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									                                                                                                                Economics Research
                                                                                                                             19 April 2013



Global Economics Weekly
                                                                                          Global Forecasts                                   2
Weaker commodities can                                                                    Global Synthesis                                   3

support growth                                                                            Global Rates and Inflation                         5

• As part of the recent consolidation in risk appetite, commodity prices have             United States
   retreated, and in turn this helps to provide some additional support for the G20.      Outlook                                            6
                                                                                          GDP Tracking: Q1 GDP tracking 3.0%                 8
• With Brent oil down 16% since early February, lower energy costs will help Japan        Data Review & Preview                              9
   and India the most, but the impact is also significant for Europe and China.
                                                                                          Euro Area
• Japan’s trade data illustrate that, even with a 20% currency depreciation, the          Outlook                                       11
   export response takes time (particularly given slowing Chinese import demand).         France: Fiscal adjustment: to three
                                                                                          or not to three?                              13
• The lower inflation profile from weaker commodities also affords more potential         Slovenia: Manageable threats                  16
   for sustained and aggressive QE by the Fed and BoJ, and for ECB/BoE easing.            Data Review & Preview                         19

Developed Economies                                                                       United Kingdom
                                                                                          Outlook                                       21
United States: In like a lion, out like a lamb                                        6
                                                                                          Data Review & Preview                         23
Manufacturing ex-autos fell in March, which signals the rebound in inventories that has
helped to boost growth in Q1 is coming to an end.                                         Japan
                                                                                          Outlook                                       24
Euro area: Next week’s data could push the ECB to act                 11
                                                                                          Data Review & Preview                         26
Next Tuesday’s PMI and Wednesday’s IFO prints could be important for the
macroeconomic outlook and, if weak, could spark a rate cut.                               Emerging Asia
                                                                                          China Outlook                                 27
UK: No revolution, not much evolution                                          21
                                                                                          Asia Outlook                                  29
The redrafted MPC remit has not changed the policy outlook, but weak activity data
                                                                                          India: Lower inflation, commodities
keep the prospect of more QE open.                                                        major relief                                  31
                                                                                          Data Review & Preview                         34
Japan: The BoJ and the right expectations                                  24
Financial conditions have become substantially more accommodative, but the BoJ            EEMEA
strategy for 2% price stability also relies heavily on expectations.                      Outlook                                       35
                                                                                          Data Preview & Review                         37
Emerging Markets
                                                                                          Latin America
China: The “new normal” for growth                                              27
                                                                                          Outlook                                       38
Chinese Q1 GDP growth surprised to the downside at 7.7%. We view the slowdown as
                                                                                          Data Preview & Review                         40
more structural in nature than cyclical and think potential growth is now 7-8%.
                                                                                          Country Snapshots                             41
Emerging Asia: A lower energy bill – Who gains?                                      29
With energy prices dropping, Asia’s external balances are likely to improve.              Global Weekly Calendar                        47

EEMEA: More rate cuts as growth is key concern                                   35       INSTITUTIONAL INVESTOR ALL-AMERICA
Turkey cut its main policy rates 50bp, bringing the repo rate to 5.0%. Next week we       FIXED INCOME RESEARCH TEAM SURVEY
                                                                                          2013
expect Hungary to continue its loosening cycle, possibly with a 50bp cut.
                                                                                          Voting has begun for the Institutional Investor
Latin America: Split ways                                                          38     All-America Fixed Income Research Team
                                                                                          Survey 2013. Barclays would welcome your
LatAm policymakers are once again refocusing on global events. Concerns about falling     support.
commodity prices and softer global economic activity are gaining space.                   If you have not received a ballot and would like
                                                                                          to participate, please click on Institutional
                                                                                          Investor's Rankings Assistance Page to request
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 52        one.
Barclays | Global Economics Weekly


GLOBAL FORECASTS
                                                      Real GDP                                   Real GDP                Consumer prices            Consumer prices
                                           % over previous period, saar                       % annual change           % over a year ago           % annual change
                         Weight* 4Q12          1Q13       2Q13       3Q13       4Q13   2011    2012   2013      2014   1Q13   2Q13    4Q13   2011    2012    2013     2014
Global                    100.0      2.5        2.9        3.6        4.1        4.5    3.8   3.1    3.2        4.0     2.7    2.6 ↓ 2.9 ↓ 3.8         2.9    2.8      3.1
   Advanced                50.5     -0.5        1.5        1.4        2.0        2.1    1.4   1.2    1.1        2.0     1.5    1.3 ↓ 1.5 ↓ 2.5         1.8    1.4   ↓ 2.0
   Emerging                49.5      5.7        4.4   ↓    5.8        6.2   ↑    7.0   6.5    5.0    5.3        6.0     4.7    4.9    5.3    6.3       4.7    5.0      4.9
       BRIC                31.2      6.6        5.4   ↓    6.7   ↑    7.1   ↑    8.1   7.6    6.0   6.4         6.9     4.3    4.4    4.9    6.6       4.1    4.6      4.4
Americas                  32.1       1.3        2.8        2.1        2.5        2.7   2.6    2.4    2.3        2.7     3.1    3.0 ↓ 3.4 ↓ 4.2         3.3    3.2   ↓ 3.7
   United States           21.3      0.4        3.0        1.5        2.0        2.0   1.8    2.2   1.9         2.3     1.7    1.3 ↓ 1.8 ↓ 3.2         2.1    1.6   ↓ 2.3
   Canada                   2.0      0.6        2.0        2.0        2.5        2.5   2.4    1.8   1.7         2.2     0.9 ↓ 1.1 ↓ 1.8 ↓ 2.9          1.5    1.3   ↓ 1.8    ↓
   Latin America            8.8      3.7        2.7        3.8        3.7        4.3   4.5    2.9   3.2         3.9     7.9    8.6    8.9    8.1       7.4    8.5      8.5
       Argentina            1.0      6.5        1.0        4.5        2.5        2.5   8.9    1.9   2.9         3.2    27.4   28.0   28.8   22.3      24.0   28.0     29.8
       Brazil               3.3      2.2        4.5        2.8        3.2        3.6   2.7    0.9   3.0         3.5     6.3    6.5    6.1    6.6       5.4    6.4      5.7
       Chile                0.4      2.5        5.3        5.0        5.4        5.6   6.0    5.6   5.3         5.5     1.5    2.3    2.9    3.3       3.0    2.6      3.0
       Colombia             0.7      7.4        4.0        5.0        4.5        5.0   5.9    4.0   4.2         4.5     1.9    2.0    2.3    3.4       3.1    2.1      2.9
       Mexico               2.4      3.1        2.0        5.2        4.5        4.2   3.9    3.9   3.3         4.0     3.6    3.8    3.5    3.4       4.1    3.5      3.9
       Peru                 0.5      7.4        6.3        7.6        5.5        6.7   6.9    6.3   6.6         6.5     2.5    2.2    2.4   3.4        3.7    2.3      2.5
       Venezuela           0.5       2.4       -8.3       -4.3        0.8        7.4   4.2    5.6   -1.4        2.7    23.4   29.8   37.6   26.1      21.1   31.4     32.0
Asia/Pacific              40.3       5.7   ↓    4.8   ↓    6.4   ↑    6.7   ↑    6.9   6.0    5.4   5.6         6.3     2.2    2.3    3.0   3.7        2.4    2.6      3.3
   Japan                   6.2       0.2        1.1        3.0        3.9        4.5   -0.6   2.0   1.1         2.6    -0.3   -0.2    0.4   -0.3      -0.1    0.0      2.3
   Australia               1.3       2.4        4.2        2.5        3.2        2.3    2.4   3.6    3.0        2.3     2.8    2.9    2.5    3.3       1.8    2.6      2.4
   Emerging Asia           32.8      6.9   ↓    5.5   ↓    7.2   ↑    7.3   ↑    7.6    7.5   6.2    6.6        7.1     3.2    3.3    4.1    5.6       3.4    3.6      3.8
        China              17.8      8.4   ↓    6.4   ↓    8.2   ↑    9.1   ↑    8.7    9.3   7.8    7.9        8.1     2.4    2.7    4.0    5.4       2.6    3.2      3.5
       Hong Kong            0.5      4.9        2.0        2.4        4.1        4.1    4.9   1.4    3.0        3.5     3.7    4.2    3.1    5.3       4.1    4.0      4.5
       India                6.6      3.9        5.7        7.6        5.4        7.5    7.2   5.1    5.6        7.0     6.8    6.1 ↓ 5.9 ↓ 9.5         7.5    6.2   ↓ 5.6
       Indonesia            1.7      7.0        5.3        7.1        6.3        7.4   6.5    6.2   6.3         6.4     5.0    5.2    5.5    5.4       4.3    5.3      4.5
       South Korea          2.2      1.1        3.2        4.9        7.4        5.3   3.7    2.0   3.3         4.0     1.5    1.9    2.3    4.0       2.2    2.0      3.0
       Malaysia             0.7     10.9        5.0        4.0       -1.5       10.0   5.1    5.6   5.1         5.7     1.5    1.7    2.4    3.2       1.7    1.9      3.0
       Philippines          0.6      5.1       10.0        5.0        5.1        4.6   3.9    6.6   6.2         6.3     3.2    3.5    4.4    4.8       3.1    3.8      4.1
       Singapore            0.4      3.3        1.0        3.6        6.0        4.5   5.2    1.3   2.0         3.4     4.3    2.7    3.2    5.2       4.6    3.3      3.1
       Taiwan               1.3      7.3        4.1        2.8        3.2        4.1   4.1    1.3   4.0         4.3     2.1    1.3    2.0    1.4       1.9    1.6      2.8
       Thailand             0.9     15.0       -3.5        5.5        4.5        1.5   0.0    6.5   5.0         5.5     3.1    2.9 ↓ 3.0 ↓ 3.8         3.0    2.9   ↓ 3.1    ↓
Europe and Africa         27.6      -0.5   ↑    0.4        1.2        2.1        3.0 ↑ 2.4    0.5   0.8         2.1     2.6    2.5 ↓ 2.3 ↓ 3.5         3.0    2.5      2.3
   Euro area               14.9     -2.3       -0.4        0.7        1.1        1.2   1.5    -0.5  -0.3        1.4     1.9    1.5 ↓ 1.3 ↓ 2.7         2.5    1.5   ↓ 1.4
       Belgium              0.6     -0.5        0.2        0.8        1.4        1.4   1.8    -0.2  0.2         1.5     1.4    0.9 ↓ 0.3 ↓ 3.4         2.6    0.8   ↓ 0.8    ↓
       France               3.0     -1.2       -0.9        0.8        1.3        1.0   1.7    0.0   0.0         1.4     1.2    0.9 ↓ 1.1 ↓ 2.3         2.2    1.1   ↓ 1.1    ↓
       Germany              4.3     -2.3        1.7        2.4        2.2        1.9    3.1   0.9    1.0        2.0     1.8    1.6 ↓ 1.6 ↓ 2.5         2.1    1.6   ↓ 2.0    ↓
       Greece               0.4    -16.2       -5.5       -5.2       -2.7       -1.0   -7.2   -6.4  -6.3        -0.4    0.0   -0.6 ↓ -1.1 ↓ 3.1        1.0   -0.6   ↓ -0.7   ↑
       Ireland              0.3     -0.2        1.5        1.6        2.0        1.6    1.4   0.9    1.0        2.3     1.1    0.3 ↓ 0.6 ↓ 1.2         1.9    0.5   ↓ 1.2
       Italy                2.4     -3.7       -2.0       -0.8        0.5        0.8   0.5    -2.4  -1.5        1.0     2.1    1.4 ↓ 1.7 ↓ 2.9         3.3    1.7   ↓ 1.8    ↓
       Netherlands          1.0     -1.7       -0.2       -0.1        0.7        1.2   1.1    -1.0  -0.7        1.2     3.2    3.1    2.1    2.5       2.8    2.8      1.9
       Portugal             0.3     -7.1       -1.8       -0.4        0.4        1.1   -1.6   -3.2  -2.5        0.5     0.4    0.7    0.5    3.6       2.8    0.5      0.1   ↑
       Spain                1.9     -3.1       -2.1       -1.2       -0.3        0.1    0.4   -1.4  -1.6        0.8     2.8    1.9 ↓ 1.0 ↓ 3.1         2.4    1.7   ↓ 1.0
   United Kingdom           3.1     -1.2       -0.1        1.0        1.4        1.5   1.0    0.3   0.6         1.8     2.8    3.0    2.5    4.5       2.8    2.8      2.6
   Switzerland              0.5      1.0        1.2        1.2        1.2        1.2   1.9    1.0   1.2         1.5    -0.3   -0.2    0.2    0.2      -0.7   -0.1      0.2
   Sweden                   0.5      0.1        0.8        1.6        2.3        2.5   3.7    1.2   1.4         2.5    -0.1    0.1    1.3    3.0       0.9    0.5      1.9
   Norway (mainland)        0.4      1.2        2.8        2.8        3.2        3.2   2.5    3.5   2.7         3.0     1.2    1.7    1.6    1.3       0.7    1.6      1.6
   Denmark                  0.3      0.8        1.2        1.6        2.0        2.8   0.8    -0.4  1.0         1.8     1.2    1.6    2.2    2.8       2.4    1.9      1.8
   EM Europe & Africa       7.9      3.1   ↑    1.9   ↓    2.1   ↓    4.2        7.3 ↑ 4.9    2.5   2.7         3.5     5.8    5.7    5.1    6.4       5.5    5.6      4.6
       Czech Repub.         0.4     -0.7       -0.1        0.3        0.5        0.5   1.8    -1.2  -0.4        0.7     2.1    1.8    2.2    1.9       3.3    2.0      2.0
       Hungary              0.3     -3.4       -0.3        0.4        3.1        3.2   1.6    -1.8  -0.4        1.2     2.9    2.5    1.9    3.8       5.7    2.3      2.9
       Poland               1.1      0.8        0.4        0.8        2.0        2.0   4.3    2.0   1.0         2.8     2.5    2.0    2.2    3.9       4.0    2.2      0.6
       Russia               3.5      6.5   ↑    0.9   ↓    0.5   ↓    4.1   ↓   10.3 ↑ 4.3    3.4    3.0        3.5     7.2    7.0    5.9    8.6       5.1    6.6      5.6
       Turkey               1.6     -0.2   ↓    5.3   ↑    6.1        7.4        9.1    8.8 ↑ 2.2 ↓ 4.4         4.9     7.2    7.4    6.9    6.5       8.9    7.4      5.5
       Israel               0.3      2.4        3.1        3.3        4.3        4.8    4.7   2.9    3.2        3.6     1.4    1.4    2.0    3.4       1.6    1.6      1.8
       South Africa         0.8      2.1        2.8        3.2        3.4        3.5    3.5   2.5    2.7        3.4     5.7    6.0    6.0    5.0       5.7    6.0      5.8
Note: Arrows appear next to numbers if current forecasts differ from that of the previous week by 0.5pp or more for quarterly annualized GDP, by 0.2pp or more for
annual GDP and by 0.2pp or more for Inflation. Weights used for real GDP are based on IMF PPP-based GDP (5yr centred moving averages). Weights used for
consumer prices are based on IMF nominal GDP (5yr centred moving averages)”. * IMF PPP-based GDP weights for 2013.Source: Barclays Research




19 April 2013                                                                                                                                                                2
Barclays | Global Economics Weekly


GLOBAL SYNTHESIS

                                               Weaker commodities can support growth
Julian Callow                                  Commodity prices have softened since January, with the CRB index down 7% and Brent oil
+44 (0)20 7773 1369                            down 16% from its recent February 8 high. This news, combined with reports that indicate
julian.callow@barclays.com                     disappointing sales from some new IT products, has helped to explain the recent correction
                                               (from a strong run) in equity prices. At the same time, the recent weakness in commodity
                                               prices can be viewed as providing some additional assistance to economies that are in need
                                               of re-balancing, including opening up further potential for significant monetary stimulus.

The commodity price ‘tax’ has                  To calibrate the effect of weaker commodity prices on G7 demand, in Figure 1, we show the
lessened from 2011 and could                   relationship of commodity inflation with the gap between ‘headline’ and ‘core’ inflation.
go negative this year                          While headline inflation has yet to fall below the core rate, in part this may be due to
                                               government-driven prices, and Figure 1 suggests that, at the very least, headline inflation
                                               will remain in line with the core rate, if not at some stage move below. The gap between the
                                               two series, which might be interpreted as a commodity price ‘tax’, was 1.3pp in 2011, but
                                               last year fell to 0.3pp, and this year will probably be about flat.

Some countries are particularly                Lower commodity prices tend to boost spending power and, hence, domestic demand in those
dependent upon mineral fuel                    countries that are particularly large importers of commodities. Figure 2 illustrates that, among
imports and so more sensitive                  advanced economies, this should be a particular benefit to Japan, where the trade deficit on
to a reduction in energy prices,               mineral fuels last year was 4.8% of GDP (so offset some of the negative terms of trade impact of
particularly Japan, Korea and                  the weaker yen), as well as the euro area, which had a mineral fuel deficit at 3.8% of GDP
India                                          (particularly for southern Europe, where the deficit ratio was much higher). Within emerging
                                               economies, lower energy prices (and lower gold prices also) would be a particular help to India,
                                               whose trade deficit in energy ran at 7.6% of GDP last year, China (which recorded a 3.4% trade
                                               deficit in mineral fuels in 2012), as well as Korea and Thailand (see Emerging Asia Outlook).

