 17.90 17.88 17.92 17.92 17.93 17.93 17.86 17.58 17.38 17.26 17.01 16.73 16.61

India 65.11 68.41 70.19 72.04 70.52 69.54 68.74 69.62 72.22 73.59 71.83 70.71 70.78 71.24 69.54 69.37 69.82 69.42 68.96

Russia 58.31 62.84 65.64 66.74 65.93 64.55 62.83 66.48 67.60 65.86 66.69 67.66 66.79 65.80 65.20 64.59 64.96 64.09 62.77

South Africa 13.31 13.25 14.09 14.31 14.02 14.39 13.39 14.13 14.75 14.54 14.10 14.31 13.85 13.83 14.38 14.15 14.45 14.58 13.85

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

119.6 118.4 120.4 122.5 121.0 122.0 119.6 120.6 120.9 121.8 123.1 122.8 120.9 120.8 121.1 121.3 122.5 122.1 121.6

Sources: Bloomberg, J.P. Morgan, and World Bank. 1 MRV = most recent value.

2018

2018 2019 2018 MRV 1

2017 2018 Q3 Q4 Q1 Q2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Energy 2 68 87 93 84 77 80 92 90 96 97 82 73 74 77 80 84 82 73 73

Non-energy 2 84 85 83 81 82 82 84 83 81 82 81 81 81 83 82 83 81 83 83

Agriculture 2 87 87 85 83 83 83 86 85 83 83 82 83 84 84 83 83 82 85 85

Metals and minerals 2 79 84 80 79 80 81 81 79 79 81 79 77 77 82 83 83 80 81 76

Memo items:

Crude oil, average ($/bbl) 53 68 73 64 60 65 73 71 75 77 62 54 56 61 64 69 67 60 60

Gold ($/toz) 1258 1269 1213 1229 1304 1310 1238 1202 1198 1215 1221 1250 1292 1320 1301 1286 1284 1359 1359

Baltic Dry Index 1152 1346 1602 1356 793 994 1649 1710 1447 1545 1201 1322 1068 630 681 777 1032 1174 2064

Sources: World Bank, World Bank Commodities Price Data (The Pink Sheet), Bloomberg. 1 MRV = most recent value. 2 Indexes, 2010 = 100. The Index component combination in the Weekly tables differs from that of the Pink Sheet.

2019