The weakness in stock markets sent the yen higher against the dollar and the euro on Wednesday as Japan’s currency is seen as a safe haven. The yen gained 1.1% to 101.27 per dollar, and it was 0.4% higher at 131.09 per euro. Volatilities in global financial markets in recent days have helped the Japanese currency to recover after it fell to a 41/2 year low of 103.74 per dollar last week.
High-income Economies…Japan’s retail spending momentum improved, with sales up 3.2% (3m/3m saar) in the three months to April, the fastest pace of growth since March 2012. Higher spending was led by rising sales of automobiles, and with consumer confidence on the rise, is expected to improve further.
In Italy, the composite index of business confidence index increased to 79.8 in May, a marked improvement from 74.9 in April and led by growing optimism in the manufacturing sector on new orders and production growth. Among industrial sub-groups, notable improvements were seen in confidence among manufacturers of intermediate goods, consumer goods and capital goods.
The decline in Spanish consumer spending also appears to be bottoming out. Retail sales shrank by - 0.85% (3m/3m) in April after recording falls of 7 percent annualized on average in the previous 7 months.
Developing Economies…East Asia and the Pacific: Thailand’s central bank lowered its benchmark rate by 25 basis points to 2.5%. This was the first reduction since October 2012 amid slowing growth in the 2013Q1.
Europe and Central Asia: Croatia’s GDP contracted in 2013Q1 by 1.5% (y/y), an improvement compared to 2.3% (y/y) contraction in the previous quarter. A slower fall in industrial production and personal consumption contributed to a softer decline in GDP.
Latin America and the Caribbean: Brazil’s GDP growth slowed to 2.2% (q/q saar), down from 2.6% (q/q saar) in the previous quarter. Growth was dragged down by declining exports and surging imports, while household and government consumption was flat. Recovering investments were the only positive contribution to growth.