                                               Weaker commodity prices have arisen because of concerns about slowing global
                                               demand, particularly out of China (which last year accounted for 44% of global
                                               consumption of metals and 12% of global oil consumption). However, the somewhat
                                               more moderate pace of Chinese growth (Q1 GDP slowed to 6.4% q/q saar, the weakest
                                               since 6.3% in Q1 09) is within our sub-consensus expectation. Overall, we expect that


FIGURE 1                                                                            FIGURE 2
Weaker profile for commodities implies further decline in                           Net trade balance (mineral fuels)
headline inflation
                                                                                       0                                                                            0
 pp                 G7 CPI inflation: 'headline' minus 'core' (LHS)     % y/y
                                                                                      -1
                                                                                            % GDP 3m ma
    3               IMF global commodities index (RHS)                   80                                                                                         20
                                                                                      -2
    2                                                                    60                                                                                         40
                                                                                      -3
                                                                         40                                                                                         60
    1                                                                                 -4
                                                                         20           -5                                                                            80
    0
                                                                         0            -6              US                                                            100
   -1                                                                                 -7              €A
                                                                         -20
                                                                                                      Japan                                                         120
   -2    Profile if commodity prices                                                  -8
                                                                         -40                          China
         remain at Apr. 17 level                                                      -9                                                                            140
                                                                                                      India
   -3                                                                    -60                          Memo: oil price (Brent $/bbl, RHS)
        00     02       04      06      08      10       12      14                 -10                                                                             160
                                                                                           05    06      07      08      09      10     11      12      13
Source: Haver Analytics, Barclays Research (the IMF series is estimated for March   Note: the ‘mineral fuel’ definition includes oil, coal and natural gas (except US –
and for April 17)                                                                   oil & natural gas only; India – oil & coal only). Source: Haver Analytics


19 April 2013                                                                                                                                                             3
Barclays | Global Economics Weekly


                                          from Q2, there should be firmer Chinese demand resulting from infrastructure spending
                                          and other measures to help consumption, particularly for healthcare, retirement and
                                          culture (please see China Outlook).

Weaker Chinese import                     The weakness in Chinese import demand affects not just commodity exporters; it has
demand has affected                       been apparent as well in weaker imports from the advanced economies. Indeed, even the
advanced economies as well                latest Japanese trade data show that despite the 20% yen depreciation in the six months
as commodity exporters                    to March, there has so far been only a slight uptick in exports to the rest of Asia (Figure
                                          3). This also illustrates that it will take a significant time for the effect of the change in BoJ
                                          strategy to feed through, via a weaker yen, into Japanese exports. The euro area
                                          continues to represent a major source of drag on global demand

                                          As well, the Japanese trade data illustrate that demand in the euro area remains
                                          exceptionally weak (with Japanese export volumes to the euro area in Q1 13 weaker even
                                          than in Q1 09). This has also been a substantial source of drag on global auto registrations,
                                          which have failed to grow during the past year outside China (Figure 4; note that the growth
                                          in Chinese registrations is also of little benefit to exporters since Chinese imports of autos
                                          have been in rapid decline during the past six months).

Global industrial sector was              The global auto cycle is closely associated with that of industrial production; therefore, the
relatively tepid during Q1                stagnant trend in registrations outside China signals that the global industrial sector was rather
                                          tepid during Q1 13, with not so much prospect of significant improvement in Q2. From a
                                          monetary policy perspective, this tends to reinforce our perspective that the Federal Reserve will
                                          continue to engage in very aggressive asset purchases during the remainder of this year.
                                          Alongside the formidable plan of asset purchases this year by the Bank of Japan, this would still
                                          represent a very strongly stimulatory monetary environment. As well, the chances of further ECB
                                          easing have been rising, and this could be crystalised if there is not much new improvement in
                                          business confidence (with the next set of PMI data due next week). ECB stimulus might also take
                                          the form of a new long-term LTRO, perhaps linked to measures to support SME lending, as
                                          discussed by our fixed income strategists. Additionally, we see a 40% chance of further UK QE in
                                          the months ahead, given the weakness of UK demand.

Emerging economies continue               Across emerging economies, monetary policy still shows mixed tendencies. Chinese policy
to demonstrate country-                   is likely to remain on hold given the moderation, while India is likely to continue to ease
specific factors for monetary             policy significantly. Turkey is also easing monetary policy, whereas Brazil has embarked
policy                                    upon a tightening cycle, although the relatively small initial action (+25bp) and dovish
                                          statement caused markets to reappraise how far this will go (see Latam Outlook).


FIGURE 3                                                                 FIGURE 4
Japanese export volumes: only a faint recovery so far                    Global auto registrations have helped global IP to grow

            2005 = 100,                                                   Index (2005=100, sa)                                          mn, saar
140          seasonally                                                   135                                                                  70
                                                                                     Global IP (Barclays series), LHS
130           adjusted
                                                                          130           'Global 34' auto sales, RHS                           65
120                                                                                     Global registrations ex China (RHS)
                                                                          125
110                                                                                                                                           60
100                                                                       120
                                                                                                                                              55
  90                                                                      115
  80                                                                                                                                          50
                           US                                             110
  70                       EU                                                                                                                 45
                                                                          105
  60                        Asia
                                                                          100                                                                 40
  50
  40                                                                       95                                                                 35
       05      06     07        08   09   10     11     12     13               06     07      08     09     10       11      12   13
Source: Barclays Research                                                Source: Barclays Research



19 April 2013                                                                                                                                   4
Barclays | Global Economics Weekly


GLOBAL RATES AND INFLATION
Central Bank rates
Official rate                                             Start of cycle                                        Next move                  Forecasts as at end of
% per annum (unless stated)         Current               date              level         Last move             expected          Q2 13       Q3 13         Q4 13        Q1 14
Advanced
Fed funds rate                       0-0.25         Easing: 17 Sep 07       5.25      Dec 08 (-75-100)         Beyond 2014        0-0.25      0-0.25       0-0.25        0-0.25
BoJ overnight rate                    0.10          Easing: 30 Oct 08       0.50       Oct 10 (0-10)           Q1 16 (+20)        0-0.10      0-0.10       0-0.10        0-0.10
ECB main refinancing rate             0.75           Easing: 3 Nov 11       1.50         Jul 12 (-25)            End 2014          0.75        0.75         0.75          0.75
BOE bank rate                         0.50           Easing: 6 Dec 07       5.75        Mar 09 (-50)           Feb 15 (+25)        0.50        0.50         0.50          0.50
RBA cash rate                         3.00           Easing: 1 Nov 11       4.75        Dec 12 (-25)           Beyond 2014         3.00        3.00         3.00          3.00
RBNZ cash rate                        2.50          Easing: 10 Mar 11       3.00        Mar 11 (-50)           H2 14 (+50)         2.50        2.50         2.50          2.50
Swiss National Bank                  0-0.25          Easing: 8 Oct 08       2.75        Aug 11 (-25)           Beyond 2013         0.25        0.25         0.25          0.25
Norges Bank                           1.50          Easing: 14 Dec 11       2.25        Mar 12 (-25)           Q1 14 (+25)         1.50        1.50         1.50          1.50
Riksbank                              1.00          Easing: 20 Dec 11       2.00        Dec 12 (-25)           Q1 14 (+25)         1.00        1.00         1.00          1.00
Bank of Canada                        1.00         Tightening: 1 Jun 10     0.25        Sep 10 (+25)           Q1 14 (+25)         1.00        1.00         1.00          1.00
Emerging
China: 1y bench. lending rate         6.00           Easing: 7 Jun 12        6.56         Jul 12 (-31)        Beyond Q1 14         6.00           6.00      6.00         6.00
Indonesia: O/N policy rate            5.75          Easing: 11 Oct 11       6.75         Feb 12 (-25)          Beyond Q1 14        5.75           5.75      5.75         5.75
India: Repo rate                      7.50          Easing: 17 Apr 12        8.50        Mar 13 (-25)           Q2 13 (-50)        7.00           7.00      7.00         7.00
Korea: Base rate                      2.75           Easing: 12 Jul 12       3.25        Oct 12 (-25)           Q1 14 (+25)        2.75           2.75      2.75         3.00
Poland: 2w repo rate                  3.25           Easing: 7 Nov 12        4.75        Mar 13 (-50)          May 13 (-50)        2.75           2.50      2.50         2.50
Russia: Overnight repo rate           5.50        Tightening: 13 Sep 12      5.25        Sep 12 (+25)           Sep 13 (-25)       5.50           5.25      5.25         5.00
South Africa: Repo rate               5.00          Easing: 11 Dec 08       12.00         Jul 12 (-50)         Sep 14 (+50)        5.00           5.00      5.00         5.00
Turkey: 1wk repo rate                 5.00          Easing: 20 Nov 08       16.75        Dec 12 (-25)           Q1 14 (+50)        5.00           5.00      5.00         5.50
Brazil: SELIC rate                    7.50          Easing: 31 Aug 11       12.50        Apr 13 (+25)          May 13 (+25)        7.75           8.25      8.25         8.25
Chile: Monetary policy rate           5.00        Easing: 12 January 12      5.25        Jan 12 (-25)           Q4 13 (+25)        5.00           5.00      5.25         5.25
Mexico: Overnight rate                4.00          Easing: 16 Jan 09        8.25        Mar 13 (-50)          Beyond 2013         4.00           4.00      4.00         4.00
Note: Rates as of COB 18 Apr 2013. Source: Barclays Research

Key CPI projections
                     US                          UK                          Euro area                      France                Sweden                         Japan
                     CPI                   RPI            CPI              HICPx           HICP          CPI ex tobacco             CPI                  CPI ex perishables
              nsa          y/y      nsa          y/y      y/y       nsa         y/y         y/y        nsa         y/y          nsa        y/y            nsa            y/y
Jan-13       230.3         1.6     245.8         3.3      2.7      115.13       1.9         2.0       124.36       1.1         312.00       0.0          99.1            -0.2
Feb-13       232.2         2.0     247.6         3.2      2.8      115.55       1.8         1.8       124.72       0.9         313.39      -0.2           99.2           -0.3
Mar-13       232.8         1.5     248.7         3.3      2.8      116.94       1.7         1.7       125.69       0.9         314.65       0.0           99.5           -0.5
Apr-13       232.6         1.1     250.4         3.3      2.7      117.04       1.3         1.4       125.61       0.6         315.29      -0.1           99.9           -0.3
May-13       232.6         1.2     251.0         3.5      3.0      116.95       1.4         1.4       125.62       0.7         315.75       0.2           99.8           -0.2
Jun-13       233.2         1.6     251.2         3.9      3.4      117.06       1.5         1.6       125.91       0.9         315.40       0.3          99.5            -0.1
Jul-13       233.4         1.9     251.1         3.7      2.9      116.39       1.5         1.6       125.52       1.0         314.89       0.5          99.6             0.1
Aug-13       233.9         1.5     252.0         3.7      2.8      116.55       1.3         1.4       126.03       0.8         315.34       0.6           99.7            0.1
Sep-13       234.5         1.3     253.7         3.9      3.2      117.21       1.1         1.2       125.62       0.7         317.33       0.8           99.9            0.1
Oct-13       234.3         1.3     254.2         3.5      2.7      117.50       1.1         1.2       125.82       0.8         318.15       1.1          100.0            0.2
Nov-13       234.4         1.8     254.3         3.5      2.6      117.44       1.3         1.3       125.80       1.0         318.29       1.4           99.9            0.4
Dec-13       234.5         2.1     255.0         3.3      2.3      117.90       1.3         1.4       126.30       1.0         318.85       1.3           99.9            0.5
Jan-14       235.2         2.2     254.1         3.4      2.4      116.52       1.2         1.3       125.53       0.9         316.66       1.5          99.8             0.7
Feb-14       236.0         1.7     255.7         3.1      2.3      116.79       1.1         1.2       125.78       0.8         318.31       1.6          100.0            0.8
Mar-14       236.8         1.7     257.1         3.4      2.5      118.31       1.2         1.2       126.68       0.8         319.39       1.5          100.3            0.9
Apr-14       237.9         2.3     258.4         3.2      2.5      118.69       1.4         1.5       126.81       1.0         320.73       1.7          102.5            2.7
May-14       238.4         2.5     259.3         3.3      2.5      118.73       1.5         1.6       127.02       1.1         321.47       1.8          102.5            2.7
Jun-14       238.9         2.5     259.7         3.4      2.7      118.85       1.5         1.6       127.25       1.1         321.56       2.0          102.2            2.7
Jul-14       239.1         2.4     259.3         3.3      2.7      118.08       1.5         1.5       126.76       1.0         321.49       2.1          102.3            2.7
Aug-14       239.6         2.4     260.7         3.5      2.8      118.23       1.4         1.5       127.20       0.9         321.91       2.1          102.5            2.8
Sep-14       240.2         2.4     261.8         3.2      2.4      118.91       1.5         1.5       126.77       0.9         324.12       2.1          102.7            2.8
Oct-14       240.1         2.5     263.0         3.5      2.6      119.20       1.4         1.5       126.83       0.8         325.30       2.2          102.8            2.8
Nov-14       240.2         2.4     263.5         3.6      2.8      119.14       1.4         1.5       126.76       0.8         325.65       2.3          102.7            2.8
Dec-14       240.1         2.4     264.9         3.9      3.0      119.62       1.5         1.5       127.21       0.7         326.48       2.4          102.7            2.8
2011                       3.2                   5.2      4.5                   2.7         2.7                    2.1                     3.0                           -0.3
2012                       2.1                   3.2      2.8                   2.4         2.5                    1.9                     0.9                           -0.1
2013                       1.6                   3.5      2.8                   1.4         1.5                    0.9                     0.5                           0.0
2014                       2.3                   3.4      2.6                   1.4         1.4                    0.9                     1.9                           2.2
Note: Shaded values indicate actual data. ‘R’ indicates revision to front-month forecast. Source: Barclays Research




19 April 2013                                                                                                                                                                     5
Barclays | Global Economics Weekly


OUTLOOK: UNITED STATES

                                              In like a lion, out like a lamb
Michael Gapen                                 • Manufacturing ex-autos fell in March, which signals the rebound in inventories that
+1 212 526 8536                                   has helped to boost growth in Q1 is coming to an end.
michael.gapen@barclays.com
                                              • Energy production remained elevated in March, suggesting that energy-related
                                                  consumption continues to be a main factor in recent consumption strength.

                                              • Residential investment surged further in Q1. Lean inventories and land purchases by
                                                  homebuilders point to sustained momentum in housing beyond year-end.

Less inventory accumulation                   Incoming data on industrial production and housing starts have reinforced two themes we
and the lagged effect of higher               have been highlighting recently. One is that higher-than-expected growth in Q1, fueled by a
taxes should slow growth in Q2                rebound in inventories and household expenditures on utilities, will ultimately prove
                                              transitory. Growth, which entered the year like a lion, is exiting Q1 like a lamb. The second is
                                              that the housing sector would be resilient to any cyclical slowing in the broader economy.
                                              Consequently, we continue to expect that real GDP growth will slow to 1.5% (q/q saar) in
                                              Q2 from an estimated 3.0% in Q1, but look for underlying strength in the private sector to
                                              lead to a modest improvement in growth in the second half of the year.

                                              The bounce from inventories is fading…and consumption is slowing
Manufacturing ex-autos fell in                Manufacturing output in the March industrial production report declined by 0.1% m/m.
March, but inventories should                 Excluding motor vehicles and parts, which rose 2.9% on the month, manufacturing fell
still add 1pp to growth in Q1                 0.3%, registering the first decline in four months. In our view, this likely signals the end to
                                              the mini-inventory cycle that helped to boost growth in Q1. Inventories subtracted 1.5pp
                                              from growth in Q4, and we view production data in late Q4 and the early part of this year as
                                              reversing the inventory shortfall. The decline in manufacturing ex-autos is consistent with
                                              our forecast for less manufacturing inventory accumulation in March than has been the
                                              case in recent months (Figure 1). We estimate that inventories added 1pp to growth in Q1,
                                              but we believe firms are likely to be restoring production to a more neutral level in Q2, and
                                              we look for little contribution from inventories to growth in the coming quarters.




