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

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.

Developing-country stocks slid to a 9-month low on Tuesday, led by the steepest drops in Philippine, Thailand, and Indonesia shares since 2011, amid growing speculation of the scaling back of the U.S. stimulus program and signs of slowing down in the major developing countries. The benchmark MSCI index fell 1.3% to the lowest level since September 6. Benchmark indexes in Philippine and Thailand tumbled 4.6% and 4.7%, respectively, amid capital outflows concerns, while Indonesian index fell 3.5%, the worst one-day loss in a year.

Indian rupee slumped to an all-time low against the dollar, weakening 0.4% to 58.395, amid a record current-account deficit, slowest economic growth in a decade and expectation of the dollar appreciation if the Federal Reserve reduces its stimulus program. Indian stocks fell to a seven-week low and the country’s biggest corporate bonds tumbled, weighted down by the rupee’s slide.

High-income EconomiesUK industrial production rose for the third successive month in April, with output up by 3.4%(3m/3m saar) versus 0.7% in March. The improvement was led by a jump in mining sector output which more than offset a small contraction (0.2% m/m sa) in manufacturing. 

Greece’s industrial production momentum turned positive for the first time in six months, with output rising by 1.6% (3m/3m saar) in April, helped by three consecutive monthly gains in output (seasonally adjusted).

Separately, Greek consumer prices continued to fall for the third consecutive month in May, with the harmonized index of consumer prices down 0.3% (y/y) following a 0.6% fall in April.

Developing EconomiesEurope and Central Asia: Turkey’s GDP growth accelerated in 2013Q1 to 6.6% (q/q saar), up from 0.4% (q/q saar) in the previous quarter. While services, manufacturing and construction activities increased, mining and quarrying declined. On a y/y basis, GDP grew by 3% in 2013Q1, up from 1.4% expansion registered in the previous three months.

Latin America and the Caribbean: Mexico’s industrial production growth contracted in April by 1.3% (3m/3m saar), down from 0.9% (3m/3m saar) growth in March. Declines were led by manufacturing which also contracted in April by -0.4% (3m/3m saar), down from a slight growth of 0.1% (3m/3m saar) in the previous month.

Sub-Saharan Africa: South Africa’s manufacturing growth rebounded to 7% (y/y) in April, up from a 2.2% (y/y) contraction in March and 2.8% (y/y) in February. Output increased 8.4% in the month.

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