World stock markets remain strong… French consumer confidence at near
three-year high… Ukraine tightens capital controls
Financial Markets
Global equities inched higher and they traded at near record highs as investors welcomed Tuesday’s
comments from Fed chairwoman Janet Yellen suggesting that the U.S. central bank may be on course for
a later start to an interest rate hike. Fading concerns over the Greek exit and a rebound in China’s
manufacturing sector also boosted investors’ sentiment. Following Tuesday’s gains in U.S. equities and
further rally in Asia markets overnight, the MSCI world stock index was up 0.05% and staying close to alltime peak level reached in September.
Oil prices traded higher Wednesday on signs of improving demand. But gains were limited after data
showed U.S. crude-oil stockpiles climbed to a record level last week, posting the seventh straight week of
gain. Saudi Arabia’s oil minister said that oil demand was growing and that markets have calmed. And
Chinese manufacturing sector posted a modest expansion in February, which is bullish for oil prices given
that the country is the second largest user of oil. Brent crude rose 1.1% to $59.21 a barrel, while U.S. oil
futures gained 0.9% to $49.70.
High Income Economies
Rising to a near three-year high and signaling a recovery, French consumer confidence index edged up
to 92 in February from 90 in January, survey data from statistical office Insee showed Wednesday. The
latest reading beat economists’ forecast of 91 and was the highest level since May 2012, when it was
also 92. The sub-indexes measuring households' opinion of their past financial situation and their future
financial situation also climbed by two points each to -27 and -15, respectively.
Austria’s production index, which combines industrial production and construction, declined a workingday-adjusted 2.6% (y/y) in December. Production in the industrial sector fell 1.1% and construction
output tumbled by 7.3%. Among sub-sectors, energy industry logged a sharp decline of 10.1%, while
non-durable consumer goods production advanced by 7.4%. In the whole year 2014, production index
slid 0.6% compared to 2013. The decrease was mainly due to the 2.0% drop in the construction sector.
At the same time, industrial sector registered a slight decline of 0.3%.
GDP for Hong Kong SAR, China expanded 2.3% in 2014, in line with economists’ expectations, slower
than the 2.9% growth saw in 2013, but much faster than the 1.5% increase in 2012. The latest slowdown
occurred amid wide-scale democracy protests beginning in September that disrupted retail sales and
tourism, especially from the Chinese mainland.
Developing Economies
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East Asia and Pacific
China’s Markit Economics flash manufacturing purchasing managers’ index (PMI) rose to a four-month
high of 50.1 in February from 49.7 in January. Economists expected the index to come in at 49.5. A
reading above 50 signals expansion while that below 50 indicates contraction. Sub-components of the
index suggested that while manufacturing output increased marginally, firms still faced considerable risks
from weak foreign demand and deepening deflationary pressures. Employment levels also declined at an
accelerated pace. Analysts believe that domestic economic activity remains sluggish and external
demand uncertain, such that more policy easing will be still warranted to support growth. Final data will be
released on March 2.
Europe and Central Asia
Ukraine’s central bank put restriction on foreign currency purchases in a latest bid to stem a sharp drop in
the hryvnia’s value. Authorized banks are prohibited from purchasing foreign currency for their clients until
February 27. Banks are also restricted in the own purchases of foreign currency for hryvnias for their
operations to up to 0.5% of bank’s capital for a working day. The central bank also enlarged the waiting
period to four business days from three, for the purchase of foreign currency through deposits in special
accounts, or for making advance payments on imports worth more than $50,000.
February 25, 2015
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World Bank’s Development Economics Prospects Group. Recent issues, together with analysis of a
variety of macroeconomic topics, covered by the Group, may be found at:
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