FIGURE 1                                                                     FIGURE 2
Manufacturing slowed in March, suggesting the inventory                      Electric and gas production in Q1 has accelerated, matching
bounce is waning                                                             the increase in household energy consumption
  % m/m                                                                        % m/m
                          IP: Manufacturing
                                                                               15                 IP: Electric and gas
 1.6                      Manufacturing inventories, ex-autos
 1.4                                                                                              Electric and natural gas consumption
 1.2                                                                           10
 1.0
 0.8                                                                            5
 0.6
                                                                  forecast
 0.4
                                                                                0
 0.2
 0.0
-0.2                                                                           -5
-0.4
-0.6                                                                          -10
         Oct12       Nov12       Dec12       Jan13        Feb13   Mar13                Oct12       Nov12       Dec12         Jan13   Feb13   Mar13
Source: Census Bureau, Federal Reserve, Haver Analytics                      Source: BEA, Federal Reserve, Haver Analytics


19 April 2013                                                                                                                                        6
Barclays | Global Economics Weekly


Household spending has been                   The March industrial production data, along with last week’s retail sales report that showed
boosted by higher energy                      core retail sales fell in March, also confirm our view that consumption is slowing from the
consumption; we do not                        lagged effect of the higher taxes. As we noted in Unlocking the Q1 consumption puzzle, 5
expect this to persist                        April 2013, much of the strength in Q1 consumption is related to household expenditures
                                              on energy, while non-energy consumption was feeling the pinch of higher taxes. Electric
                                              and natural gas production rose 5.3% m/m in March, the third straight monthly increase.
                                              Electric and natural gas production and consumption have moved in unison as of late, and
                                              we expect that the personal spending data will show strong gains in household energy
                                              expenditures in March. Strong gains in energy expenditures are likely to be temporary and
                                              we continue to expect a slower rate of consumption growth in Q2.

                                              US housing: The beat goes on
Lean inventories are driving                  Housing starts in March were 1.036mn units, marking the first time starts exceeded 1mn
homebuilders to increase                      units since mid-2008. Our view for some time has been that housing would prove resilient
starts                                        to any fiscal-induced slowing in the economy, given the dramatic inventory clearing that has
                                              taken place in recent years. The average pace of starts at 969k in Q1 is in line with our
                                              outlook (see 2013-14 US Housing market outlook: The beat goes on, 25 January 2013), and
                                              we expect low inventories of new and existing homes to support starts and house prices in
                                              the coming year. Both the level and months’ supply of new home inventories remain near
                                              post-crisis lows at 152k and 4.4 months, respectively, in February despite the 34.8%
                                              increase in starts y/y (Figure 3). This indicates that homebuilders have so far been
                                              successful at assessing housing demand and avoiding overbuilding during the housing
                                              recovery. We continue to view the state of inventories of new and existing homes as
                                              supporting further increases in residential investment in the coming quarters. We look for
                                              residential investment to add 0.5pp to real GDP growth in Q1.

Land purchases by builders                    In addition to inventory dynamics, other actions by homebuilders suggest they see favorable
indicate that the recovery in                 conditions in the housing sector as persisting into 2014 and 2015. The median value of land
housing has long-term                         purchases and development by the largest US homebuilders rose sharply in the second half
momentum                                      of last year as the recovery in housing broadened, particularly in Q4 when median
                                              expenditures by the group doubled to nearly $250mn per builder. This behavior, in our view,
                                              indicates that homebuilders are confident enough about the trajectory of the US housing
                                              market to improve previously acquired land to make it suitable for building and to increase
                                              the rate of acquisition of new land for future building. We expect Q1 to show further robust
                                              spending by builders on land acquisition and development.


FIGURE 3                                                                   FIGURE 4
Despite the acceleration in starts, inventories remain lean                Homebuilder land purchases bode well for future starts

   000s                    New home inventory (lhs)            months        $mn
                                                                                      Median value of land purchases and development
 600                       Months' supply (rhs)                     13      250                 by largest US homebuilders
 550
 500                                                                 11     200
 450
 400                                                                 9      150
 350
 300                                                                 7      100
 250
 200                                                                 5       50
 150
 100                                                                 3        0
       04    05    06     07     08      09    10   11    12   13                  1Q11     2Q11       3Q11   4Q11   1Q12   2Q12   3Q12   4Q12

Source: Census Bureau, Haver Analytics                                     Source: Barclays Research


19 April 2013                                                                                                                                7
Barclays | Global Economics Weekly


GDP TRACKING: UNITED STATES

                                          Q1 GDP tracking 3.0%
Peter Newland                             This week’s CPI, industrial production, and housing starts data did not shift our Q1 GDP
+1 212 526 3153                           tracking estimate, which remains at 3.0%. This is in line with our published forecast,
peter.newland@barclays.com                ahead of next week’s advance release.

                                          • Housing starts rose by a much-stronger-than-expected 7.0% m/m in March. This points to
                                                 a significant positive contribution to Q1 GDP growth from residential investment (Figure 2).

                                          • The components of the CPI we use to deflate consumer spending were modestly softer
                                                 than we expected in March, suggesting more real spending. However, this was not
                                                 sufficient to shift our tracking estimate.

                                          • The weakness in some components of industrial production in March suggests fairly soft
                                                 equipment and software investment in Q1. Next week’s March durable goods report will
                                                 provide a clear picture.

                                          FIGURE 1
                                          GDP tracking*

                                                   Release date            Indicator                                          Period            Q1 tracking

                                                       2-Apr               Vehicle sales                                       Mar                   3.4
                                                       5-Apr               Trade                                               Feb                   3.5
                                                       9-Apr               Wholesale inventories                               Feb                   3.2
                                                      12-Apr               Retail sales                                        Mar                   2.8
                                                      12-Apr               Business inventories                                Feb                   3.0
                                                      16-Apr               CPI                                                 Mar                   3.0
                                                      16-Apr               Housing starts                                      Mar                   3.0
                                                      16-Apr               Industrial production                               Mar                   3.0
                                                      24-Apr               Durable goods orders                                Mar
                                                      26-Apr               GDP                                               Q1-1st
                                          Note: *Our GDP tracking estimate is distinct from our published GDP forecast. It reflects the mechanical aggregation of
                                          monthly activity data that directly feed into the BEA’s GDP calculation. Source: Barclays Research



FIGURE 2                                                                         FIGURE 3
GDP growth contributions                                                         GDP tracking estimates
                           Q4 – Third estimate         Q1 tracking                 % q/q (saar)
                                                                                   3.5
                          % q/q                     % q/q        Cont.
                                    Cont. (pp)                                                                     Q1
                          (saar)                    (saar)       (pp)
                                                                                   3.0
 Real GDP                   0.4                      3.0

 Consumption                1.8         1.3           2.3         1.6              2.5
 Govt. spending             -7.0       -1.3          -3.5         -0.6
 Res. investment            17.5        0.4          23.7         0.6              2.0
 E&S investment             11.8        0.9           2.9         0.2
 Structures                 11.8        0.4           7.1         0.2              1.5
 Net exports, $bn          -384.7       0.3         -383.8        0.0
 Ch inventories, $bn        13.3       -1.7          44.2         0.9              1.0
                                                                                   13-Feb-13    01-Mar-13 13-Mar-13 01-Apr-13             16-Apr-13
Source: BEA, Barclays Research                                                   Source: BEA, Barclays Research




19 April 2013                                                                                                                                                  8
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: UNITED STATES
Dean Maki, Michael Gapen, Peter Newland, Cooper Howes

Review of last week’s data releases
Main indicators                                   Period           Previous            Barclays           Actual          Comments
Empire State mfg index                              Apr              9.2                  7.5               3.1           Modest rise in employment
NAHB housing market index                           Apr               44                  44                42            Still consistent with rise in starts
CPI, % m/m (y/y)                                    Mar            0.7 (2.0)           -0.1 (1.6)        -0.2 (1.5) Downside surprise reflected food
Core CPI, % m/m (y/y)                               Mar            0.2 (2.0)           0.2 (2.0)         0.1 (1.9)        Below-trend (0.1%) rise in OER
Housing starts, thous saar                          Mar             968 R                940               1036           Strong rise in multi-family starts
Industrial production, % m/m                        Mar             1.1 R                 0.3               0.4           Driven by rise in utilities
Philadelphia Fed mfg index                          Apr              2.0                  0.0               1.3           New orders and employment fell
Leading indicators index, % m/m                     Mar              0.5                  0.1              -0.1           Index up 1.7% on a y/y basis

Preview of the next week
Monday 22 April                                           Period           Prev 2              Prev 1             Latest           Forecast       Consensus
08:30 New York Fed President Dudley (FOMC voter) speaks in New York
10:00 Existing home sales, mn saar                         Mar              4.90                4.94              4.98               5.05               5.00
Existing home sales: We expect existing home sales to rise 1.5% m/m in March to 5.05mn units versus 4.98mn units in February,
keeping the upward momentum in the pace of sales in place. Sales at 5.05mn units this month would leave the 3mma at 4.99mn,
modestly ahead of the average pace of sales recorded in Q4 (4.90mn) and Q3 (4.74mn) of last year.

Tuesday 23 April                                           Period           Prev 2              Prev 1            Latest           Forecast       Consensus
08:58 Markit PMI-p, index                                  Apr               56.1               55.2              54.9                 -                54.5
09:00 FHFA purchase-only HPI,%m/m (y/y)                    Feb             0.5 (5.5)         0.5 (5.6)        0.6 (6.5)            0.6 (6.9)             -
10:00 New home sales, thous saar                           Mar               381                 431               411                425               419
FHFA purchase only HPI: We look for the FHFA Home Price Index to rise 0.6% in February, consistent with the improvement in
other home price indices during the same period. This would translate into a y/y increase of 6.9%.

New home sales: We look for new home sales to rise 3.5% m/m in March to 425k. This would leave months’ supply at 4.4
months, similar to last month, leaving inventory levels near post-crisis lows. Our forecast leaves the 3mma at 422k, well above
the 380k average in Q4 12 and the 371k average in Q3. One factor in our forecast is MBA mortgage applications for purchase,
which rose 5.1% in March to 206.4 from 196.4 in March.

Wednesday 24 April                                        Period            Prev 2              Prev 1            Latest           Forecast       Consensus

08:30 Durable goods orders, % m/m                          Mar                 3.6               -3.7              5.6               -2.4               -2.9
08:30 Durable goods ex transportation,% m/m                Mar                 0.8               3.0               -0.7               0.5               0.7
Durable goods orders: We are forecasting a 2.4% decline in durable goods orders in March, largely reflecting a likely weakness in
the aircraft component. Excluding this (as well as the volatile defense component), we have penciled in a 0.5% increase in core
capital goods orders, and a 1.0% rise in core capital good shipments.




19 April 2013                                                                                                                                                    9
Barclays | Global Economics Weekly


Thursday 25 April                                      Period      Prev 2       Prev 1        Latest     Forecast     Consensus
08:30 Initial jobless claims, thous (4wma)             20-Apr     388 (355)    348 (359)    352 (361)    355 (361)       351
Friday 26 April                                        Period      Prev 2       Prev 1        Latest     Forecast     Consensus
08:30 Real GDP, % q/q saar                              Q1 A         1.3          3.1          0.4          3.0          3.0
08:30 Real consumer spending,% q/qsaar                  Q1 A         1.5          1.6          1.8          2.3          2.7
08:30 GDP price index, % q/q saar                       Q1 A         1.6          2.7          1.0          0.9          1.4
09:55 Michigan consumer sentiment- f index               Apr        77.6         78.6         72.3 P       72.5          73.5
GDP: We expect the advance release of Q1 GDP to show real growth of 3.0% at an annualized rate. Relative to the 0.4%
registered in Q4, we expect a significant swing in the contribution of inventory accumulation. Absent this, we are looking for
modestly stronger growth in private consumption (2.3% versus 1.8%) and residential investment (20% versus 17.6%) and a
smaller decline in government spending (-3.5% versus -7.0%). Finally, we have factored in a small boost from net trade and
positive growth in equipment and software and structures investment, albeit more modest than in Q4.

U. of Michigan consumer sentiment: We look for a print of 72.5 in the University of Michigan’s final April survey, which would be
up slightly from the initial reading of 72.3. While we expect that the broader picture of consumer confidence to be little changed
from the preliminary report, we project that modest gains in equity markets, as well as several consecutive weekly declines in
gasoline prices, should provide a modest boost to sentiment.




19 April 2013                                                                                                                   10
Barclays | Global Economics Weekly


OUTLOOK: EURO AREA

                                     Next week’s data could push the ECB to act
Antonio Garcia Pascual               • Next Tuesday’s PMI and Wednesday’s IFO prints could be important for the
+44 (0)20 3134 6225                      macroeconomic outlook and, if weak, could spark a rate cut.
antonio.garciapascual@barclays.com
                                     • A rate cut is not a panacea as neither money market rates nor the euro are likely to
                                         fall much following a policy rate cut. The key remains unlocking SME lending.

                                     • The ECB published its first pan-European household survey – a new powerful
                                         analytical tool.

Next week PMIs and IFO are           The week ahead will be particularly important to measure the pulse of the euro area economy.
likely to determine the ECB’s        On Tuesday we will get April PMIs for the euro area and on Wednesday Germany’s IFO. Both
near-term policy action              printed worse values in March than in February. We are, however, expecting some stabilization or
                                     even a mild improvement in economic activity in Q2-Q4 13 on the back of: 1) gradually
                                     improving financing conditions; 2) receding fiscal drag as governments relax fiscal targets as
                                     they target structural rather and headline fiscal balances (see In Focus: France); and 3) slightly
                                     improving demand for euro area exports, as global growth gradually improves. Instead, if next
                                     week’s survey data print yet another contraction (not our baseline but not highly unlikely), we
                                     think that the ECB will likely move towards a refi rate cut.

A rate cut is not a panacea, as      We would argue, however, that the impact of a rate cut would not be quantitatively very
the main problem is credit           significant in encouraging economic activity or weakening the euro. The reason is that
access by SMEs, which require        EONIA, not the refi rate, is the relevant rate for euribor and the mortgages or SME loan rates
a different kind of tool             in Spain and Italy. With ample liquidity surplus (c.EUR340bn), EONIA fixing at c.8bp is priced
                                     off the zero deposit rate. For these reasons, a refi rate cut of 25bp is likely to result in a small
                                     change to EONIA fixing and a drop in euribor rates of only a few basis points (the 12 month
                                     euribor is currently at 53bp). In sum, neither EONIA or euribor, nor economic activity or the
                                     euro should experience sizeable moves following a 25bp rate cut by the ECB.

                                     But then, why should the ECB bother with a rate cut? In our view, a cut is useful in two
                                     respects. First, it reduces the funding costs for banks borrowing from ECB facilities,
                                     especially those banks in the periphery that remain largely reliant on ECB liquidity. There is a
                                     total of EUR726bn of ECB liquidity under different refinancing operations, of which Italian
                                     and Spanish banks have borrowed EUR268bn and EUR266bn, respectively. Second it sets a
                                     lower cap on EONIA, ie, at 50bp instead of 75bp. Over time the liquidity surplus should fall
                                     as financial conditions normalize and banks gradually repay their loans to the ECB. And with
                                     a shrinking liquidity surplus, EONIA should move gradually away from its lower bound, ie,
                                     the zero deposit rate, towards its upper bound, ie, the refi rate.

The European Investment Bank         What about non-standard policy tools to address insufficient and expensive access to credit
and Fund have the know-how           by SMEs in the periphery? While most euro area policymakers would agree on the diagnosis
on supporting SME loans              of the problem, there is no consensus on the policies to help SMEs. Recent speeches by
                                     Draghi and other ECB staff highlight the limited scope for ECB action on this front (see
                                     Europe Money Markets: The ECB’s options, 18 April 2013). Recent references to 1) a role by
                                     the Eurosystem NCBs, helping with the rating of SME loans, and 2) the European Investment
                                     Bank and the European Investment Fund (EIB and EIF), possibly helping with financial
                                     resources or guarantees for SME loans, seem to point to a coordinated effort from several
                                     agencies, also involving national governments. In our view, a 3-5y LTRO on specific SME-
                                     type collateral, possibly at fixed rates, could also be deployed by the summer.

                                     In our view, the EIB and EIF are probably better equipped institutions in terms of know-how
                                     to help unlock credit to SMEs in the periphery. The EIB can help through its loan programme

19 April 2013                                                                                                                         11
Barclays | Global Economics Weekly


                                                                                  to medium and small credit institutions targeting SME loans. The EIF can help through
                                                                                  capital relief and guarantees on SME loan portfolios so that banks can grant loans with less
                                                                                  collateral or at better rates. These institutions may require further support or financial
                                                                                  resources from the EU to boost their programmes.

                                                                                  First pan-European household survey: a powerful analytical tool
The new pan-European                                                              The ECB recently published the results of the first wave of the Eurosystem Household
household survey provides                                                         Finance and Consumption Survey (HFCS). The HFCS provides detailed household-level data
important insights into                                                           on various aspects of household balance sheets and related economic and demographic
household strengths and                                                           variables, including income, voluntary pensions, employment and measures of
vulnerabilities                                                                   consumption. A key feature of the HFCS is that it provides individual household data
                                                                                  collected in a harmonised way across 15 euro area countries for a sample of more than
                                                                                  62,000 households. Until now, distributional information on household assets and liabilities
                                                                                  had been scarce and rarely comparable across euro area countries. From an analytical
                                                                                  perspective, further insights into the distribution of wealth, debt and income are particularly
                                                                                  important for gaining a better understanding of the monetary transmission mechanism and
                                                                                  the impact of macroeconomic shocks on financial stability.

