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                      DECPG Daily
        Economics and Financial Market Commentary
                      May 17, 2013
                            Damir Cosic, Eung Ju Kim, Tehmina Khan

  You’ll find recent issues of this Daily and lots of other current analysis and high -frequency data at our
                                    website: http://www.worldbank.org/gem


Turkish bond yields at record lows on rating upgrade…Spain posts first monthly
trade surplus…Russia and Mexico GDP slows.
Financial Markets…Turkish government bonds rallied on Friday, with the benchmark
2-year note yield sliding 19 basis points to a record low of 4.61%, after Moody’s Investor
Service raised the country’s credit rating to investment grade for the first time in two
decades. Rates on the 2-year bonds have tumbled 138 bps this year. The nation’s
stocks also rallied, sending the Borsa Istanbul 100 index gained as much as 1.3% to
record highs.
Net purchases of Indian stocks by foreign investors totaled $311 million at the week
ended on May 15, the most since February 17, amid growing expectations of further
rates cuts by the central bank following slowing inflation in April. Oversea investors have
purchased a net $13.4 billion of local stocks thus far this year.
South Africa’s rand continued to depreciate against the dollar today, sliding as much as
1.2% to a four-year low of 9.4327, as renewed concern over labor unrest and
weakening commodity prices weighted on the country’s economy. The rand has
declined 3.2% this week.
High-income Economies…Spain posted its first monthly trade surplus on record in
March as imports slumped by 15% (y/y), after government budget cuts undermined
domestic demand. The trade balance swung to a surplus of 634.9 million euros in
March from a deficit of 1.18 billion euros in February and 3.2 billion euros a year earlier.
Exports rose 2% (y/y).
Canada’s annual inflation rate fell in April to 0.4% (y/y) on declining gasoline prices,
compared to a 1% gain the previous month. This is the slowest in more than three
years, taking it below the central bank’s target band of 1-3% and adding to evidence of
growing slack in the world’s 11th largest economy.
Japan’s core machinery orders excluding volatile ship and utility orders, which are a key
gauge of future investment demand, jumped by 14.2% (m/m sa) in March after a 4.2%
gain in February. Orders for Q1 were flat compared to a decline of 3.1% (q/q saar) in
Q4. Overseas orders were up by 54.1% (q/q saar) after a 13.3% increase in Q4.
Developing Economies…East Asia and the Pacific: China’s average wages for
employees at non-private enterprises grew by 11.9%, down from 14.4% growth in 2011.
Non-private enterprises include state-owned companies, listed companies and joint

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ventures. Average wages for employees at private companies climbed 17.1% 2012,
also decelerating from 18.3% increase in 2011.
Europe and Central Asia: Russia’s GDP grew by 1.6% (y/y) in 2013Q1, slowing for a
fifth consecutive quarter and down from a 2.4% (y/y) in 2012Q4. Russian economy is
affected by the recession in the euro area extended into a sixth quarter, which accounts
for about half of Russian trade. In addition, companies are trimming investment, while
government spending on the 2014 Sochi Olympics is drawing to a close and public-
wage growth slows.
Latin America and the Caribbean: Mexico’s GDP grew by 1.8% (q/q saar) in 2013Q1,
down from 3.1% (q/q saar) in the previous quarter. Growth was affected by economic
weakness in the United States. In addition, Mexican public sector expenditure ebbed,
common at the beginning of a new presidential administration.

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DECPG Daily is an informal briefing for Bank staff whose responsibilities require that they stay abreast of
changes in global markets. The views expressed here are those of the various authors and do not
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