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Upstate New York Regional Advisory Council Meeting
Federal Reserve Bank of New York 33 Liberty Street
10F, Paul Volcker Boardroom Tuesday, March 22, 2016
AGENDA
10:30am Introductory Remarks Jack Gutt, Executive Vice President
10:40am-11:10am The National Economy Richard Peach, Senior Vice President
11:10am-11:30am Regional Update
Jason Bram, Research Officer 11:30am-12:00pm International Update
Matthew Higgins, Vice President 12:00pm 12:15pm 12:15pm-1:55pm
Adjourn to NWCR-10F Lunch Round Table Discussion with William Dudley, President Questions for discussion with President Dudley:
Your experience and that of your customers and suppliers can give us insight into current economic conditions. 1. Has your firm experienced an increase in demand in recent
months? 2. Has demand for your product or service increased sufficiently that you increased or plan to increase employment in 2016? 3. Has demand for your product or service increased sufficiently
that you plan to increase investment in plant and equipment in 2016?
4. Can you please give us a brief overview of the process you typically go through and the major factor you take into account when setting average wage increase and starting wages for
your workforce? In particular, how do you factor in recent and expected inflation — specifically, changes in the cost of living for your workers? 5. Has your access to credit changed in 2016? 6. How is the labor market in meeting your needs?
2:00 pm Adjourn
Upstate New York Regional Advisory Board
Federal Reserve Bank of New York 33 Liberty Street New York, NY
Tuesday, March 22, 2016
ATTENDEE LIST
Board Members Scott Bieler President & CEO West Herr Automotive Group Kenneth M. Franasiak Chairman Calamar William Gisel President & CEO Rich Products Corporation Dr. Anne Kress President Monroe Community College Jordan Levy NY Partner Softbank Capital
Melanie LittleJohn Regional Director National Grid Linda MacFarlane President & CEO Community Loan Fund of the Capital Region Martin Mucci President & CEO PayChex, Inc. Robert L. Stevenson President Eastman Machine Company Carlos Unanue President Goya de Puerto Rico, Inc.
Federal Reserve Bank of New York
William Dudley Jack Gutt Richard Peach Matthew Higgins Anika Pratt
President EVP, Head of Communications & Outreach Group SVP, Research & Statistics VP, Integrated Policy Analysis AVP, Outreach & Education
Jason Bram Luis Uranga Tony Davis Angela Sun
Research Officer, Research & Statistics Officer and Chief of Staff, Chief of Staff’s Office Director, Community Engagement, Outreach & Education Associate, Legal
US Macro Overview March 22, 2016
Overview
• US economic growth slowed over the course of 2015 due primarily to slower growth among our trading partners and substantial dollar appreciation.
– Consumer spending and housing continued to be the engines of growth. – Growth of business fixed investment slowed substantially, due in part to the sharp contraction
in oil and gas drilling activity. – Net exports exerted a substantial drag.
• The labor market is showing all the classic signs of being at or near full
employment.
• Core inflation has moved up of late. – Rent inflation continues to edge higher. – Health care price inflation has turned the corner. – Rate of decline of core goods prices has slowed substantially.
• What is in store for 2016? Is the worst of the dollar shock behind us?
– There are some “green shoots”.
2
80
100
120
140
80
100
120
140
2012 2013 2014 2015 2016
Nominal Trade-Weighted Value of US$ Index Index
Source: Federal Reserve Board
Jan-97=100
-25
-20
-15
-10
-5
0
5
10
15
20
25
-25
-20
-15
-10
-5
0
5
10
15
20
25
2005 2007 2009 2011 2013 2015
Imports and Exports of Real Goods 4 Quarter % Change 4 Quarter % Change
Source: Bureau of Economic Analysis Note: Shading shows NBER recessions.
Exports
Imports
0
200
400
600
800
1000
1200
1400
1600
1800
0
200
400
600
800
1000
1200
1400
1600
1800
2000 2002 2004 2006 2008 2010 2012 2014 2016
Baker Hughes US Oil Rig Count Active Oil Rigs Active Oil Rigs
Source: Baker Hughes Note: Shading shows NBER recessions.