The survey highlights the                                                         Some of the key highlights of this first survey show that 43.7% of households in the euro
elevated financial burden of                                                      area have debt; 23.1% have mortgage debt; 60.1% of households in the euro area own their
Spanish and Dutch households                                                      main residence – 40.7% outright and 19.4% with a mortgage – and 23.1% of households
and the relative strength of the                                                  own other real estate property. The dispersion here is considerable: countries where house
Italian households                                                                ownership increased very rapidly in recent years prior to the crisis are now at greater risk as
                                                                                  housing prices are deflating rapidly, incomes are falling and unemployment remains on the
                                                                                  rise. This situation is particularly acute in Spain and to some extent in the Netherlands. This
                                                                                  is in contrast to other countries also under economic stress, such as Italy, where household
                                                                                  financial conditions are stronger.

                                                                                  The median debt to income ratio (DTI) for the entire sample stood at 61%, but reached 194% in
                                                                                  the Netherlands and 113% in Spain. In Italy, in contrast, the median household DTI stood at
                                                                                  50%. Obviously DTI is related to the proportion of mortgage debt in these countries: 44.7% of
                                                                                  the Dutch households have outstanding mortgage debt, along with 32.5% of Spanish
                                                                                  households, in contrast to 10.8% of the Italian households. Households in Italy also have more
                                                                                  liquid assets relative to their gross income at 21% (as the EUR17bn retail demand for BTP Italia
                                                                                  show), in contrast to the Dutch or Spanish households with 16% and 12%, respectively.



FIGURE 1                                                                                                        FIGURE 2
Household financial burden                                                                                      Fraction of households owning their main residence
                                              Bubble shows net liquid assets as a fraction of annual                               All   BE   DE   GR   ES   FR   IT   CY   NL   PT   SL
                                     55
                                                                 gross income
 % of household with mortgage debt




                                     50                                                                         Total population   60    70   44   72   83   55   69   77   57   72   82
                                                                                                                Income
                                     45                                                CY         NL
                                                                                                                  Bottom 20%       47    45   16   65   78   30   54   58   41   66   69
                                     40
                                                                                                                  20-40%           51    59   35   69   79   43   60   73   43   63   83
                                     35
                                                       FR                    ES                                   40-60%           59    72   43   72   82   53   67   73   54   72   77
                                     30                     BE
                                                 DE                                                               60-80%           66    83   55   74   85   70   79   87   71   75   89
                                     25                                           PT
                                                                                                                  80-90%           76    87   70   80   87   76   79   94   76   79   89
                                     20                                                                           90-100%          80    90   74   86   92   83   86   91   79   85   93
                                                      GR         All
                                     15        SL                                                               Age
                                     10               IT                                                          16-33            32    46   13   36   67   26   42   74   53   48   60
                                      5                                                                           35-43            57    65   42   67   79   54   57   80   61   69   83
                                      0                                                                           45-53            64    75   48   77   85   62   69   82   62   77   83
                                          0    25     50    75         100    125 150       175   200 225         55-63            71    77   59   84   89   69   79   81   55   77   85
                                                                                                                  65-73            71    80   59   88   89   70   79   73   55   78   90
                                                       Median debt-to-income, in %
                                                                                                                  75+              65    79   48   84   90   59   76   61   51   72   89
Source: ECB                                                                                                     Source: ECB


19 April 2013                                                                                                                                                                         12
Barclays | Global Economics Weekly


IN FOCUS: FRANCE

                                     Fiscal adjustment: to three or not to three?
Fabrice Montagne                     This is an edited extract of a report published on 17 April 2013
+33 (0) 1 4458 3236
                                     With the publication of its Stability Programme, France also launched a campaign for a
fabrice.montagne@barclays.com
                                     slower pace of fiscal consolidation in Europe and greater expansionary policy in surplus
                                     countries. If growth continues to slow, a policy shift at the June summit looks plausible.

The government is now                The government presented this week its Stability and Convergence Programme (SCP) for
targeting 2.9% deficit next years,   2013-2017, confirming that it does not plan to bring the nominal deficit below 3.0% before
based on 1.2% GDP growth             next year. The government hopes that the 2.9% deficit target for 2014 (after 3.7% this year)
                                     and a stronger commitment to implement structural reform will suffice to convince the EC
                                     and other member states to grant a one year extension (de facto already agreed). This fiscal
                                     forecast is underpinned by growth assumptions of +0.1% this year and +1.2% next (see
                                     Figure 1).

France is also showing strong        In an interview, FM Pierre Moscovici said his priority was to ensure that the pace of
commitment to pursue                 deficit reduction does not push France into recession, explaining that the focus should
structural reforms as well as        be on structural deficit not nominal. He believes that the outlook will improve provided
curbing spending                     the global environment improves, Europe recovers and France implements structural
                                     reforms. He also said that Europe should not underestimate the risks of an excessive
                                     pace of fiscal consolidation and that surplus countries should also contribute to the
                                     ongoing rebalancing act.

The EC is probably already           While the government says it based its macroeconomic scenario on the EC’s spring
working with less                    forecasts, a major difference is that the EC worked under the assumption of a deficit
optimistic scenarios                 increasing by 0.2pp of GDP, while the government includes measures aimed at reducing the
                                     structural deficit by 0.9pp of GDP. Hence, the EC’s alternative scenario showing deficits
                                     dropping below 3.0% of GDP next year would also show growth below 1.0%, even taking
                                     the smallest fiscal multiplier possible.

                                     FIGURE 1
                                     Macroeconomic scenario (Stability and Convergence Programme, growth rates in %
                                     2013-2017)

                                                                                 2012          2013       2014       2015-2017

                                     GDP                                           0            0.1        1.2           2
                                     Private consumption                         -0.1           0.2        0.9          1.9
                                     Public consumption                           1.4           1.2        0.6          0.3
                                     Gross fixed capital formation                 0           -0.8        1.2          2.4
                                     Inventories (contribution)                   -1           -0.4        0.1           0
                                     Net exports (contribution)                   0.7           0.3        0.2          0.3
                                     Exports                                      2.5            2         4.5          6.7
                                     Imports                                     -0.3           0.8        3.5          5.3
                                     GDP deflator                                 1.6           1.5        1.75         1.7
                                     Average wage per employee                     2            1.9        2.2          2.9
                                     Employment                                  -0.2          -0.6        0.2          1.1
                                     Source: French Ministry of Finance




19 April 2013                                                                                                                 13
Barclays | Global Economics Weekly


                                     Crucial influence of the newly established High Council of Public Finance
The high council of public           The High Council of Public Finance (newly established, acting as independent
finance has expressed                budgetary committee) considers that the government’s scenario is too optimistic and
concerns that the SCP is too         that there is a high risk that growth will be significantly below 1.0% next year. The high
optimistic                           council also notes that the government chose to base budget planning on an average
                                     scenario, rather than to opt for a conservative scenario that would have minimized the
                                     likelihood of missing the target (Figure 2). The European treaties leave the choice to
                                     governments to opt either for one (plausible scenario) or the other (conservative
                                     scenario) but fiscal credibility can only be achieved through repeatedly hitting targets,
                                     which would advocate for a conservative approach. We believe that the establishment
                                     of the high council and the new powers of the EC will contribute to this change in
                                     planning, even though this may happen over time only.

It would only take 0.2pp lower       The rule of thumb is that every percentage point of lower growth generates about half a
growth for France to miss its        percentage point of additional cyclical deficit. Hence it would take only 0.2pp lower
deficit target next year             growth for France to miss its target next year, unless it comes up with additional
                                     measures. With the current level of uncertainty in GDP forecasts, 0.1pp is obviously too
                                     little a buffer.

Reforms are crucial for the long     Concerning the medium to long term, the High Council of Public Finance highlights the
term growth and employment           risks surrounding the forecasts. In particular, competitiveness gains appear to have
                                     been insufficiently documented. It is currently unclear how ambitious the government’s
                                     reform agenda is but its exports growth assumption will require further gains in
                                     competitiveness which can only be delivered by additional reforms. As we show in
                                     France: Where reforms need to be made (Part 1) - a diagnostic, 27 February 2013,
                                     reforms have to address rather small imbalances (taken individually) but spread widely
                                     across the board (non-cost competitiveness, wages, non-wage costs, intermediary
                                     costs, pensions, unemployment benefits, family allowances…). Over the long run,
                                     higher potential growth, a lower unemployment rate and efficient public spending are
                                     crucial as they dominate the debt sustainability picture over short term fiscal
                                     adjustment in revenues and spending. Hence, whatever, the short-term fiscal dynamics,
                                     long-term structural reforms should be the priority.


                                     FIGURE 2
                                     Consolidation path slower than previously planned

                                           00   01     02    03    04     05    06    07     08   09   10   11   12   13   14   15   16   17
                                       0

                                      -1

                                      -2

                                      -3

                                      -4

                                      -5

                                      -6

                                      -7

                                      -8
                                                       Gvt balance (% of GDP)                 Old Gvt Forecast        New Gvt Forecast
                                     Source: Ministry of Finance, INSEE, Barclays Research




19 April 2013                                                                                                                              14
Barclays | Global Economics Weekly


                                     Change in European economic policy?
After several months without         Since the beginning of the year, the government has faced serious headwinds with
clear communication, the             Cahuzac’s secret bank account scandal leading to his resignation as budget minister the
government is back in the            latest development in an extraordinary series of negative news (75% super tax
spotlight on economic matters        setbacks, deficit revisions, disappointing growth, uncertainties about future reforms,
                                     historically low approval rates…). The publication of the SCP and the National Reform
                                     Programme (NRP) is an interesting opportunity for the government to reset its
                                     economic strategy and communicate more strongly about the need for economic
                                     reforms, taking the success of labour market agreement as a benchmark. With the
                                     negative opinion of the High Council of Public Finance and recent forecasts by
                                     international institutions (IMF, EC, OECD) showing either higher deficits, lower growth
                                     or both, it looks like the government yet again has taken an optimistic bias to minimize
                                     the need of adjustment.

France is willing to take the        Despite some headwinds, France seems willing to take this discussion to the next level
discussion to the European           and launched a campaign to review the pace of fiscal consolidation in Europe as well as
level, hoping for a change           the contribution of surplus countries to the rebalancing effort. President Hollande said
 in paradigm                         this week that the current European recession is the consequence of austerity policies
                                     in parts of Europe, not compensated by expansionary fiscal policy in surplus countries.
                                     This view has also been supported by the IMF at this week’s G20 and by the US
                                     Treasury secretary Lew during his Europe visit. Also, M. Draghi seemed out of firepower
                                     at the last governing council meeting despite noticing that risks to growth were on the
                                     downside. Finally, German Chancelor Merkel was unusually supportive as she wished
                                     “France success because France is key to the eurozone as a whole”

Disappointing growth would           Putting all this together, the case for a less aggressive fiscal consolidation path and better
prove France’s case and              policy coordination in Europe is shaping up. The next weeks will be crucial as the EC will
increase the likelihood              formulate its draft recommendation based on the SCPs and the NRPs. At this point, it is
of a policy change at the            unclear what stance the EC will take (tough on nominal targets or benevolent on reform
June summit                          plans) and whether the French government's commitments will be sufficient. With the
                                     adoption of the two-pack earlier this year, negative recommendations by the EC are a much
                                     more credible threat as it has the authority to change a draft budget bill before it goes to the
                                     parliament. While newly reformed European institutions could force a government to take
                                     additional measures, the balance might also swing the other way if Heads of States and
                                     Governments find common ground on a softer pace of consolidation and coordination
                                     along the lines advocated by France, for example. Hence, lower growth could be the trigger
                                     for a policy shift in Europe. But if growth comes in stronger than expected in Q1 (data
                                     released mid may) then this change in paradigm will not happen until after the German
                                     election, if at all.




19 April 2013                                                                                                                     15
Barclays | Global Economics Weekly


IN FOCUS: SLOVENIA

                                     Manageable threats
Eldar Vakhitov
+44 (0)20 7773 2192                  This is an excerpt from Slovenia: Manageable threats, 18 April 2013.
eldar.vakhitov@barclays.com
                                     Slovenia faces significant challenges but, in our view, public debt can remain on a sustainable
Apolline Menut                       path. The government can likely manage without financial assistance from the Eurogroup. We
+44 (0) 20 3555 0862                 recommend buying Slovenia’22s as we expect tightening of the spreads in the medium term.
apolline.menut@barclays.com
                                     Recession persists, with another GDP contraction likely in 2013
Andreas Kolbe                        After a timid export-driven recovery in 2010, Slovenia slipped back into a double-dip
+44 (0)20 3134 3134                  recession, recording six consecutive quarters of negative growth since Q3 2011. Recession
andreas.kolbe@barclays.com           intensified in 2012 with GDP falling 2.3% and 8.3% from its 2008 pre-crisis peak, on the
Double-dip recession                 back of strong fiscal consolidation and an abrupt reduction of foreign inflows and credit to
continues as real GDP shrank         the corporate sector. We expect prolonged economic weakness in 2013 and forecast a
by 2.3% in 2012                      further -1.9% GDP contraction. We expect the economy to start recovering in 2014,
                                     supported by a recovery in global activity. However, this normalisation is highly conditional
Further deterioration is             on the resolution of the banking crisis and a successful restructuring of the highly leveraged
expected in 2013, driven by          corporate sector.
falling domestic demand
                                     Political risks have fallen, but the new government faces tough challenges
Continuing fiscal consolidation,     The disclosure of corruption allegations against former Prime Minister Janez Jansa opened a
reform implementation and            period of heightened political uncertainty, culminating in a no-confidence vote in February.
fixing the banking sector            We believe that the formation of a new coalition government led by PM Alenka Bratusek has
remain tough challenges for          reduced short-term political risks, although tough challenges remain. The new government
the new government                   has reiterated its commitment to pursue fiscal consolidation, continue reform
                                     implementation and fix the banking sector. By 9 May, the government pledged to send to
                                     the EU its programme of measures to avoid the crisis.

                                     FIGURE 1
                                     Slovenia’s banking system scale is much smaller compared with Cyprus
                                       Capital adequacy ratio, latest
                                        5
                                                                 Bubble size:
                                                                                                               Cyprus
                                        7                  Bank assets (% GDP)
                                        9
                                      11                            Spain
                                                                                         Portugal            Slovenia
                                      13
                                                                                  Poland        Hungary              Romania
                                      15
                                      17                                                                     Lithuania
                                                Turkey      Czech
                                                                                Latvia                                         Ukraine
                                      19
                                      21                                                                Croatia                 Serbia

                                      23
                                            0                  5                  10                  15                   20                  25
                                                                                                                        NPL (% total loans), latest
                                     Note: Slovenia’s bank assets are c.150% of GDP. Source: IMF, Haver Analytics, Barclays Research




19 April 2013                                                                                                                                         16
Barclays | Global Economics Weekly


                                                   Banking sector needs recapitalisation, a ‘’bad bank’’ has been created
Banking sector problems                            The banking sector has been the weak spot in the Slovenian economy. Public ownership in the
stem from corporate sector                         banking system is very high (accounting for c.40% of banking loans) and has been reflected in
indebtedness and                                   weak corporate governance, which contributed to the poor asset quality. The share of NPLs in
weak governance                                    total loans increased to about 15% and is likely to rise further due to the ongoing recession.
                                                   Capital adequacy, at 12%, is one of the lowest in the region. According to the government,
                                                   initial recapitalization needs amount to about 2.7% of GDP. While it is hard to estimate these
                                                   with precision, we think they could turn even bigger. Importantly however, the scale of the
                                                   Slovenian banking system is not comparable with that of Cyprus: bank assets amount to
Initial recapitalization needs                     c.150% of GDP, compared with c.700% in Cyprus. In October 2012, the government
amount to c.3% of GDP                              established the Bank Asset Management Company (BAMC) which will take over the
                                                   impaired assets and try to recover what is left of them. This will be financed by the issuance
                                                   of government-guaranteed bonds of up to EUR4bn (11% of GDP), which will likely be
                                                   spread over several years (under the current law, the BAMC has a five-year mandate).


                                                   Fiscal consolidation should continue to ensure debt sustainability
Fiscal consolidation has                           Fiscal consolidation was remarkable in 2012, leading to a reduction of the general
been remarkable, but                               government deficit (on an ESA95 basis) to 3.7% of GDP from 6.4% in 2011. Under the
should continue to ensure                          current measures, the deficit is likely to be closer to 4% of GDP in 2013, in our view. Public
debt sustainability                                debt reached 54% of GDP in 2012, more than doubling since 2008, though still remaining
                                                   among the lowest in the euro area. Taking into account bank initial bank recapitalisation
                                                   costs (2.7% of GDP) and maximum possible debt issuance by the BAMC (11% of GDP), it
                                                   could reach 72% of GDP in 2013. Delayed recovery or further capital injections into the
                                                   banking system represent the main downside risks; thus pursuing fiscal consolidation
                                                   remains crucial for public debt to be sustainable.

