Global Economic Prospects 2014

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February 2014

Prospects Daily: Chinese stocks and currency tumble on Tuesday, European Commission sees faster Eurozone recovery on firming domestic demand, South Africa’s Q4 GDP growth exceeds expectations

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Financial Markets…Chinese stocks dropped the most in five months amid worries over property markets and the country’s currency weakened the most in more than three years. The benchmark Shanghai Composite Index fell 2%, extending its four-day decline to 5.1%, led by a slump in property stocks on mounting funding concerns. China’s yuan depreciated 0.46% versus the dollar to 6.1266, the steepest drop since November 2010, spurred by signs Chinese economy is losing momentum.

Prospects Daily: U.S. equities rise to record high on Monday, German business confidence highest since July 2011, Brazil’s consumer confidence lowest since May 2009

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Financial Markets…U.S. stocks rallied on Monday, with the S&P 500 index rising to a record high, as investors speculated the world biggest economy can withstand the normalization of Fed’s monetary policy. The U.S. stock rally shrugged off worries over a cooling property market in China. The S&P 500 gained as much as 0.9% to an all-time high of 1,852, surpassing a previous high of 1,848.38 reached on January 15, and the Dow Jones industrial average was also up 0.9% in morning trade. The S&P index has bounced back 5.4% from its low on February 3.

Prospects Daily: Ukrainian financial markets tumble again amid shattered truce, Singapore revises Q4 GDP from contraction to growth, China’s manufacturing PMI falls to a seven-month low

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Financial Markets…Global equities moved lower on Wednesday as downbeat economic data from China and Eurozone and escalating turmoil in Ukraine dampened market sentiment. The benchmark MSCI world stock index dropped 0.5% to a 6-day low, with the MSCI developing-country stock index sliding 1.1%. Meanwhile, U.S. equities opened higher in morning trade with the S&P 500 and the Dow gaining 0.3% and 0.4%, respectively.

Prospects Daily: Ukrainian financial markets slump amid escalating civil unrest, U.K. unemployment at 7.2%, South Africa’s inflation accelerates

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Financial Markets…Ukraine’s financial markets slumped on Wednesday amid escalating civil unrest.  The nation’s benchmark stock index tumbled as much as 4.2% before parings the loss to 2.0%, and the yield on the government bonds due in June rose by 1,135 basis points to an all-time high of 34.27%.  Investors are dumping financial assets of Emerging Europe’s riskiest borrowers after Ukrainian President Viktor Yanukovych yesterday banned anti-government protests after clashes in Kiev killed at least 25 people.

Prospects Daily: Kazakhstan devalues its currency by 19%,Yellen: recovery in U.S. labor market far from complete, South Africa’s manufacturing output expands at fast pace in December 2013

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Financial Markets… Kazakhstan’s central bank devalued its tenge currency by 19% to 185 per dollar in an effort to hinder foreign speculators and adjust to the currency weakening of its main trading partner Russia. The Russian ruble, which is a reserve currency of Kazakhstan along with dollars and euros, has weakened 5.4% thus far this year. This has put additional pressure on the Kazakhstan currency as Russia accounted for nearly 18 % of Kazakhstan’s total trade, second after the European Union at about 41%.

Prospects Daily: U.S. trade deficit widens more-than-expected, Ghana’s central bank raises lending rate to 18% after imposing foreign exchange controls

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High Income Economies…In the week ended February 1stU.S. first-time jobless claims fell more-than-expected to 331,000, a decrease of 20,000 from the previous week's revised figure of 351,000. The less volatile four-week moving average inched up to 334,000, an increase of 250 from the previous week's revised average of 333,750. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also climbed to 2.96 million in the week ended January 25th from the preceding week's revised level of 2.95 million.

Prospects Daily: Ukraine’s currency weakens to five-year low against the U.S. dollar, Japanese service sector slows to 5-month low, Indonesia’s GDP growth slows to four-year low in 2013

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Financial Markets… World stock markets were mixed on Wednesday with Asian and European shares posting small gains while U.S. equities opened lower. The MSCI Asia-Pacific stock index advanced 0.8%, after sliding the most since June 20 yesterday, as Japan’s Topix index gained 2.1%. The Japanese gauge declined 13% between January 8th and yesterday. The Stoxx Europe 600 Index was up just 0.1% as a sharp drop in December retail sales offset an encouraging euro-zone PMI report and relatively calmer conditions in developing-country financial markets.

World Bank published latest commodity prices: February 2014

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In January of 2014, energy prices eased by 2.7%, while the non-energy commodities edged down by 0.8%. Food prices were off by 1.6%, while beverages climbed up by 1.8%. Raw materials were off by 0.8% while fertilizers rebounded strongly by 4.2%. Metals eased by 0.7%, while precious metals recovered by 1.8%.
 
To access recent and long-term historical prices and other commodity-related information, please click here.

Prospects Daily: Global stocks fall to near 4-month low, U.S. Factory orders pull back In December, Brazil records highest trade deficit in January

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Financial Markets… Global stocks fell to near a 4-month low on Tuesday as concerns over a slowdown of the U.S. economy in the wake of weaker-than-expected manufacturing activity exacerbated the global risk-aversion caused by a sharp sell-off in developing countries. The current market turmoil has wiped out about $2.9 trillion from world stock markets thus far this year. Japan’s benchmark Nikkei index slumped 4% in its worst sell-off since June, remaining the worst performer among developed-country benchmark stock indices this year.