0
100
200
300
400
500
600
0
100
200
300
400
500
600
2012 2013 2014 2015 2016
Non-Investment Grade Corporate Bond Spread Basis Points Basis Points
Source: Standard & Poor, Federal Reserve Board
-1
0
1
2
3
4
5
6
-1
0
1
2
3
4
5
6
2012 2013 2014 2015 2016
Aggregate Weekly Hours Worked Y/Y % Change Y/Y % Change
Source: Bureau of Labor Statistics
Note: Shading shows NBER recessions.
Goods-Producing Industries (Left Axis)
Private Service-Providing
Industries (Right Axis)
-4
-3
-2
-1
0
1
2
3
4
5
-4
-3
-2
-1
0
1
2
3
4
5
2006 2008 2010 2012 2014 2016
Real Wage & Salary Income versus Real PCE Y/Y % Change Y/Y % Change
Source: Bureau of Economic Analysis
Note: Shading shows NBER recessions.
Real W&S Income
(Left Axis)
Real PCE (Right Axis)
-30
-20
-10
0
10
20
30
40
50
60
-30
-20
-10
0
10
20
30
40
50
60
287-603 604-679 680-749 750-801 802-839
Change in Debt 2014Q4-2015Q4 By Credit Score Quintile Percent Percent
Equifax Risk Score Quintiles*
Mortgage/ HELOC Auto Credit Card Inquiries
Note: * 2014Q4 Quintiles
Student Loan
9
0
200
400
600
800
1000
1200
1400
1600
1800
0
50
100
150
200
250
300
350
400
450
500
2000 2002 2004 2006 2008 2010 2012 2014 2016
Housing Starts Thousands, 3 MMA Thousands, 3 MMA
Source: Census Bureau Note: Shading shows NBER recessions.
Total Multifamily (Left Axis)
Total Single Family
(Right Axis)
Single Family Housing Market
3
4
5
6
7
8
9
10
11
12
13
-20
-15
-10
-5
0
5
10
15
20
25
2000 2002 2004 2006 2008 2010 2012 2014 2016
12 Month % Change Months
Source: CoreLogic, National Association of Realtors, via Haver Analytics Note: Shading shows NBER recessions.
Single Family House Price Index
(Left Axis)
Months’ Supply
(Right Axis)
“Normal” Range for Months’ Supply
0
0.005
0.01
0.015
0.02
0.025
0.03
0
0.005
0.01
0.015
0.02
0.025
0.03
1968 1978 1988 1998 2008
Housing Starts and Existing Homes Sales Per Capita Units Units
Source: BLS, Census Bureau, NAR
Note: Shading shows NBER recessions.
Housing Starts
Existing Home Sales
.0178 (average over 1968-2003)
.009 (average over 1968-2003)
-800-600-400-200020040060080010001200140016001800
-1000
-500
0
500
1000
1500
2000
1999 2001 2003 2005 2007 2009 2011 2013 2015
Household Formations 2 Year Avg. Change 2 Year Avg. Change
Source: Bureau of the Census Note: Shading shows NBER recessions.
Total (Left Axis)
Renter (Left Axis)
Owner (Right Axis)
500
550
600
650
700
750
800
500
550
600
650
700
750
800
1999 2001 2003 2005 2007 2009 2011 2013 2015
About 35 to 40 Million People
Credit Score at Mortgage Origination: All First Mortgages Credit Score Credit Score
Source: FRBNY Consumer Credit Panel
Median
10th Percentile
25th Percentile
14
-25
-20
-15
-10
-5
0
5
10
15
20
25
-25
-20
-15
-10
-5
0
5
10
15
20
25
2005 2007 2009 2011 2013 2015
Bank Assets: Domestically and Foreign Chartered Banks % Change Year-to-Year % Change Year-to-Year
Source: Federal Reserve Board Note: Shading shows NBER recessions.
Commercial and Industrial Loans
(Left Axis)
Residential Real Estate Loans (Right Axis)
Commercial Real Estate Loans
(Left Axis)
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
60 65 70 75 80 85 90
Quarterly data1980Q1 – 2007Q4
Equipment Investment Spending and Capacity Utilization Real Business Investment in New Equipment (% Change – Year to Year)
Real Business Investment in New Equipment (% Change – Year to Year)
Source: Federal Reserve Board, Bureau of Economic Analysis
Manufacturing Capacity Utilization (Percent of Capacity)
2015Q4:
(76.0, 1.0)
16
-5
-4
-3
-2
-1
0
1
2
3
4
5
-8
-6
-4
-2
0
2
4
6
8
10
2000 2002 2004 2006 2008 2010 2012 2014 2016
Real Government Consumption and Gross Investment 4 Quarter % Change 4 Quarter % Change
Source: Bureau of Economic Analysis Note: Shading shows NBER recessions.