Financing needs are high                           Assuming the budget deficit will be close to 4% of GDP, we estimate financing needs at
                                                   c.EUR3bn for the remainder of the year. There are no bond maturities before April 2014. Taking
                                                   into account the EUR0.6bn cash surplus from the recent T-bill auction and buyback, the
                                                   government still needs to obtain about EUR2.5bn this year, according to our calculations. It has
                                                   already indicated that part of this could be obtained through privatisation. For 2014, the
                                                   financing needs appear to amount to EUR4-4.5bn depending on the extent of fiscal
                                                   consolidation. This does not take into account possible increase in bank recapitalization costs,
                                                   should such a need arise. In addition, one should keep in mind the government-guaranteed
                                                   bond issuance by BAMC of up to EUR4bn which may be spread over several years.

FIGURE 2                                                                                  FIGURE 3
Fiscal consolidation is crucial for debt to stabilise                                     Public debt amortisation highest in Q2 14
               Public debt (% GDP) - fiscal adjustment                                     1,800         Government amortization payments (EUR bn)
90
                              scenarios                                                    1,600
80
                                                                                           1,400
70
                                                        11pp increase due                  1,200
60
                                                        to BAMC debt issuance*             1,000
50
                                                                                             800
40
                                                                                             600
30
                                                                                             400
20
  2005          2007        2009         2011        2013         2015        2017           200
           Optimistic (1pp adjustment in 2013-2017)                                             0
           Baseline (1pp adjustment in 2014-2017)                                                    Q2 13     Q3 13    Q4 13       Q1 14    Q2 14    Q3 14   Q4 14
           Pessimistic (no adjustment, delayed recovery in 2013-2017)
                                                                                                                                 T-bills    T-bonds
Note: *Assuming it will be done entirely in 2013 (it may be spread over several years).   Source: Bloomberg, Barclays Research
Source: Haver Analytics, Barclays Research


19 April 2013                                                                                                                                                    17
Barclays | Global Economics Weekly


                                             The government could manage on its own, while possible assistance would
                                             be focused on the banking sector
Slovenia could request a                    Despite a challenging banking sector and large financing needs, we think the government
financial assistance facility for           could avoid the bailout given its relatively low public debt ratio. Otherwise, a possible
the recapitalization of the                 financing assistance by the Eurogroup could be tailored in a similar fashion as in Spain:
banking sector                              sector-specific focused on bank restructuring and recapitalisation. In this case, Slovenia
                                            would have to agree on a memorandum of understanding (MoU) with the Troika including
                                            plans to restructure its banking system, improve governance, supervision and regulation, as
                                            well as privatisation plans.

                                             Strategy: Most scenarios should lead to tighter spreads – long Slovenia
                                             sovereign credit
Slovenia’s challenges not                   Since the escalation of the Cyprus crisis, Slovenia has increasingly moved into the market’s
comparable with Cyprus’,                    spotlight and its sovereign spreads have widened substantially (Figure 4). As we analyse
in our view                                 above, Slovenia faces significant challenges, but we do not think they are unmanageable or
                                            comparable with those in Cyprus or Greece.

Debt haircut for sovereign                  Financing needs for Slovenia are non-negligible, but debt levels and the size of the banking
bondholders is highly unlikely              sector problems seem still at a level that would suggest that Slovenia can revert to a
                                            sustainable economic path. Hence, in a scenario in which Slovenia were to find it difficult to
                                            access markets for its financing needs and, in an extreme scenario, applies for a fully-
                                            fledged Troika programme, it would seem very unlikely that sovereign bondholders would
                                            be forced to take a haircut on debt holdings.

Spreads are likely to tighten in            If Slovenia is indeed able to obtain sufficient market financing (our base case scenario),
most scenarios, and we                      supply pressures may limit any potential rally. However, on balance, we think that most
recommend being long                        possible scenarios should lead to tighter spreads in the medium-term and hence reiterate
Slovenia credit                             our positive view on Slovenia credit. For international investors, we do not think the spread
                                            pick-up of Slovenia’s domestic EUR-denominated paper over the international USD ‘22s is
                                            generous enough for the likely more limited liquidity. Thus, we highlight Slovenia ‘22s as the
                                            preferred instrument to express our positive view.




FIGURE 4                                                                  FIGURE 5
Slovenia ‘22s spreads have come under pressure post Cyprus                Spread versus rating in the European periphery and in CEE:
                                                                          Slovenia looks mispriced and offers value, in our view
 500                             Cyprus/troika intial agreement                   Z-spread
          Z-sprd                                                          500
                                 with bank depositor "bail-in"                                                                        Port EUR21s
 450                                                                      450                     Slov 22s
                                                                          400                                           Hung 21s
 400
                                                                                                                Spain
                                                                          350                                                           Serbia 22s
 350                                                                                                           EUR22s
                                                                          300                    Italy                      Croa 21
 300                                                                                            EUR21s
                                                                          250
                                                                                                                        Rom 22s
 250                                                                                                         Ireland
                                                                          200
                                                                                                             EUR20s
 200                                                                      150             Lith 22s      Latvia 21s              Average rating
   11-Dec          11-Jan          11-Feb       11-Mar         11-Apr
                                                                          100
                   Slovenia $22s                Croatia $21s
                                                                                        A-     BBB+     BBB    BBB-      BB+     BB       BB-
                   Serbia $21s                  Hungary $21s
Source: Bloomberg, Barclays Research                                      Note: USD bonds shown, except for EUR government bonds of Portugal, Spain,
                                                                          Italy and Ireland. Source: Bloomberg, Barclays Research


19 April 2013                                                                                                                                       18
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: EURO AREA
Philippe Gudin, Francois Cabau, Antonio Garcia Pascual, Fabio Fois, Thomas Harjes, Fabrice Montagne, Apolline Menut

Review of last week’s data releases
Main indicators                                 Period Previous    Barclays      Actual      Comments

                                                                                             Euro area HICP inflation rate confirmed at 1.7% in March
E17: Final HICP, % m/m (y/y)                      Mar   …(1.7) P   1.2 (1.7)     1.2 (1.7)
                                                                                             Likely to fall further in April
                                                                                             Downward correction          in   ZEW      financial    investor
Germany: ZEW economic expectations index          Apr     48.5           -         36.3
                                                                                             expectations


Preview of week ahead

Monday 22 April                                                    Period       Prev. 2          Prev. 1       Latest          Forecast      Consensus
-       Ireland: Troika starts tenth review of Irish Bailout program
11:00   E17: ECB Executive Board Cœuré speaks at the ES2 Conference in Vienna
17:00   France: CB Noyer speaks at “Paris EUROPLACE international financial forum 2013” in New York
07:00   Swi: M3, % y/y                                              Mar           9.9             9.4           9.8                -                 -
14:00   E17: 'Flash' consumer confidence, index                        Apr       -23.9           -23.6         -23.5               -            -24.0
Tuesday 23 April                                                   Period       Prev. 2          Prev. 1       Latest          Forecast      Consensus
-       Netherlands: Parliament votes on Cyprus aid package
06:00   Swi: Trade balance, € bn                                   Mar            0.9             2.1           2.0                -                1.7
06:45   France: Business climate, index                                Apr        87               90            90                -                89
06:58   France: "Flash" manufacturing PMI, index                       Apr       42.9             43.9          44.0             44.0               44.0
06:58   France: Flash services PMI, index                              Apr       43.6             43.7          41.3             42.4               42.0
07:28   Germany: "Flash" manufacturing PMI, index                      Apr       49.8             50.3          49.0             50.0               49.0
07:28   Germany: "Flash" services PMI, index                           Apr       55.7             54.7          50.9             52.0               51.0
07:30   Sweden: Unemployment rate (sa), %                           Mar        7.6 (8.0)        8.4 (8.0)     8.5 (8.2)        8.5 (8.1)             -
07:58   E17: "Flash" manufacturing PMI, index                          Apr       47.9             47.9          46.8             46.8               46.7
07:58   E17: "Flash" services PMI, index                               Apr       48.6             47.9          46.4             46.8               46.6
07:58   E17: "Flash" composite PMI, index                              Apr       48.6             47.9          46.5             46.7               46.3
08:00   Italy: Retail sales sa, % m/m (y/y)                            Feb     0.0 (-2.4)      -0.1 (-3.4)   -0.5 (-3.0)         0.0                 -
08:00   Italy: Consumer confidence, index                              Apr       84.7             86.0          85.2             85.0               85.5

Sweden – Unemployment rate: We expect seasonally adjusted unemployment to decrease by 0.1pp to 8.1% in March after
increasing 0.2pp in February. However, non-seasonal adjusted unemployment should remain unchanged 8.5%.

Euro area – “flash” PMI: We look for a slight increase in euro area “flash” PMI in April, with euro area composite PMI edging up to
46.7, driven by a timid upward move in services (46.8) sector. We believe that German manufacturing and services PMIs will
rebound after last month’s downward correction. We expect a flat reading for French manufacturing PMI while the services sector
should be slightly more volatile and bounce back to 42.4.

Wednesday 24 April                                                 Period       Prev. 2          Prev. 1       Latest          Forecast      Consensus
12:30   E17: ECB Executive Board Member Mersch speaks on “Prospects for the euro and Europe” in Germany
13:00   E17: ECB VP Constâncio presents ECB annual report 2012 in Brussels
08:00   Germany: IFO business climate, index                           Apr      104.3            107.4         106.7            107.0           106.3
08:00   Germany: IFO current assessment, index                         Apr      108.1            110.2         109.9            110.0           109.5
08:00   Germany: IFO business expectations, index                      Apr      100.7            104.6         103.6            104.0           103.0
13:00   Belgium: Business confidence index                             Apr       -13.2           -11.0         -15.0               -            -14.0

Germany – IFO: We expect the IFO index to post a moderate improvement after last month’s correction.




19 April 2013                                                                                                                                              19
Barclays | Global Economics Weekly


Thursday 25 April                                                 Period    Prev. 2       Prev. 1       Latest      Forecast   Consensus
07:55   E17: ECB Executive Board Member Asmussen speaks at Bellwether Europe conference in London
07:00   Spain: Unemployment rate, %                                Q1         24.6          25.0         26.0          -         26.5
16:00   France: Jobseekers net change (sa), k                      Mar        8.0           43.9         18.4          -           -
Friday 26 April                                                   Period    Prev. 2       Prev. 1       Latest      Forecast   Consensus
-       France: President Hollande visits China
-       Spain: Releases its stability and convergence program and National reform program
07:15   E17: ECB Executive Board Member Asmussen speaks on “Global growth through M&A?” in Frankfurt
06:45   France: Consumer confidence indicator, index               Apr         85            86           84           -          83
07:00   Swi: KoF leading indicator                                 Apr        1.1           1.0           1.0          -          1.0
07:15   Sweden: Consumer Confidence, index                         Apr        -2.9          -1.0          2.8         4.5          -
07:15   Sweden: Economic Tendency Indicator, index                 Apr        90.3          95.1         95.4         96.1         -
07:15   Sweden: Manufacturing confidence Indicator, net balance    Apr        -16           -11           -10         -9           -
08:00   E17: M3, % m/m (y/y)                                       Mar     -0.1 (3.5)    0.4 (3.5)     0.2 (3.1)     (3.0)       (3.0)
08:00   E17: Loans to private sector (adjusted), % m/m (y/y)       Mar     -0.2 (-0.2)   -0.1 (-0.5)   0.0 (-0.4)    (-0.2)        -

Sweden – Consumer confidence: We expect consumer confidence to increase slightly in April (4.5) just a touch below its historical
average (4.9).

Sweden – Economic Tendency: We expect the economic tendency, which is a combined measure of business and consumer
confidence, to increase slightly to 96.1 in April but to remain below its historical average (100).

Sweden – Manufacturing confidence: We expect manufacturing confidence to post increase slightly in April (-9) but to remain
below its historical average (-4.5).

Euro area – M3: We expect some moderation in aggregate M3 growth and possibly weaker deposit flows to peripheral EA member
states after Cyprus.




19 April 2013                                                                                                                            20
Barclays | Global Economics Weekly


OUTLOOK: UNITED KINGDOM

                                             No revolution, not much evolution
Simon Hayes                                  • High and persistent inflation continues to hinder monetary activism, and the
+44 (0)20 7773 4637                             redrafted MPC remit has not changed the policy outlook.
simon.hayes@barclays.com
                                             • Poor data may yet prompt more QE, however, and earnings growth fell unexpectedly
                                                in February, taking real average earnings to a twelve-year low.

                                             • Fiscal austerity has not been as unyielding as is often portrayed, and we do not
                                                expect the government to react to the IMF’s suggestion that policy is too tight.

The amended MPC remit                        The heralded UK monetary revolution continues to be striking by its absence. Despite the
will not in itself change the                widespread claim that Chancellor Osborne’s updated MPC remit had given the committee
policy stance                                more leeway to focus on growth rather than inflation, our interpretation was that it was little
                                             more than a redraft, essentially providing a more accurate description of the existing
                                             regime. The minutes of the April MPC meeting indicate that the MPC is of the same view
                                             and that the updated remit itself will not prompt a change in the policy stance.

                                             Nevertheless, there remains a heightened expectation that Mark Carney’s ascension to the BoE
                                             governorship will bring a step change in the monetary regime. Comments this week by Governor
                                             King highlighted two main areas in which Mr Carney’s approach might differ. First, Mr Carney is
                                             an enthusiastic supporter of conditional forward guidance, whereas Sir Mervyn is not. Second,
                                             Mr Carney may be more willing to contemplate purchases of riskier assets under QE.

The monetary stance remains                  An obvious point here is that these differences are only likely to come to light if the MPC
circumscribed by high and                    decides that more QE is necessary. As things stand, however, the monetary stance remains
persistent inflation                         circumscribed by high and persistent inflation. CPI inflation was steady at 2.8% in March,
                                             but is expected to rise above 3% in the coming months, and with producer price data
                                             highlighting building pipeline pricing pressures, a fall back to the 2% target seems a distant
                                             prospect. The majority of MPC members seems uncomfortable with this outlook – not
                                             enough to tighten policy, but enough to be wary of further loosening. Moreover, the MPC is
                                             not a consensual body, so replacing Governor King, who has been voting for more QE, with
                                             Mr Carney, would not make the voting arithmetic more dovish.


FIGURE 1                                                                   FIGURE 2
Real average weekly earnings hit a 12-year low in February                 Retail sales volumes are more than 10% below their pre-
                                                                           crisis trend

£ per week,                                                                   index,
2012 prices                                                                 2009=100
520                                                                         120
510                                                                         110
500
490                                                                         100
480                                                                          90
470
460                                                                          80
450                                                                          70
440
430                                                                          60
420                                                                               96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
      00 01 02 03 04 05 06 07 08 09 10 11 12 13                                     Estimated trend at end-07           Latest estimated trend
                        Real average weekly earnings                                Retail sales volumes
Source: Haver Analytics, Barclays Research                                 Source: Haver Analytics, Barclays Research


19 April 2013                                                                                                                                    21
Barclays | Global Economics Weekly


This week’s labour market            In our view, the most likely prompt for more QE is soft activity data, and this week’s
data were soft and point to          labour market statistics illustrated the fragility of the recovery. The unemployment rate
a weak outlook for labour            rose, employment fell and average earnings were extremely weak. In real terms, average
incomes                              weekly earnings fell to a twelve-year low (Figure 1), the continuation of a downtrend that
                                     has persisted for more than three years. Households are acutely conscious of this erosion
                                     in their resources, and consumers’ appetite to spend and to borrow has been curtailed
                                     accordingly. As an illustration of the size of the adjustment they have undergone, retail
                                     sales volumes are more than 10% lower than the pre-crisis trend would have implied
                                     (Figure 2). It is hard to see a sustained recovery taking hold until the outlook for
                                     household incomes improves.

We do not expect the Treasury        Against this subdued backdrop for private demand, the IMF this week grew more vocal in its
to respond to the IMF’s              concern that the government’s pursuit of fiscal consolidation is harming the economy’s
criticism of the deficit             recovery prospects. The flinty response from the Treasury supports our view that the
reduction plan                       government is unlikely to change tack for the time being. In fact, the accusation that the
                                     government’s deficit reduction plan has been unyielding in the face of economic weakness
                                     is not wholly supported by the facts. It is true that, cumulatively over the course of this
                                     parliament, its target for discretionary consolidation has changed little – the current plan is
                                     for £130bn of tightening (8.7% of annual GDP) between 2010-11 and 2015-16, compared
                                     with an original (June 2010) target of £128bn. However, the path of consolidation has been
                                     adjusted significantly. Whereas the original plan envisaged £24bn (1.6% of GDP) of
                                     tightening in the current fiscal year, this has been pared back to just £10bn (0.7% of GDP) –
                                     Figure 3. Thus, despite the Chancellor’s tough rhetoric, the Treasury has sought to reduce
                                     the effect of fiscal tightening on growth this year in the hope that the difference can be
                                     caught up in 2015-16, when the economy is stronger.

