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June 2013

Prospects Daily: Developing-country stocks bounce back…Japanese industrial production accelerates…Vietnam GDP growth up slightly

Global Macroeconomics Team's picture
Financial MarketsThe dollar gained against the yen but fell versus the euro on the last trading day of the quarter and the month as fears of an imminent scaling back of the U.S. stimulus program faded. The U.S. currency was up 0.6% to 98.94 yen today, but it has lost 1.4% to Japan’s currency this month. The euro gained 0.4% against the dollar to $1.3090, extending its quarterly gain to 2.1%.

Prospects Daily: China’s money market rates moderate, EU ministers agree on bank bailout rules, India’s current account deficit narrows

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Financial Markets… Developed-market government bonds remained steady on Thursday as an unexpectedly sharp downward adjustment to first-quarter U.S. gross domestic product calmed fears that Federal Reserve would soon scale back its stimulus program. An agreement among European Union ministers on how to manage failing banks also weighted positively on European bonds. The 10-year yield on U.S. Treasuries fell 2 basis points to 2.52% after sliding 7 bps yesterday, while the yields on similar-maturity German and U.K. debt slide 4 bps to 1.73% and 6 bps to 2.40%, respectively.

Prospects Daily: Global stock markets rally for a second day, German consumer confidence rises to 5-year high, Mexico economy slows

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Financial Markets…Global equities advanced for a second day on Wednesday, helped by better-than-expected U.S. economic data, European policy markers’ reassurance on accommodative monetary policy, and moves by China to ease cash crunch concerns. Notably, developing-country stocks gained the most since May 2012 as Philippines’ shares surged the most since 2008.

Prospects Daily: Developing-country stocks bounce back, US home prices continue to rise, China announces measures to ease cash crunch

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Financial Markets…U.S. Treasuries extended their losses in volatile trading on Tuesday, erasing earlier gains, after better-than-expected U.S. durable goods orders in May added to signs that the U.S. economic recovery is gaining momentum. The benchmark 10-year note yields fell 6 basis points to 2.48% in earlier trading, but they climbed back to 2.53%. 10-year yields climbed to 2.66% yesterday, the highest level since 2011.

DECPG Daily: Global equities weaken…German business sentiment improves in June…Chinese manufacturing slows

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Financial Markets…Global equities edged lower on Monday as mounting speculation  that the U.S. central bank will scale back its stimulus program, combined with a prospect of tighter credit conditions in China, pushed risk-aversion among investors higher. The benchmark MSCI world stock index fell 0.8% to add to last week’s loss of 3.2%, while MSCI’s developing-country index slid for a fifth consecutive day to a one-year low. Notably, China’s Shanghai Composite Index tumbled 5.3% today, the steepest decline since August 31, 2009.

Prospects Daily: Developing-country currencies weaken…Consumer price inflation rises in the US and UK…FDI into China up slightly

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Financial Markets…The dollar rose against the yen for a second day on Tuesday, appreciating 1% to 95.40 after sliding to a two-month low of 93.75 last week, as investors waited for clarity of the future of the U.S. monetary stimulus program from the Federal Reserve. While many speculated the Fed will slow the pace of its bond purchasing program, most expect higher interest rates as distant event, and this partly explains the greenback’s rise against Japan’s currency.

Prospects Daily: Turkish financial markets tumble, US home builders’ confidence rises, Sri Lankan growth eases

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Financial Markets…World shares bounced back from last week’s large losses on Monday, with benchmark indexes in Asia, Europe, and U.S. all gaining more than 1%, amid expectation that the Federal Reserve will provide some clarity on its stimulus plans after concluding its two-day meeting on Wednesday. Uncertainty over the direction of Fed’s monetary policy has prompted a sell-off in global financial markets since late May.

Prospects Daily: World Bank’s Global Economic Prospects report expects muted global growth, led by developing countries

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The World Bank’s semiannual Global Economic Prospects report released on June 12 says risks from advanced economies have eased and global growth is firming. Global GDP is expected to expand about 2.2% this year and strengthen to 3.0% and 3.3% in 2014 and 2015. Global trade is expected to grow less quickly than in the past, expanding only 4.0% in 2013, compared to the pre-crisis pace of 7.3%.

Prospects Daily: Indian rupee slumps further, Greek industrial production rises, Turkish GDP accelerates

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Financial Markets…The cost of insuring against default on Asian corporate and sovereign bonds jumped to an 8-month high amid concerns that slowing growth in the region cut profitability. The benchmark Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 15 basis points to 142 bps, heading for the highest closing since September 26.

Prospects Daily: Investors retreat from global bond funds…US payroll employment improves…Venezuela’s inflation soars

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Financial Markets…Investors pulled a record $12.5 billion from global bond funds in the week ended June 5th, posting the first outflows in 24 weeks, amid growing concerns about the possible scaling back of the U.S. stimulus program. Global equity funds also posted outflows of $6.2 billion, with $5 billion of that coming from developing-country markets and $1.2 billion from mature markets.

Global investment patterns will see radical changes by 2030

Jamus Lim's picture

In an earlier post, we highlighted a feature of the global pattern of investment in recent times: that since 2000, developing countries have gradually increased their share of global investment, moving from around 20 percent through much of the second half of the last century, to around 46 percent by 2010. The rapidity of this rise notwithstanding, the natural question is whether this trend will continue into the future.

Prospects Daily: Philippine stocks fall further, Spain unemployment falls, Russia inflation increases

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Financial Markets…The dollar bounced back from a 4-week low versus the yen as weak US economic data eased concerns about earlier-than-expected ending of the Federal Reserve’s stimulus program. News that Japan would appeal public pension funds to raise investments in stocks and overseas assets also hurt Japans’ currency. The dollar appreciated 0.5% to 100.10 yen after sliding to 98.86 yesterday, the lowest level since May 9, while the greenback gained 0.1% to $1.3086 euro.

Prospects Daily: US yields up, US ISM PMI shows contraction in manufacturing, Developing countries manufacturing PMIs slow

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Financial Markets…German bunds and U.S. Treasuries declined on Monday amid growing speculation that the U.S. central bank will curb the pace of its stimulus program sooner than previously expected following comments from Federal Reserve Bank of San Francisco President John Williams. German 10-year bund yield rose the most in three months, rising as high as to 1.57%, while U.S. 10-year bond rate rose 6 basis points to a 13-month high of 2.23%.