Federal (Left Axis)
State & Local (Right Axis)
0
2
4
6
8
10
12
56
58
60
62
64
66
68
2000 2002 2004 2006 2008 2010 2012 2014 2016
Percent Percent
Source: Bureau of Labor Statistics, via Haver Analytics Note: Shading shows NBER recessions.
Labor Force Participation Rate
(Left Axis)
Unemployment Rate
(Right Axis)
Employment-Population Ratio
(Left Axis)
Labor Market Indicators
0
2
4
6
8
10
12
60
65
70
1955
1959
1963
1967
1971
1975
1979
1983
1987
1991
1995
1999
2003
2007
2011
2015
Labor Share of National Income and Unemployment Percent Rate
Source: Bureau of Economic Analysis, BLS Note: Shading shows NBER recessions.
Labor Share of National Income
(Left Axis)
Unemployment Rate
(Right Axis)
-2
-1
0
1
2
3
4
5
-2
-1
0
1
2
3
4
5
2000 2002 2004 2006 2008 2010 2012 2014 2016
12 Month % Change 12 Month % Change
Source: Bureau of Economic Analysis, via Haver Analytics Note: Shading shows NBER recessions.
Total PCE
Core PCE
FOMC Objective
PCE Deflator
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
-3
-2
-1
0
1
2
3
4
2000 2002 2004 2006 2008 2010 2012 2014 2016
CPI Inflation: Core Goods and Core Services 12 Month % Change 12 Month % Change
Source: Bureau of Labor Statistics Note: Shading shows NBER recessions.
Core Goods (Left Axis)
Core Services (Right Axis)
-1
0
1
2
3
4
5
6
7
8
9
10
11
12
2000 2002 2004 2006 2008 2010 2012 2014 2016
Rental Vacancy Rate and Rent of Primary Residence Percent 12 Month % Change
Source: Census Bureau, BLS Note: Shading shows NBER recessions.
Rental Vacancy Rate
(Left Axis)
Rent of Primary Residence (Right Axis)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Personal Consumption Expenditures: Health Care Price Index 12 Month % Change 12 Month % Change
Source: Bureau of Economic Analysis Note: Shading shows NBER recessions.
17% of total PCE deflator 19% of core PCE deflator
0
1
2
3
4
0
1
2
3
4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
TIPS-based Inflation Expectations Percent Percent
Source: Federal Reserve Board
Note: Dashed lines represent 2 standard
deviations from the mean.
5-10 Years
2011 – Present Average
2.44
3.22 (+2 SD)
1.65 (-2 SD)
(As of 3-1-16)
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
2012 2013 2014 2015 2016
Energy, Industrial Metals and Livestock Level Level
Source: Standard & Poor’s
Note: Shading shows NBER recessions.
Index Dec-31-1969=100
Energy (Left Axis)
Industrial Metals (Right Axis)
Livestock (Left Axis)
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014 2015 2016
Industrial Production: Manufacturing Y/Y % Change Y/Y % Change
Source: Federal Reserve Board
Note: Shading shows NBER recessions.
Overview of the Regional Economy Presentation to the Upstate New York Regional Advisory Board Jason Bram, Research Officer March 22, 2016
The views expressed here are those of the presenter and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System.
Overview of Regional Conditions
• Recent benchmark revisions show slower job growth in upstate New York, while home prices remain buoyant.
• New York City’s economy continues to grow briskly.
• New Jersey’s economy is looking a bit stronger after benchmark revisions.
• Puerto Rico’s economy continues to languish at depressed levels.