The preliminary estimate of Q1       Returning to the monetary policy outlook, the next key staging point in the data procession
GDP is likely to be close to         is the preliminary estimate of Q1 GDP, which is released next Thursday. We expect zero
zero, keeping the MPC on edge        growth on the quarter, following the 0.3% drop in Q4. Although this points to a sizable
                                     chance that the estimate will be negative – an outturn that would condemn the economy to
                                     an ‘official’ triple-dip recession – we see the risk to our forecast as skewed slightly to the
                                     upside. In any case, an outturn close to zero is likely to keep the MPC on edge.




                                     FIGURE 3
                                     Discretionary fiscal tightening has been re-profiled to support demand

                                      £bn
                                      35
                                                                                               Planned discretionary tightening reduced in 
                                      30                                                       2013‐14 to assist recovery, catch up 
                                                                                               envisaged in 2015‐16 
                                      25

                                      20

                                      15

                                      10

                                        5

                                        0
                                                2010-11          2011-12         2012-13       2013-14          2014-15          2015-16
                                                                   Original plan (June 2010)   Latest plan (March 2013)
                                     Source: HM Treasury, Barclays Research


19 April 2013                                                                                                                                 22
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: UNITED KINGDOM
Blerina Uruçi

Review of last week’s data releases
Main Indicators                                  Period   Previous         Barclays             Actual          Comments

CPI, % m/m (y/y)                                  Mar      0.7 (2.8)       0.4 (2.9)           0.3 (2.8)        CPI inflation was unchanged, while both
                                                                                                                input and output prices (including core
RPI, % m/m (y/y)                                  Mar      0.7 (3.2)       0.6 (3.4)           0.4 (3.3)
                                                                                                                prices) eased by more than expected. We
RPIx, % m/m (y/y)                                 Mar      0.7 (3.2)       0.6 (3.4)           0.5 (3.2)        expect inflation to remain elevated for the
Input prices, % m/m (y/y)                         Mar     2.8 (2.1) R      0.8 (1.7)           -0.1 (0.4)       rest of the year.

Output prices, % m/m (y/y)                        Mar      0.8 (2.3)       0.5 (2.1)           0.3 (2.0)
Core output prices, % m/m (y/y)                   Mar      0.3 (1.3)       0.3 (1.5)           0.1 (1.3)
MPC minutes, Bank Rate vote                       Apr        9-0               9-0                9-0           Governor King and Messrs Fisher and Miles
                                                                                                                were the dissenters, voting for a £25bn QE
MPC minutes, QE vote                              Apr        6-3               6-3                6-3           expansion.
ILO unemployment rate, %                          Feb        7.8               7.8                7.9           The labour market was depressed, with rising
                                                                                                                unemployment and very weak earnings
Claimant count unemployment, k                    Mar       -5.3 R             0.0                -7.0
                                                                                                                growth. We expect this weakness to continue
Average weekly earnings, % 3m/y                   Feb        1.2               1.6                0.8           and for subdued earnings growth to remain a
Core average earnings, % 3m/y                     Feb       1.3 R              1.1                1.0           drag on private consumption.

Retail sales, % m/m (y/y)                         Mar     2.1 (2.5 R)     -0.7 (-0.4)         -0.7 (-0.5)       Cold weather and poor income prospects
                                                                                                                bore down on retail sales.
Retail sales exl. fuel, % m/m (y/y)               Mar     2.1 (3.2) R      -0.7 (0.8)          -0.8 (0.4)

Preview of the next week
Tuesday 23 April                                                        Period        Prev 2             Prev 1        Latest      Forecast     Consensus
09:30     PSNBx, £bn                                                     Mar            14.8             -11.9           2.8         15.4          15.5
09:30     PSNB, £bn                                                      Mar            12.6             -10.3           4.4         13.8          13.5
09:30     PSNCR, £bn                                                     Mar            17.0             -20.7          -1.5         10.0          22.0
11:00     CBI industrial trends, total orders                            Apr            -20               -14           -15            -            -14
Public borrowing: We expect March PSNBx to be £15.4bn and PSNB to be £13.8bn, little changed from government borrowing
in the same month last year. If our forecasts materialised, this would bring PSNBx borrowing for the fiscal year 2012-13 to about
£83bn, slightly less than the OBR's forecast of £86.0bn.

Wednesday 24 April                                                      Period        Prev 2             Prev 1        Latest      Forecast     Consensus
09:30     BBA lending data                                               Mar             -                  -             -            -             -
11:00     CBI distributive trades, total sales                           Apr            17.0              8.0            0.0           -             -



Thursday 25 April                                                       Period        Prev 2             Prev 1        Latest      Forecast     Consensus
09:30     GDP preliminary release, % q/q (y/y)                           Q1          -0.4 (0.0)      0.9 (0.4)       -0.3 (0.2)    0.0 (0.2)     0.1 (0.4)
GDP: We forecast the preliminary estimate of Q1 GDP to show flat growth, after a contraction of 0.3% q/q in Q4 12. We see
some upside risks to this forecast (see the UK outlook).




19 April 2013                                                                                                                                                23
Barclays | Global Economics Weekly


OUTLOOK: JAPAN

                                                 The BoJ and the right expectations
Kyohei Morita                                    • Financial conditions have become substantially more accommodative, but the BoJ
+81 3 4530 1688                                         strategy for 2% price stability also relies heavily on expectations.
kyohei.morita@barclays.com
                                                 • Most of the accommodation is due to exchange rate improvements (REER). This should
                                                        help, but Japan mainly exports capital goods, which depend more on overseas demand.
Yuichiro Nagai
+81 3 4530 1064                                  • Domestically, wage growth is still the key. Consumer expectations have strengthened
yuichiro.nagai@barclays.com                             both for inflation and employment. These are encouraging but need to materialize.

James Barber, CFA                                Financial conditions have become substantially more accommodative over the past two
+81 3 4530 1542                                  quarters, but how will this help the BoJ achieve its price stability target of 2% y/y in the
james.barber@barclays.com                        overall CPI? As the BoJ is concerned with the “sound development of the national economy”
                                                 rather than simply inflation itself, we can assume the real economy needs to improve with
                                                 accompanying growth in wages.

Financial conditions have                        As shown in Figure 1, most of the accommodation in financial conditions has been due to
improved, mainly due to an                       an improvement in the real effective exchange rate (REER). The weaker currency should
improvement in REER                              help Japan tap into overseas demand. However, that alone will not guarantee strong
                                                 exports. In part, this is because Japan has transformed into an exporter primarily of capital
                                                 goods rather than consumer goods. As discussed last week, exports of capital goods are
                                                 more elastic with respect to demand (ie, overseas economies) than to prices (ie, REER). In
                                                 short, overseas demand must be supportive.

A weak JPY helps, but Japan                      Yet even that does not guarantee export strength. In trade with China, Japan’s largest export
mainly needs overseas                            destination through 2011, exports have continued to trend downward since early 2011,
demand and a way to improve                      apparently due to structural causes – a partial loss of the supply chain to China due to the
exports to China                                 Great East Japan Earthquake in March 2011 (Figure 2). In the process, Japan has been
                                                 surpassed by Korea and Taiwan in terms of exports to China and may soon fall behind the
                                                 US for the first time in about 30 years. In the March trade data released this week, Japan
                                                 finally logged an upturn in export volumes to all major regions. Given the sharp drops over

FIGURE 1                                                                              FIGURE 2
Financial conditions substantially more accommodative due                             …but Japanese exports to China are falling, perhaps due to
primarily to JPY depreciation (REER)…                                                 earthquake-linked supply chain losses
                         Financial conditions index (FCI)                                                               Exports to China
                                                                                       (USD bn; annualized)                                             March 2011
 4                                                                                                                                                      earthquake
                                                                                      250
 3                                                                        Easier
 2                                                                                    200
 1
                                                                                      150
 0
-1                                                                                    100
-2
                                                                         Tighter        50
-3
     05      06     07      08      09     10      11      12     13       (CY)
                                                                                         0                                                                        (CY)
             Lending attitude                           Real short-term rates                93    95     97    99     01     03     05    07      09     11     13
             Real long-term rates                       REER                                            Japan           Korea             Taiwan            US
             TSE market cap                             FCI
Note: The weights of the variables are standardized so that a one point decline       Note: Seasonally adjusted, 3mma.
(rise) in the FCI is equivalent to a decline (rise) of around 1% in real GDP during   Source: National Bureau of Statistics of China, Barclays Research
the subsequent year. Source: Barclays Research


19 April 2013                                                                                                                                                         24
Barclays | Global Economics Weekly


                                                the past several months, however, we will have to wait for the April data to see if this marks
                                                the start of a recovery. Although the weaker JPY does have a price effect in that it increases
                                                JPY revenue for a certain level of real exports (ie, a rise in the export deflator), any effect on
                                                real exports will likely take time to materialize.

Domestically, wages need to                    In terms of domestic demand, wages need to increase in order to achieve the 2% y/y price
improve, which requires a                      stability targeted by the BoJ. As shown in Figure 3, however, the FCI and real wages have
boost to labor productivity – a                been largely uncorrelated over the past decade. This might be seen as evidence that
job for the government                         monetary policy alone cannot determine real wages, ie, the relative value of wages versus
                                               prices. Instead, there needs to be a focus on labor productivity. In our view, this should be a
                                               central theme of the government’s growth strategy due for release in June. One measure of
                                               its effectiveness will be whether it contains measures to boost liquidity in the labor market,
                                               including an easing of Japan’s onerous conditions for job termination 1.

Consumer inflation                             FCI measurements and correlations with the real economy aside, can expectations for
expectations have                              inflation spur expenditure and create the kind of virtuous cycle that lifts the economy and
strengthened, but need to rise                 provides a fundamental basis for such inflation? Such a notion clearly forms part of the BoJ’s
further to reach a level                       strategy. We expect it to reinforce such expectations in its 26 April Outlook Report through
consistent with 2% CPI                         forecasts showing that the CPI is heading toward 2% in two years (see Data
inflation                                      Review/Preview). A Cabinet Office survey released this week did find for the first time since
                                               August that over 70% of households expected prices to rise over the next 12 months. Yet
                                               the weighted average of those expectations has been roughly flat and about 2pp above the
                                               overall CPI since 2011, which suggests it may need to rise another 2pp in order to reach a
                                               level consistent with 2% CPI inflation (Figure 4).

The improvement in consumer                    Importantly, however, the same survey also reported an improvement in consumer
confidence and employment                      confidence to pre-Lehman levels, including a jump in the index measuring attitudes about
expectations is encouraging;                   employment conditions to its highest level since May 2007. Such expectations, realistic or
materialization may be crucial                 not, must be encouraging for the BoJ. Materialization may be crucial to the success of its
                                               strategy and highlights the importance of the government’s role mentioned above.




FIGURE 3                                                                              FIGURE 4
Monetary policy cannot control real wages                                             Household inflation expectations may need to climb another
                                                                                      2pp to reach a level corresponding with 2% CPI inflation
                FCI and real wages largely uncorrelated                                             Household inflation expectations and actual CPI
                                                                       (% y/y)           (% y/y)
    4                                                                         4         4
    3                                                                         3         3
    2                                                                         2         2
    1                                                                         1
                                                                                        1
    0                                                                         0
                                                                                        0
-1                                                                            -1
                                                                                       -1
-2                                                                            -2
-3                                                                            -3       -2

-4                                                  -4                                 -3
        00 01 02 03 04 05 06 07 08 09 10 11 12 13 (CY)                                      04     05     06     07      08     09      10     11     12      13 (CY)
                  FCI (LHS)    Real wages (RHS)                                                    Household inflation expectations                 Overall CPI
Source: MHLW, MIC, Cabinet Office, Barclays Research                                  Note: Household inflation expectations are calculated as a weighted average
                                                                                      based on the distribution of survey responses, using 5% for “5% or higher,”
                                                                                      3.5% for “2% to less than 5%” and 1% for “under 2%.” Source: Cabinet Office
                                                                                      Monthly Consumer Confidence Survey, Barclays Research

1
 The four conditions based on legal precedent are: 1) management necessity of dismissal for the purposes of reorganization; 2) efforts in order to avert dismissal for
the purposes of reorganization; 3) selection of terminated employee based on rational criterion; and 4) appropriateness of procedures.

19 April 2013                                                                                                                                                       25
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: JAPAN
Kyohei Morita, Yuichiro Nagai, James Barber

Review of this week’s data
Main indicators                  Period Previous Barclays   Actual     Comments

Reuters Tankan, mfg/non-          Apr   -11/+12     NA      -4/+12     The DI improved sharply for manufacturers, likely reflecting the effects
mfg DI                                                                 of the BoJ ease near the beginning of the survey period. Also, the
                                                                       expectations DI for July improved sharply for both manufacturers and
                                                                       non-manufacturers, in line with our expectations for the economy to
                                                                       pick up in H1 and start to accelerate in H2.
Trade balance, nsa/sa             Mar    -780/     -392/    -362/      Japan finally logged an upturn in export volumes to all major regions.
(JPY bn)                                 -1093      -835     -922      Given the sharp drops over the past several months, however, we will
                                                                       have to wait for the April data to see if this marks the start of a recovery.
Index of all-industry activity    Feb     -1.6      0.8      0.6       The index turned back up in February, based largely on the rise in the
(% m/m)                                                                tertiary index, which accounts for more than 60% of the total.

Preview of the week ahead
Wednesday 24 April                                                 Period       Prev 2         Prev 1        Latest       Forecast     Consensus
08:50     Corporate services price index (% y/y)                     Mar          -0.4          -0.2           0.1          -0.5           -0.4
Corporate service prices: We estimate that the CSPI turned back down in March. As services demand fluctuates with the
economic cycle, the index is highly correlated with the output gap, which could make it a focus in 2013.

Friday 26 April                                                    Period       Prev 2         Prev 1        Latest       Forecast     Consensus
08:30     National CPI ex-perishables (% y/y)                        Mar          -0.2          -0.2          -0.3          -0.5           -0.4
08:30     Tokyo CPI ex-perishables (% y/y)                           Apr          -0.5          -0.6          -0.5          -0.4           -0.4
NA        BoJ MPM results
15:00     BoJ semi-annual Outlook report
CPI: We expect the core CPI to show another relatively steep decline in February due to base effects linked to last year’s rise in
TV prices (a technical factor related to survey coverage), but look for it to turn up around July. However, the recent decline in
commodities represents a downside risk.

BoJ MPM/Outlook Report: We do not expect any further easing this time around. However, we do believe the BoJ could
continue to act on the expectations channel through its core CPI forecasts, perhaps revising sharply upward for FY14 and/or
extending its forecasting horizon out to FY15 to demonstrate its commitment/expectation to reach the 2% price stability target
in about two years.




19 April 2013                                                                                                                                     26
Barclays | Global Economics Weekly


OUTLOOK: CHINA

                                                                                  The “new normal” for growth
Steven Lingxiu Yang                                                               • Chinese Q1 GDP growth surprised to the downside at 7.7%. We view the slowdown
+852 2903 2653                                                                             as more structural in nature than cyclical and think potential growth is now 7-8%.
stevenlingxiu.yang@barclays.com
                                                                                  • March activity indicators also were soft. Investment growth is supported by
                                                                                           infrastructure projects, but manufacturing and property investment remain slow.
Jian Chang
+852 2903 2654                                                                    • The new premier emphasised boosting effective domestic demand in the latest State
jian.chang@barclays.com                                                                    Council meeting and promised to keep investment at a “reasonable” pace.

Yiping Huang                                                                      China’s Q1 GDP growth surprised the market to downside at 7.7% y/y (Barclays: 7.9%,
+852 2903 3291                                                                    consensus: 8%), versus 7.9% in Q4 12. Since 2012, we have argued that the current
yiping.huang@barclays.com                                                         economic slowdown is probably more structural in nature than cyclical. This is evidenced by
                                                                                  the still-tight labour market and the well-controlled inflation – instead of deflation – when
                                                                                  growth slowed to 7.4% in Q3 last year from above 10% in 2010. The soft outturn in Q1
                                                                                  supports our long-held cautious view of China’s recovery and our below-consensus growth
Chinese Q1 growth surprised                                                       forecast of 7.9% for 2013. We expect growth to remain in the 7.5-8.0% range in the coming
downside                                                                          quarters, as China’s potential growth rate has come down to 7-8%, in our view (see China:
                                                                                  Beyond the Miracle, 22 February 2013).

March industrial production                                                       The March activity indicators, which were released along with Q1 GDP, also point to modest
also was weak                                                                     industrial production (IP). IP growth, at 8.9% y/y, posted a downside surprise for the second
                                                                                  month in a row (Barclays: 10.2%; consensus: 10.1%) and slowed from 9.9% in Jan-Feb,
                                                                                  making Q1 growth at 9.5%, lower than the 10% achieved in Q4 12 (Q3: 9.1%, Q2: 9.5%,
                                                                                  Q1: 11.6%). This unexpected slowing of IP growth suggests that despite some visible
                                                                                  restocking of raw materials in Q4, the gradual pickup in final demand is not strong enough
                                                                                  to support: 1) a visible follow-up in inventory restocking among downstream industries; and
                                                                                  2) that industry overcapacity continues to weigh on upstream industries and restocking
                                                                                  needs. Production of steel and cement slowed in line with slowing investment growth.

