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Prospects Daily: Developing-country shares turn weaker, U.K. raises growth forecasts, South Africa’s inflation rises for third consecutive month

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Financial Markets…Developing-country stocks fell for the first time this week on China concern. The benchmark MSCI Emerging Market Index fell 0.3%, snapping a two-day gain, as China’s broader stock index dropped 0.8% and the country’s currency weakened to near an 11-month low against the dollar. The collapse of property stocks and an increase in money-market rate spurred a slide in Chinese stocks. Russian stocks posted sharp declines as well amid lingering tensions over Ukraine.

High Income Economies…During the three months to January, U.K.’s jobless rate, based on International Labor Organization standards, came in at 7.2%, down from 7.4% in the three months to October. The number of unemployed totaled 2.33 million, down by 63,000 from the August to October period. At the same time, employment increased 105,000 to a record 30.19 million due to more self-employed people.

At the same time, Chancellor George Osborne announced that the U.K. is set to grow faster-than-expected in the next two years. The economy is expected to expand 2.7% in 2014, greater than the earlier forecast of 2.4%. The 2015 growth forecast was hiked to 2.3% from 2.2%, while projections for 2016 and 2017 were left unchanged at 2.6%. Meanwhile, the outlook for 2018 was cut to 2.5% from 2.8%.

Chile's Q4 2013 GDP missed forecasts, with the economy shrinking 0.1% (q/q sa), following a 1.6% increase in Q3. On an annualized basis, GDP decreased 0.3% (q/q saar) in Q4, after Q3’s 6.5% increase. For the whole of 2013, the economy expanded 4.1%.

Japan's leading economic index increased for the fifth consecutive month in January moving up more-than-expected to 113.1 in January from the upwardly revised 111.9 in December. The coincident economic index, which measures the current economic situation, also advanced to 115.2 in January from the upwardly revised 112.2 in December. Similarly, the lagging index, a gauge of the past performance of the economy, increased to 116.0 from 114.8.

Developing Economies…South Asia: India’s leading economic index fell 0.3% (m/m) to 177.3 in February, after rising 0.7% in January. Four of the eight components contributed positively to the index, with negative contributions coming from exports and the financial indicators. The coincident economic index, a gauge of the current economic situation, edged up 0.3% to 202.1, after rising 0.1% in January. In the six months ended February, the leading economic index gained 0.3%, while the coincident index fell 2.1%.

Sub-Saharan Africa: South Africa’s inflation, measured by the consumer price index, rose for the third consecutive month to 5.9% (y/y) in February up from 5.8% in January, moving closer to the central bank’s 6% ceiling, mainly due to higher petrol and food prices and health insurance costs. Month-on-month, prices rose 1.1% in February up from 0.7% in January.

Meanwhile, South Africa’s retail sales increased at a fast pace in January, rising 6.8% (y/y), after advancing 2.7% in December, largely exceeding expectations. The January reading was the fastest increase in retail sales since August 2012, when retail sales grew 6.9%. Driving this rapid increase, sales of textiles, clothing, and footwear and leather goods rose 11.6%; and sales of hardware, paint and glass products increased 9.9%. Month-on-month, retail sales went up 0.8% in January, following a 1.0% increase in December.