FEDERAL RESERVE BANK OF NEW YORK 2 2
80
90
100
110
120
130
2007 2008 2009
Shading indicates NBER recession
2010 2011 2012 2013 2014 2015 2016 2017
New York State
New Jersey
New York City
Puerto Rico
Regional Economic Activity Index of Coincident Economic Indicators (CEI)
Index (Dec2007=100)
Dec
Source: Federal Reserve Bank of New York 3
88
92
96
100
104
2007 2008 2009
Shading indicates NBER recession
2010 2011 2012 2013 2014 2015 2016 2017
New York State
New York City
United States
New Jersey
Puerto Rico
108
Feb
112
116
Private-Sector Employment Seasonally Adjusted Index
Index (Dec2007=100)
Source: Bureau of Labor Statistics and Moody's Economy.com 4
Employment Growth in Upstate NY Before and After Benchmark Revisions
5 Source: New York State Department of Labor, Bureau of Labor Statistics, and Moody's Economy.com
2,175
2,200
2,225
2,250
2,275
2,300
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands
Upstate NY Pre Revision
Upstate NY Post Revision
Jan
Dec
Shading indicates NBER recession
Employment Growth in Upstate NY Before and After Benchmark Revisions
6 Source: New York State Department of Labor, Bureau of Labor Statistics, and Moody's Economy.com. Note: Employment growth calculated as percent change between 2014 and 2015 annual total employment.
1.6
1.3 1.2
0.9
0.7
-0.4
0.5
1.1
0.4
0.2 0.1
-1.1
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Buffalo Albany Rochester Utica Syracuse
Pre Revision Change Post Revision Change
Percent
Binghamton
Employment Growth in New York City Before and After Benchmark Revisions
7 Source: New York State Department of Labor, Bureau of Labor Statistics, and Moody's Economy.com
3,600
3,800
4,000
4,200
4,400
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands
New York City Pre Revision
New York City Post Revision
Shading indicates NBER recession
Jan
Dec
Employment Trends in Puerto Rico Before and After Benchmark Revisions
8 Source: Bureau of Labor Statistics and Moody's Economy.com
850
900
950
1,000
1,050
1,100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands
Puerto Rico Pre Revision
Puerto Rico Post Revision
Jan
Dec
Shading indicates NBER recession
-60
-40
-20
0
20
40
60
2007 2008 2009
Shading indicates NBER recession
2010 2011 2012 2013 2014 2015 2016 2017
Empire State Manufacturing Survey
Business Leaders Survey
(Service Sector)
Current Economic Conditions FRBNY Business Surveys, Current Conditions
Diffusion Index
Mar
Source: Federal Reserve Bank of New York 9
For more detail on these two surveys, please see https://www.newyorkfed.org/survey/business_leaders/bls_overview and https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html
Superstorm Sandy
March 2016 Supplementary Questions FRBNY Business Surveys
Source: Federal Reserve Bank of New York 10
Empire State Manufacturing Survey
Business Leaders (Service Sector) Survey
Mean Median Mean Median
Compensation your firm will pay per employee (for wages and benefits) 2.79 3.00 3.44 3.00
Prices your employees will pay (for goods and services where they live) 2.27 2.00 2.69 2.00
Prices U.S. consumers will pay (for goods and services ) 2.03 2.00 2.64 2.00
By what percentage do you expect each of the following to change over the next 12 months?
For full report, please see https://www.newyorkfed.org/medialibrary/media/survey/business_leaders/2016/2016_03supplemental.pdf
60
70
80
90
100
110
2006 2007 2008 2009
Shading indicates NBER recession
2010 2011 2012 2013 2014 2015 2016 2017
United States
Downstate NY
Upstate NY
Home Prices CoreLogic Home Price Index, Seasonally Adjusted
Index (Mar2006=100)
Jan
Source: CoreLogic Home Price Index (including distressed sales) 11
60
70
80
90
100
110
120
130
2006 2007 2008 2009
Shading indicates NBER recession
2010 2011 2012 2013 2014 2015 2016 2017
United States
Albany
Rochester
Buffalo
Home Prices CoreLogic Home Price Index, Seasonally Adjusted
Index (Mar2006=100)
Jan
Source: CoreLogic Home Price Index (including distressed sales)
Syracuse
12
Global Economic Outlook
Upstate New York Regional Advisory Board Matthew Higgins, March 2016
Roadmap Foreign advanced economies’ struggle to escape
“lowflation”
Political economy risks in Europe
Market and economic stresses facing EMEs
China’s ongoing economic slowdown and recent policy surprises
High EME corporate debt and the risk of disorderly deleveraging
0
2
4
6
8
10
12
10 11 12 13 14 15 16
Global GDP Growth Percent Q/Q-4
Emerging ex. China
China
Advanced
90
95
100
105
110
115
08 09 10 12 12 13 14 15 16
Indexes, 2008:Q1 = 100
Advanced Economy Real GDP
Japan
United States
Euro area
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
98 00 02 04 06 08 10 12 14 16 18
Euro Area: Real GDP vs. Potential Trillions of 2010 euros
Real GDP
EC Potential Estimate
Linear Trend, 1998-2005
EC forecasts
Sources: Eurostat, EC CIRCA database.
