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Prospects Daily: Global equities climb to a near 6-year high, OECD Q3 economic growth stable at 0.5%, Nigeria’s GDP growth accelerates in Q3

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Financial Markets… Global equities climbed to a near 6-year high on Monday as Chinese government announced its most comprehensive economic and social reforms since the 1990s. Growing expectations of continued stimulus in the U.S. also weighed positively on market sentiments. The benchmark MSCI world stock index rose 1.6% to its highest level since January 2008. Notably, china’s offshore stock index (traded in Hong Kong) jumped 5.6%, while the country’s benchmark Shanghai Composite Index climbed 2.9% amid prospects of ambitious economic reforms. U.S. equities also opened higher in morning trade, with the Dow and S&P 500 indexed extending historic highs reached last week.
 
The dollar has started the week on a weak note amid growing market speculations that the Federal Reserve would maintain its stimulus program this year. The greenback slid against the euro to as low as $1.3542, the weakest level since November 6, and it depreciated 0.6% versus the yen to 99.94 after climbing to 100.44 last Friday, the strongest level since September 11. Most investors currently expect any Fed’s move is more likely in March 2014 than December this year, suggesting the dollar liquidity is likely to remain robust through the global financial system for the time being.
 
High Income Economies…Provisional estimates show that the OECD economy expanded by 0.5% (q/q sa) in Q3, unchanged from Q2.  GDP growth for the U.K and U.S. accelerated to 0.8% and 0.7% respectively, compared with 0.7% and 0.6% in Q2.  Japan’s and Germany’s GDP increased by 0.5% and 0.3%, respectively, down from 0.9% and 0.7% registered in Q2.  In France, GDP decreased by 0.1%, after the rebound of 0.5% in Q2.  In Italy, GDP declined for the ninth consecutive quarter, but with the pace of contraction slowing to 0.1%, compared with 0.3% in Q2.  Compared with Q3 2012, GDP growth for the OECD area accelerated to 1.4% (y/y), compared with 1.0% in Q2.  Among the G7, Japan recorded the highest growth rate (2.6%, y/y) and Italy the largest contraction (-1.9%).
 
Driven by exports rising 1.0% (m/m sa) with a concurrent fall in imports by 0.3%, preliminary estimates of the Eurozone trade balance indicate a surplus of €13.1 bn for September, compared with August’s surplus of €6.9 bn.  The European Union’s trade balance for September was a surplus of €0.6 bn, compared with August’s deficit of €2.4 bn.  EU exports rose by 0.2% (m/m sa), while imports fell by 0.2%.
 
Boosted by rising copper output, Chile’s economic growth accelerated to 4.7% (y/y) in Q3 from a revised 4.0% in Q2.  The mining sector, the main contributor to growth, increased 8.5% up from 4.5% in Q2, mainly due to a 9.1% growth in copper production. Agriculture rose 7.4%, up from 5.7% in Q2 and manufacturing production accelerated to 2.0%, from 1.0 % in Q2.  In contrast, fishing dropped by 8.1%.  On a quarterly annualized basis, GDP increased by 5.4% (q/q saar), compared with 1.3% in Q2.
 
Developing Economies… East Asia and Pacific: Thailand’s economy grew at the annualized rate of 2.7% (y/y) in the third quarter of 2013, slower than the 2.9% (y/y) expansion recorded in the second quarter, and lower than the consensus forecast of 3%. The slowdown was driven by a sharp decline in investment, which fell 6.5% (y/y) in the third quarter; and, in addition, household consumption declined  by 1.2% (y/y).  Positive contributions came from government consumption, which grew by 7.4% (y/y) and net exports of goods and services, which rose by 18.6% (y/y). Quarter-on-quarter, GDP rose 1.3% in the third quarter from flat growth in the second quarter. As a result of these outturns, the government lowered its growth estimate for 2013 to 3% from the previous projection of 3.8-4.3; and for 2014, growth is projected in the range of 4-5%.
 
Middle East and North Africa: Iraq’s annual headline inflation, measured by the consumer price index, rose to 3.1% (y/y) in October from 0.3% (y/y) in September on account of higher food prices and housing cost.
 
Sub-Saharan Africa: Nigeria’s economy grew at a fast pace in the third quarter of 2013, with GDP growth rising to 6.8% (q/q), up from 6.2% in the second quarter.  The oil sector contributed 12.5% to real GDP growth in the third quarter, down from 12.9% in the second quarter, and less than the 13.4% recorded in the third quarter of 2012.  Oil production came in at 2.26 million barrels per day in the third quarter of 2013, up from 2.11 million barrels per day in the second quarter but less than the 2.52 million barrels per day recorded in the same quarter in 2012. The non-oil sector continued to expand, growing at 7.9% in the third quarter, up from 7.6% in the third quarter of 2012, and 7.3% in the second quarter for 2013. The agricultural sector, banking and insurance activities, real estate, hotels and restaurants, building and construction, and solid mineral production were the main drivers of the non-oil sector growth.