Investment growth edged                                                           Fixed asset investment growth slowed to 20.9% y/y YTD from 21.2% in January-February
down, but was supported by                                                        2013. The details show that infrastructure investment stayed strong in last month,
infrastructure projects                                                           supporting headline investment growth and offsetting slow growth in the manufacturing and


FIGURE 1                                                                                                                                        FIGURE 2
Quarterly contribution to Chinese annual GDP growth                                                                                             Industrial production surprised to the downside
                                                                                                                                                 25                                                             50
 20     pp                     Consumption                             Investment                       Net export
                                                                                                                                                                                                                40
                                                                                                                                                 20
 15
                                                                                                                                                                                                                30

                                                                                                                                                 15
 10                                                                                                                                                                                                             20

                                                                                                                                                                                                                10
                                                                                                                                                 10
  5
                                                                                                                                                                                                                0
                                                                                                                                                  5
  0                                                                                                                                                                                                             -10

                                                                                                                                                  0                                                     -20
 -5                                                                                                                                               Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
       1Q-09
               2Q-09
                       3Q-09
                               4Q-09
                                       1Q-10
                                               2Q-10
                                                       3Q-10
                                                               4Q-10
                                                                        1Q-11
                                                                                2Q-11
                                                                                        3Q-11
                                                                                                4Q-11
                                                                                                        1Q-12
                                                                                                                2Q-12
                                                                                                                        3Q-12
                                                                                                                                4Q-12
                                                                                                                                        1Q-13




                                                                                                                                                             IP            IP: Steel (RHS)   IP: Cement (RHS)


Source: CEIC, Barclays Research                                                                                                                 Source: CEIC, Barclays Research


19 April 2013                                                                                                                                                                                                   27
Barclays | Global Economics Weekly


                                         property sectors. YTD infrastructure investment (~30% share) rose to 25.6% y/y versus 23%
                                         in Jan-Feb (transportation: 28.3% versus 15.7% in Jan-Feb; water and environment
                                         management projects: 36.9% versus 36%; electricity, gas and heating: 12.2% versus 19.2%).
                                         Property sector investment slowed to 20.2% y/y from 22.8% in Jan-Feb, and property starts
                                         fell 20.2% y/y in March after increasing 14.7% in Jan-Feb. We think the sector could face
                                         more headwinds in the coming months. Though property sales remained supported, rising
                                         27% y/y in March (Jan-Feb: ~50%, Q1: 42%), this may reflect buyers rushing to complete
                                         their transactions after the State Council announced strict enforcement of the existing 20%
                                         capital gains tax on home sales in the secondary market. We believe this strong level of
                                         property sales is probably not sustainable, and a slowdown in real estate investment could
                                         pose further downside risks to economic growth in 2013.

Consumption remained soft on             Retail sales growth was generally in line with expectations, rising marginally to 12.6% y/y
President Xi’s anti-corruption           (Barclays: 12.5%, consensus: 12.6%) from 12.3% in Jan-Feb, but it remains soft. In real
campaign                                 terms, retail sales growth edged up to 11.7% y/y from 10.9%, driven by daily consumer
                                         goods (food, clothing and recreation goods), as well as property-related sales (furniture,
                                         construction materials sales).

7.5% growth is probably the              Overall, our judgment is that China’s new leaders are balancing a near-term slowdown against
government’s bottom line                 medium-term structural change, and they appear to subscribe to the view that lower growth
                                         needs to be tolerated to cultivate new growth drivers through institutional and economic
                                         reforms. 7.5% growth is probably the government’s “bottom line”. The State Council, China's
                                         cabinet, met this week to discuss the domestic economic situation after Q1 data were
                                         released. Premier, Li Keqiang said he will continue to increase investment at a “reasonable”
                                         pace and actively expand domestic demand and improve policies to boost consumption. We
                                         think the Premier Li places “domestic demand” as the top priority as the next driver of Chinese
                                         growth, and in the press statement, the government said it would introduce more consumer-
Premier Li emphasized on                 friendly policies to encourage people to spend more on medical care, retirement service and
“domestic demand”                        cultural entertainment. The Q1 expenditure-based data also show encouraging signs that the
                                         economy’s rebalancing has a high contribution to growth from consumption (4.3pp, 55.5% of
                                         the GDP growth rate) and capital formation (2.3pp, or 30.3%).

                                         Meanwhile, we believe the current accommodative monetary and financial conditions are
                                         likely to continue in H1, but policymakers will keep a close eye on potential financial risk
                                         (see China: March surge in new loans and total social financing - deja vu?, 11 April 2013).



FIGURE 3                                                               FIGURE 4
Infrastructure spending still drives investment                        Monetary policy is likely to remain accommodative
 60                                                                      CNY bn            Bank loan                   Bank acceptance
                  Fixed asset investment (YTD, %y/y)
                                                                        3,000              Entrusted loan              Trust loan
 50                                                                                        Direct financing            Others
                                                                        2,500
 40                                                                                     2011                   2012               2013
                                                                        2,000
 30
                                                                        1,500
 20
                                                                        1,000
 10

   0                                                                     500

-10                                                                         0
  Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
                                                                        -500
           Manufacturing          Real estate       Infrastructure
                                                                                  Jan    Feb     Mar     Jan    Feb   Mar   Jan    Feb   Mar
Source: CEIC, Barclays Research                                        Source: CEIC, Barclays Research


19 April 2013                                                                                                                             28
Barclays | Global Economics Weekly


OUTLOOK: EMERGING ASIA

                                               A lower energy bill – Who gains?
Rahul Bajoria                                  • With energy prices dropping, Asia’s external balances are likely to improve.
+65 6308 3511
rahul.bajoria@barclays.com
                                               • Thailand, Korea, Philippines and India will benefit significantly from lower oil prices.

                                               • This drop in energy costs also poses downside risks to our inflation forecasts, and
Wai Ho Leong                                        could allow for looser monetary conditions.
+65 6308 3292
waiho.leong@barclays.com                       Since February, commodity prices, particularly Brent oil, which is down 16% from its peak,
                                               have fallen sharply. As the most immediate impact of lower oil prices is on current account
                                               balances, we revisit our estimates of the potential impact of lower energy prices, notably oil,
                                               on Asia’s external position (see A higher energy bill – Who pays?, 15 March 2012). Asia
                                               remains a large net importer of oil, as its growth is fuelled by relatively high oil consumption
                                               intensity. Malaysia is the only major economy in the region that exports energy
                                               commodities, making it a clear outlier in Asia.

Asia benefits from lower oil                   We estimate that for every USD10/bbl fall in the price of crude oil over 12 months, the
prices, given its status as a net              region’s current account balance improves by ~USD3.6bn per month. Based on our
energy importer                                forecasts, this implies that if oil prices were to average USD90/bbl for the next year, Asia’s
                                               current account surplus would increase by more than 25%, a meaningful improvement. We
                                               do not adjust for the elasticity of demand for oil. At lower prices, we assume that the same
                                               oil volumes are consumed, so the actual impact on Asia’s current account balance may not
                                               be as favourable, especially if growth is stronger and consumption increases at the margin.

India, Korea, Philippines and                  Our analysis shows that the impact on individual economies varies. The biggest
Thailand are the biggest                       beneficiaries of a drop in oil prices are India, the Philippines, Thailand and Korea. Given a
beneficiaries of lower energy                  relatively benign growth outlook, we believe these economies should also receive a boost to
prices                                         their domestic growth from the consequent improvement in their terms of trade. Further,
                                               currency stability should ensure that the benefits are also passed on to consumers.

Net energy exporter Malaysia                   On the flip side, Malaysia is likely to see a modest drop in its current account balance on
is likely to see its external                  lower oil prices. We estimate that a fall in crude oil to USD90/bbl from our current
surplus decline                                assumption of USD110/bbl would subtract 1.1pp from the country’s current account surplus
                                               as a percentage of GDP. Indonesia’s export earnings will depend on any corresponding
                                               reaction in palm oil prices, which determine the direction of its current account.

FIGURE 1
Current account sensitivity to oil prices
                         2012                                     2013 (Current account balance as a % of GDP)                                           pp change
Benchmark crude                                                                                                                                            if oil is
(USD/bbl)                 105           60           70           80           90           100          110          120          130          140        USD90
Korea                     3.8%         6.0%         5.3%         4.5%         3.8%         3.1%         2.3%         1.6%         0.9%         0.1%        ▲1.5%
Singapore#               18.6%        22.1%        21.7%        21.1%        20.5%        19.8%         19.0%        18.2%        17.3%        16.3%       ▲1.5%
Thailand                  0.7%         3.6%         3.0%         2.4%         1.8%         1.3%         0.7%         0.1%         -0.5%        -1.1%       ▲1.2%
Philippines               3.6%         5.5%         5.1%         4.7%         4.3%         3.9%         3.5%         3.1%         2.8%         2.4%        ▲0.8%
India                    -5.1%        -2.2%        -2.6%        -3.0%         -3.4%        -3.8%        -4.2%        -4.6%        -5.0%        -5.4%       ▲0.8%
Taiwan                   10.5%        11.3%        11.0%        10.6%        10.2%         9.8%         9.4%         9.0%         8.7%         8.3%        ▲0.8%
China                     2.3%         3.3%         3.2%         3.0%         2.8%         2.7%         2.5%         2.3%         2.2%         2.0%        ▲0.3%
Indonesia                -2.8%        -2.1%        -2.2%        -2.2%         -2.3%        -2.4%        -2.4%        -2.5%        -2.6%        -2.6%       ▲0.1%
Malaysia                  6.4%         2.9%         3.3%         4.0%         4.4%         5.2%         5.5%         6.1%         6.5%         7.2%        ▼1.1%
Note: * Indicates base scenario for average prices in 2013. Benchmark crude oil is a simple average of Brent, Dubai Fateh and WTI spot price. #Given the external
reliance of the economy, Singapore’s non-oil exports are sensitive to changes in oil prices. Source: Barclays Research



19 April 2013                                                                                                                                                       29
Barclays | Global Economics Weekly


FIGURE 2                                                                           FIGURE 3
Barring Malaysia, every major economy in the region is a net                       EM Asia’s current account balance can improve materially
energy importer                                                                    on the back of lower oil prices

  8                                                                                50
  6                                                                                45
                                       Exporter                                    40
  4
                                                                                   35
  2                                                                                30
  0                                                                                25
 -2                                                                                20
                                                                                   15
 -4
                                                                                   10
 -6
                                                                                    5
                                                  Importer
 -8                                                                                 0
-10                                                                                                      60       70      80        90    100   110   120    130      140
         TH      KR      TW       IN      PH        SG        CN     ID    MY                                                     Crude oil (USD/bl)
                      Net energy balance (2012, % of GDP)                                                        EM Asia: Monthly current a/c balance (USD bn)
Source: CEIC, Barclays Research                                                    Source: CEIC, Barclays Research



                                                  Inflation could also be lower than previously anticipated
We have lowered our inflation                     Lower oil prices have a beneficial impact on inflation as well. In the past two weeks, we have
projections for Thailand and                      cut inflation forecasts for Thailand and India (see InFocus articles) and identify downside
India due to lower commodity                      risks to our forecasts for China, Korea, and Taiwan. On average, fuel prices account for
prices                                            ~10% of inflation baskets in most economies, with high income economies of Singapore
                                                  and Hong Kong having the smallest weights, while India has the largest fuel component.

Central banks are likely to keep                  The impact of this energy-related easing in inflation pressures should allow central banks to
rates unchanged, barring India,                   either keep monetary policy accommodative or potentially loosen it further. We currently
where we expect 50bp of cuts                      forecast all central banks in emerging Asia to maintain policy rates, barring India, where we
in the next three months                          expect the RBI to cut the repo rate by another 50bp. If energy prices trend lower, we would
                                                  only expect further monetary easing in India, with all other central banks likely to stay put,
                                                  unless growth momentum slows rapidly.




FIGURE 4                                                                           FIGURE 5
India and Indonesia have the highest CPI weights for energy                        Countries with large subsidy bills benefit the most from
                                                                                   lower oil prices given the impact on inflation
16%
                                                                                                                 Impact of 20% oil price drop on CPI inflation
14%                                                                                                      0.0

12%                                                                                                      -0.5
                                                                                     percentage points




10%                                                                                                      -1.0
                                                                                                         -1.5
 8%
                                                                                                         -2.0
 6%
                                                                                                         -2.5
 4%
                                                                                                         -3.0
 2%                                                                                                      -3.5
 0%                                                                                                               IN    ID     MY    TH    PH   KR    SG    TW   CN    HK
          IN     ID     MY    TH        CN     KR        PH    TW     SG      HK                                Barclays estimate
                                                                                                                Assuming 100% Pass-through (Estimates by CPI Weights)
                        Energy weight in CPI (%)                    Average
Source: CEIC, Barclays Research                                                    Source: CEIC, Barclays Research


19 April 2013                                                                                                                                                               30
Barclays | Global Economics Weekly


IN FOCUS: INDIA

                                     Lower inflation, commodities major relief
Siddhartha Sanyal                    The fall in commodity prices, if sustained, could reduce India’s current account deficit
+91 22 6719 6177                     by nearly 1% of GDP. This could result in fewer hikes in domestic fuel prices, which
siddhartha.sanyal@barclays.com       contribute over 25% to inflation. We expect weak growth to lead to more RBI easing.

                                     Crude oil and gold are India’s two major commodity imports, and volumes of both have
Rahul Bajoria
                                     increased significantly in recent years. India’s oil imports are typically sticky and not very
+65 6308 3511
                                     sensitive to price. On the other hand, the surge in gold import demand in recent years has
rahul.bajoria@barclays.com
                                     been mostly speculative, responding to high inflation and a steady surge in gold prices
                                     (Figure 2). This implies that in the case of a downward trending price, not only could the
                                     gold import bill decline, but there is a possibility of lower volumes as well.

                                     We have examined the potential change in India’s net import bill in light of the recent drop
                                     in the prices of these two commodities, under the assumption that there will be no change
                                     in oil/gold import volumes due to the price changes. Given the observed price-demand
                                     relationship in recent years, we believe this is a conservative assumption.

Gold and oil are key imports –       If gold prices remain flat at USD1400/oz, and Brent crude price averages USD100/bbl, we
with the current drop in             estimate that India’s net import bill for could fall by nearly USD7bn for gold and more than
commodity prices, India’s            USD13bn for oil in FY 13-14 on flat volume assumptions. This would result in net savings of
current account deficit can fall     around USD20bn in import costs, and reduce the current account deficit to USD66bn
by as much as 1% of GDP              (around 3.2% of GDP), significantly lower than our baseline estimate of over USD85bn
                                     (4.1% of GDP). We do not factor in any drops in other metal prices, such as copper,
                                     palladium, or silver, which could cut the current account deficit further.

                                     Meaningful inflation benefit from lower commodity prices
Recent fall in oil price             The impact of lower commodity prices is markedly favourable for India’s inflation dynamics.
meaningful to reduce diesel          Hikes in administered prices alone have contributed around 1.7 percentage points to the
subsidy                              current headline inflation rate of c.6.0% (Figure 3). If oil prices remain low, the need to hike
                                     administered prices will ease; eg, underrecoveries on diesel would decline to less than
                                     INR3/litre if Brent crude averages USD100/bbl, compared with around INR6.5/litre at the
                                     beginning of the financial year when oil was around USD112/bbl. Moreover, we estimate
                                     that an average Brent crude price of USD100/bbl would push inflation for non-administered
                                     items of the fuel group negative on a y/y basis in the coming months, given a high base.