2016 2017
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
12 13 14 15 16
Percent change from year ago
G-3: Core Consumer Price Inflation
Japan
United States
Euro Area
Sources: BEA, Eurostat, BoJ. U.S. inflation measured using the PCE index.
1.7
0.8 0.7
0
20
40
60
80
100
08 09 10 11 12 13 14 15 16 17
Percent
Central Bank Credit as a Share of GDP
Japan
United States
Euro Area
Sources: BoJ, ECB, Federal Reserve. Projections assume that announced BoJ and ECB asset purchase programs proceed as planned, and that Federal Reserve credit remains constant at its current level. Nominal GDP is assumed to grow in line with current market forecasts.
AE Core Inflation Performance with Negative Policy Rates
Country Date AdoptedInitial Core
InflationCurrent Core
Inflation
Japan January 2016 0.8 0.7
Sweden Feruary 2015 0.9 1.4
Switzerland December 2014 0.2 -1.0
Denmark September 2014 1.0 1.3
Euro Area June 2014 0.7 0.8
Sources: National sources, OECD. Policy rates are as follows: Japan, marginal current account balances; Sweden, repo rate; Switzerland, 3-mo. LIBOR target; Denmark, CD rate; Euro Area, deposit rate.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2000 2002 2004 2006 2008 2010 2012 2014
Eurozone UK Canada Japan US
Bank Net Interest Margins Percent Percent
Source: Bloomberg, Federal Reserve Board
0%
10%
20%
30%
40%
50%
60%
0%
10%
20%
30%
40%
50%
60%
Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16
UK Poll: Should the UK Remain in the EU? 5-poll moving average 5-poll moving average
Source: Whatukthings.org.
Remain
Leave
Undecided
3
4
5
6
7
11 12 13 14 15 16
Percent, CY/CY
Evolution of EME Market Growth Forecasts
2014 2013
2015
2012
Sources: Blue Chip Economics, Consensus Economics. Figures are GDP-weighted averages for 24 EMEs outside China.
2016
70
80
90
100
110
120
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
Indexes, January 2014 = 100 U.S. and EME equity performance
S&P500 FTSE EME equity index
Note: Index values are in dollar terms
-6
-4
-2
0
2
4
6
8
10
12
10 11 12 13 14 15 16
Emerging Economy GDP Growth Percent Q/Q-4
EMEs ex. China, Brazil, Russia
China
Brazil & Russia
-20
-10
0
10
20
30
40
04 05 06 07 08 09 10 11 12 13 14 15 16
Percent from year-ago month, based on 12-month sum China: Export and Import Volume Growth
Sources: China National Bureau of Statistics, BEA.
Exports Imports
0.75
0.85
0.95
1.05
1.15
1.25
4
6
8
10
12
14
16
07 08 09 10 11 12 13 14 15 16
Percent, Q/Q-4
China: GDP growth and labor market tightness
GDP growth
Job openings to seekers ratio
Ratio
Sources: National Bureau of Statistics, Ministry of Human Resources and Social Security.
-350
-300
-250
-200
-150
-100
-50
0
14 15 16
Basic points
China: Cumulative Rate and RR Cuts
Required reserve ratio
Policy Rate
80
100
120
140
160
180
200
50
60
70
80
90
100
110
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Credit to Private Nonfinancial Sector ( % GDP ) Percent Percent
Advanced
China
Other EMEs
Source: BIS.
-250
-200
-150
-100
-50
0
50
100
150
200
250
-250
-200
-150
-100
-50
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Basic Balance
Net private non-FDI capital flows
Reserves
China: Basic Balance and Net Capital Flows $U.S. billions
"Basic balance" includes current account and net FDI. Net private fon-FDI financial flows includes errors and omissions. Last data point for reserves is estimated from partial data.
6.1
6.2
6.3
6.4
6.5
6.6
6.7
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16
China: Hypothetical Basket-Implied Exchange RateRMB per USD
Sources: Bloomberg, FRBNY calculations
Spot rate required to fix CFETS basket at level of 8/13/2015
Spot Rate (actual)
Step devaluation
Change in Private Credit to GDP Ratio End-2007 to June 2015 or 7½ years preceding crisis
0
20
40
60
80
100
120
140
160Percentage points
Sources: BIS, staff estimates.
Nonfinancial Corporate Credit by Source of Financing
0
4
8
12
16
Sources: BIS, staff estimates. Other EMEs includes India, Indonesia, Hong Kong, Korea, Malaysia, Singapore, Thailand, Brazil, Mexico, Czech Rep., Hungary, Poland, Russia, Turkey and South Africa.
$U.S. trillions, 2015:Q1
China
Domestic Banks
Domestic Debt Securities
Foreign Securities and Bank Loans
Other EMEs
$4.3
$0.9
$2.3
0 10 20 30 40 50 60 70
MexicoSouth Africa
RussiaMalaysia
South KoreaThailand
IndonesiaTurkey
IndiaBrazil
Total
Note: Represents the 1,800 most indebted companies listed on the national stock exchanges in 10 EMEs. Firms at risk have ICRs less than 2. Source: Capital IQ, IPA estimates
Petrobras
EME Corporate Debt at Risk ICRs < 2x assuming a 200 bps rate hike and 25% EBITDA decline
REFERENCE CHARTS
35
40
45
50
55
60
65
-6
-4
-2
0
2
4
6
8
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Percent SAAR
Global GDP Growth and Global Composite PMI
GDP Growth
Composite PMI
Correlation = 0.85
Sources: Markit Economics, national surveys
Jan/Feb
40.0
42.5
45.0
47.5
50.0
52.5
55.0
57.5
05 06 07 08 09 10 11 12 13 14 15 16
Diffusion Index
Emerging Market Manufacturing PMI
Source: Markit.
Average 2005 – 2008:Q1 = 53.3
Average 2012 – 2015:Q1 = 50.5
Global GDP Growth and Market Forecasts ( % CY/CY ) 2015 2016F 2017F
World 2.6 2.7 3.1
Advanced 1.8 1.8 2.0o/w: United States 2.4 2.1 2.4
Euro Zone 1.5 1.6 1.7United Kingdom 2.2 2.0 2.2Japan 0.4 0.8 0.7
Emerging Markets 3.6 4.0 4.7o/w: China 6.9 6.4 6.2
India 7.4 7.5 7.5NIE+ 1/ 2.7 2.9 3.2Russia -3.7 -1.2 1.3Brazil -3.8 -2.9 1.0Mexico 2.5 2.5 2.9
Sources: Blue Chip Economics as of March w here available, Consensus Economics as of March or February elsew here. Aggregates are dollar-GDP w eighted averages. 1/ Hong Kong, Korea, Malaysia, the Philippines, Singapore, Taiw an and Thailand.
-8-6-4-202468
1012
10 11 12 13 14 15 16
Percent SAAR and Q/Q-4
Japanese GDP Growth
SAAR Q/Q-4 Market forecast
Tōhoku earthquake VAT hike
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2010 2011 2012 2013 2014 2015 2016 2017
Oil: Supply and Demand GrowthMillions of barrels per day, 4 quarter moving average, y/y
Source: IEA. Forecast assumes OPEC ex-Iran supply continues at current rates, and Iran rejoins the market in Q3 at 0.6 mbpd . Forecast as of Feb-2015.
Current Forecast
Demand Supply
Supply forecastsas of March 2015
Demand forecastas of March 2015
Credit to the Nonfinancial Sector
0
4
8
12
16
20
24
Sources: BIS, staff estimates. Other EMEs includes India, Indonesia, Hong Kong, Korea, Malaysia, Singapore, Thailand, Brazil, Mexico, Czech Rep., Hungary, Poland, Russia, Turkey and South Africa.
$U.S. trillions
China
Corporate
Household
Government
Other EMEs
Other EMEs
China
2007:Q4 2015:Q1
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