                                     FIGURE 1
                                     Sensitivity of India’s FY 13-14 current account balance to gold and oil price changes

                                                                                                       Brent (USD/bl)

                                                                             80              90              100              112              120

                                                                                            Current account balance (USD bn)

                                                           1200              -39             -49              -60             -73              -81
                                                           1300              -42             -52              -63             -76              -84

                                           Gold            1400              -45             -55              -66             -79              -87
                                         (USD/oz)          1500              -48             -58              -69             -82              -90
                                                           1625              -51             -62              -73             -85              -94
                                                           1700              -54             -64              -75             -88              -96
                                     Note: Price assumptions are average for FY13-14. Highlighted cells show baseline assumption and potential forecast.
                                     Source: Haver Analytics, CEIC, GoI, Barclays Research



19 April 2013                                                                                                                                          31
Barclays | Global Economics Weekly


                                             FIGURE 2
                                             Surge in gold imports since 2008 has predominantly been a function of rising prices

                                              3.5                                                                                                 100,000
                                                                                                                                                  90,000
                                              3.0                 Normal
                                                                  demand & price                                                                  80,000
                                              2.5                 phase                                                                           70,000

                                              2.0                                                                                                 60,000
                                                                                                                                     Import
                                                                                                                                                  50,000
                                                                                                                                     duty
                                              1.5                                                                                                 40,000
                                                                                                                                     hiked to
                                                                                                             QE related price
                                                                                                                                     control      30,000
                                              1.0                                                            increase ;
                                                                                                                                     demand
                                                                                                             speculative /                        20,000
                                              0.5                                                            investment demand
                                                                                                                                                  10,000
                                                                                                             rises
                                              0.0                                                                                                 0
                                                Sep-03                 Feb-06                  Jul-08                Nov-10              Apr-13
                                                                            Gold imports (% of GDP)                 Gold (INR/oz, RHS)
                                             Source: Haver Analytics, GoI, Bloomberg, Barclays Research


Weak growth is keeping core                  The impact of weak domestic economic momentum is already being felt on inflation, as the
inflation low                                WPI moved lower in recent months despite high food inflation and administered fuel price
                                             hikes. Indeed, headline inflation touched a 40-month low in March, at just 5.96% y/y, versus
                                             market and our expectations of 6.3%, and significantly lower than the Reserve Bank of India’s
                                             (RBI) projection of 6.8%. Core inflation, which had softened to 3.5% y/y from about 8% a year
                                             back, is expected to fall further in coming months: we expect core WPI to average 3% y/y in
                                             H2 13. The impact of the recent fall in commodity prices will also be felt more in the coming
                                             months. Notably, our global commodities research team has recently revised down its
                                             projections for oil prices. Taking such trends and forecasts into account, we are revising our
                                             India inflation forecasts and now expect it to average around 6% in FY 13-14 (6.3% earlier).

Revision in January inflation                Despite the downside surprises in recent inflation prints, the final number for January was
data was driven largely by fuel              revised up by a large 69bp (to around 7.3%), which raises some concerns. However, of the
price increases                              69bp of upward revision, we estimate that the contribution from manufacturing goods
                                             (weight: ~65% of overall WPI) was less than 10bp. The largest contribution came from the
                                             fuel group (nearly 35bp), which is not a surprise as administered prices were hiked in
                                             January but this was not accounted for in the provisional index. Another c.25bp of the

FIGURE 3                                                                          FIGURE 4
Hikes in administered fuel group items contribute over 25%                        Core inflation moves lower; softening remains broad-based
(in pp) to current inflation

 10                                                            PP                       PP contribution to core WPI
                                                           contribution            10
  9                                                          to WPI
  8                                                                                 8
  7                                                                                 6
  6                                                                                 4
  5                                                                                 2
  4                                                                                 0
  3
                                                                                   -2
  2
                                                                                   -4
  1                                                                                 Mar-09           Mar-10           Mar-11       Mar-12         Mar-13
  0
                                                                                              Textiles                           Chemicals
   Feb-11   Jul-11     Dec-11            May-12    Oct-12     Mar-13                          Base metals                        Machinery
        Administered fuel prices           WPI ex admin fuel prices                           Others                             Non-food manufacturing
Source: Haver Analytics, Barclays Research                                        Source: Haver Analytics, Barclays Research


19 April 2013                                                                                                                                             32
Barclays | Global Economics Weekly


                                             upward revision came from primary products. In sum, while the January inflation revision
                                             looks worryingly large, we believe that it is largely one-off and does not pose any
                                             meaningful threat to the inflation trajectory in the coming months.

                                             Growth indicators stay weak; RBI set to ease further in coming months
Growth remains weak, and                     On the other hand, growth indicators remain very weak. Despite the (tiny) growth in
turnaround seems to remain                   headline industrial production (IP) for February – released last week – our trimmed mean IP
slow                                         growth measure showed a meaningful 3.4% y/y contraction, which clearly underscores the
                                             broad-based weakness in industrial activity. Several other growth indicators – such as the
                                             purchase managers’ index (PMI), automobile sales growth, and trends in capex –remained
                                             markedly weak (see More stumbling blocks for India’s recovery hopes, 5 April 2013).

RBI has room to cut rates                    While guidance from the RBI remains cautious, we believe the flow of macroeconomic data
further – we expect another                  – repeated downside surprises in inflation, a more benign trade deficit and weak growth
50bp by mid-2013 despite                     indicators – is creating room for further monetary easing. We reiterate our longstanding
cautious RBI guidance                        view of another 50bp of repo rate cuts by mid-2013 despite the RBI’s very cautious
                                             guidance. We feel the likelihood of further rate cuts (25-50bp) in subsequent quarters has
                                             been rising, and think the central bank has become more committed to proactively
                                             managing systemic liquidity. As the cash reserve ratio (CRR) has been reduced 200bp since
                                             January 2012 and is now at a historical low, we expect OMOs to be the RBI’s preferred tool
                                             for liquidity injections in the near term (we expect about INR750bn during H1 13-14).

                                             Lower trade deficit offering some respite
Monthly trade deficits are                   The improvement in external trade performance will also offer some respite and allow the
moving lower; offering some                  RBI to continue to support growth. Indeed, the trade deficit fell to a two-year low of
relief on current account                    USD10.3bn in March, significantly below the USD17.9n average deficit in January-February
deficits                                     2013 and the USD16.6bn average deficit during April 2012-February 2013. The
                                             improvement came predominantly from lower imports, which fell 2.9% y/y (April-February
                                             3.6% y/y), while exports rose to an 11-month high, at 7.0% y/y growth. Despite the
                                             favourable latest print, India’s trade deficit remains high: we expect 4.1% 006Ff deficit in
                                             FY 13-14. However, the recent drop in commodity prices should have a positive impact on
                                             India’s external trade balance and, if sustained at current levels, could cut the current
                                             account deficit by almost 1% of GDP, based only on the price effects.




FIGURE 5                                                                  FIGURE 6
Positive February IP growth due entirely to spike in volatile             Softening in trade deficit offers some relief
goods production
                                                                           10
 140
                                                                             5
 130
                                                                             0
 120
                                                                            -5
 110
                                                                           -10
 100                                                                       -15
  90                                                                       -20
  80                                                                       -25
                                                                             Mar-09          Mar-10          Mar-11            Mar-12   Mar-13
  70
   Nov-08          Nov-09         Nov-10        Nov-11      Nov-12                                      Trade balance (USD bn)
                                                                                                        Trade balance ex oil*
            IP ex volatile goods (Jan 2009 = 100)        Volatile goods                                 Trade balance ex oil, gold*

Source: Haver Analytics, Barclays Research                                Note: * Indicates data only through February 2013.
                                                                          Source: Bloomberg, CEIC, Barclays Research

19 April 2013                                                                                                                                33
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: AUSTRALASIA & EM ASIA
Joey Chew

Review of last week’s data releases
Main indicators                                Period Previous Barclays Actual             Comments
China: Industrial production (% y/y)            Mar        9.9       10.2         8.9      The pick up in final demand is not strong enough to offset
                                                                                           overcapacity in some industries.
China: Fixed asset investments                  Mar        21.2      21.3         20.9     Slower property and manufacturing investment offset robust
(% y/y, YTD)                                                                               infrastructure investment.
China: Retail sales (% y/y)                     Mar        12.3       12.5        12.6     Daily consumption and property-related sales both picked up.
China: GDP (% y/y)                               Q1        7.9        7.9         7.7      Growth is still within the government’s comfort range.
India: WPI (% y/y)                              Mar        6.8        6.3         6.0      Lower inflation provides room for the RBI to cut rates in May.
Singapore: Non-oil domestic exports             Mar       -30.6       -7.0        -4.8     Pharmaceutical exports rebounded, but electronics shipments
(% y/y)                                                                                    are still depressed.

Preview of week ahead
Tuesday 23 April                                                        Period           Prev 2           Prev 1     Latest       Forecast      Consensus
09:45          China: Flash HSBC manufacturing PMI, index                   Apr           52.3             50.4       51.6            –              51.4
13:00          Singapore: CPI (% y/y)                                     Mar              4.3              3.6        4.9           4.1              3.6
16:00          Taiwan: Industrial production (% y/y)                      Mar              2.1             19.1       -11.5          1.0              1.8
Singapore: We expect a net negative impact on private road transport cost inflation from the fall in COE premiums in February
and March, and the increase in additional registration fees for some types of cars. This should help lower headline inflation. The
core measure should be relatively stable at 1.8% in March (Feb: 1.9%).

Taiwan: March exports rose 3.3% y/y, despite a high base. We forecast IP to also rise. March manufacturing PMI recovered to
51.2 (Feb: 50.2; Jan: 51.5).

Wednesday 24 April                                                      Period           Prev 2           Prev 1     Latest       Forecast      Consensus
05:00          New Zealand: RBNZ cash rate decision (%)                     Apr            2.5              2.5        2.5           2.5              2.5
09:30          Australia: CPI (% q/q)                                       Q1             0.5              1.4        0.2           0.7              0.7
New Zealand: The RBNZ is likely to keep rates steady, but warn about rising house prices. Inflation was in line with the bank’s
expectation, while growth has been much stronger, albeit with a hit to activity yet to come from the drought.

Australia: The CPI should pick up to 0.7%, although the seasonally adjusted CPI should be a more modest 0.5%. This implies
annual inflation of 2.8% (Q4: 2.2%).

Thursday 25 April                                                       Period           Prev 2           Prev 1     Latest       Forecast      Consensus
07:00          Korea: GDP (% q/q /% y/y) – prelim. est.                     Q1           0.3/2.4          0.0/1.6    0.3/1.5       0.8/1.4          0.4/1.0
16:00          Philippines: BSP policy rate (%)                              –            3.50             3.50       3.50           3.50            3.50
25-27 Apr      Thailand: Customs exports (% y/y)                          Mar             13.5             16.1        -5.8           4.7             –
Korea: We think the economy likely grew faster in Q1 than in most of 2012, helped by a recovery in exports and a gradual
improvement in investment.

Philippines: We expect the BSP to keep the policy rate unchanged as inflation is expected to remain within the target band in
2013. However, the central bank looks inclined to cut SDA rates further – a 50bp cut in the April meeting looks likely.

Thailand: More favourable base effects and recovering demand in major Asian trading partners should support export growth.
Friday 26 April                                                         Period           Prev 2           Prev 1     Latest       Forecast      Consensus
13:00          Singapore: Industrial production (% y/y)                  Mar               1.6             -0.1       -16.6          -3.0            -3.1
–              Thailand: Manufacturing production (% y/y)                 Mar             23.0             10.2        -1.2           1.7             –
Singapore: The March rebound in pharmaceutical exports suggests an improvement in biomedical IP. However, overall IP will
still likely contract, dragged down by electronics IP given the high base.

Thailand: We expect a modest rebound in IP on the back of a stronger auto sector performance.
Note: Release dates and consensus estimates are subject to change. Source: Bloomberg, Barclays Research

19 April 2013                                                                                                                                               34
Barclays | Global Economics Weekly


OUTLOOK: EMERGING EUROPE, MIDDLE EAST AND AFRICA

                                                     More rate cuts as growth is key concern
Daniel Hewitt                                       • Turkey cut its main policy rates 50bp, bringing the repo rate to 5.0%. Next week we
+44 (0)20 3134 3522                                             expect Hungary to continue its loosening cycle, possibly with a 50bp cut.
daniel.hewitt@barclays.com
                                                    • Policymakers remain focused on growth, as, for example, consumer demand has
                                                                been on a weakening trend in the region.

                                                    • This week, the low and declining inflation levels in Poland and Israel persisted, while
                                                                inflation remained high in South Africa.

Turkey central bank cuts policy                     Turkey’s central bank (CBT) cut each of its three major policy rates by 50bp, lowering its
rates aggressively by 50bp                          interest rate corridor to 4-7% and the repo rate to 5%. While cuts were expected, the
                                                    aggressiveness of the move surprised most. It came mainly in response to a stronger foreign
                                                    capital flow outlook in the wake of the BoJ’s QE and possibly to renewed rating upgrade
                                                    speculation following positive comments by rating agencies. The CBT is also likely to feel
                                                    pressure to support growth in light of a still modest recovery in activity thus far, while the oil
                                                    price decline could alleviate some inflation and C/A pressures. Although the CBT can
                                                    effectively tighten the market rates within the corridor by reducing the liquidity provided via
                                                    its repos, this week’s decision clearly sent a dovish message. The main risk of CBT’s strategy
                                                    is for inflation (at 7.3% in March) to surprise on the upside over the summer months.

Hungary accelerates                                 In Hungary, the NBH is in the middle of a long, slow loosening cycle, having reduced its base
policy loosening through                            rate a cumulative 200bp during the past eight months to 5.0%, a post-1990 low. However,
unorthodox measures…                                inflation has declined even more, down some 300bp since August 2012, and at 2.2% y/y also at
                                                    a post-1990 low. Thus, the real rate has widened to a relatively high 280bp (Figure 1).
                                                    Underlying inflation is well below the 3% target. While headline inflation has been artificially
                                                    pushed lower by cuts in administered energy prices, it has been pushed up by hikes in indirect
…and could cut rates by 50bp                        taxes (estimated by the NBH to push inflation up by 1pp). Thus, accelerated monetary policy
next week                                           loosening appears justified, and we think this supports a 50bp cut at the rate decision meeting
                                                    next week. We think that the rate will be cut to 3.5% in this cycle. However, the situation has
                                                    become more complicated with Governor Matolcsy’s announcement that the NBH plans to
                                                    exclude foreign banks from participating in its 2w facility. By pushing liquidity directly out to
                                                    banks, this is an alternative means of loosening monetary policy that will lead to lower market

FIGURE 1                                                                                       FIGURE 2
High real rates in Hungary and Poland support further cuts                                     Russia growth indicators mixed
  8%                                                                                             20     Russia real sector indicators, % y/y

  6%
                                                                                                 15
  4%

  2%                                                                                             10

  0%
                                                                                                   5
 -2%
                                                                                                   0
 -4%
            Hungary


                      Poland




                                                                  Russia
                               Israel




                                                                           Czech R.


                                                                                      Turkey
                                        Romania


                                                    S. Africa




                                                                                                  -5
                                                                                                   Mar-10    Sep-10    Mar-11     Sep-11       Mar-12    Sep-12 Mar-13
     Inflation (% y/y), March                     Policy rate (%)
                                                                                                                  IP            Retail sales            Investment
     Real policy rate (%)                         Inflation target (mid), 2012
Source: National sources, Haver Analytics                                                      Source: Rosstat


19 April 2013                                                                                                                                                        35
Barclays | Global Economics Weekly


                                                  interest rates and HUF weakness as the new liquidity tries to find a home. However, the NBH
                                                  may be inclined to sell FX to partially offset this liquidity injection and limit its effect on FX
                                                  markets. As Governor Matolcsy indicated, NBH monetary policy is still evolving.

Poland and Israel inflation                      In releases this week, the declining trend in central Europe inflation persists as Poland CPI
decelerate, South Africa                         decelerated to 1.0% y/y in March as expected, well below the 2.5% target. This keeps real
inflation unchanged                              rates quite high at around 200bp, and we expect further CPI declines in Q2 on base effects.
                                                 In addition, IP was down 2.9% in March. We reiterate our view that the NBP will cut further,
                                                 possibly beginning in May. Israel CPI decelerated to 1.3% y/y on base effects, also as
                                                 expected. Inflation volatility is likely in the next months due to gyrations of the base effects.
                                                 In addition, there is uncertainty from fiscal policy adjustments as the 2013 budget is being
                                                 finalised. At the same time, with the base rate relatively low at 1.75%, we think the BoI is
                                                 likely to remain on hold. However, if growth were to take another downward dip, the BoI
                                                 could cut one more time. In South Africa, CPI was unchanged at 5.9%, just inside the 3-6%
                                                 target, and core inflation declined slightly to 5.1% y/y. With domestic demand weak, we
                                                 think the SARB will remain on hold until H2 14.

Russia growth indicators were                    Russia growth indicators in March were mixed with overall positive momentum. IP was up
mixed in March                                   2.6% y/y from -2.1% in February, showing a reversion to the 2012 trend after two
                                                 disappointing months. Retail sales re-accelerated to 4.4% y/y from 2.5% in February, yet
                                                 were still below expectations. Real wages remained buoyant yet slowed slightly to 4.2% y/y.
                                                 The main disappointment was investment, which returned to negative growth at -0.8% y/y
                                                 as residential construction stagnated. With inflation running well above the target at 7.0%
                                                 y/y in March and unlikely to subside until June, we expect the CBR will not start policy
                                                 easing until Q3 when we think inflation will approach the 6.0% target.

Weakening consumer demand                        Consumer demand in EEMEA has been easing for over a year, exerting downward pressure on
weighs on growth in region                       growth. Retail sales slowed, in particular in CEE-4 (Figure 3). However, retails sales data out
                                                 this week in Russia and South Africa improved. Likewise, real wages growth has slowed,
                                                 particularly in the CEE-4, while Russia and South Africa wages have been more resilient.
                                                 Consumer confidence provides a possible indication of future demand trends; it remains well
                                                 below long-term average overall. But there has been a notable closing of the gap between
                                                 regions with CEE-4 consumer confidence improving, while in Israel and South Africa, in
                                                 particular, it has deteriorated (Figure 4). In Turkey, consumer confidence improved moderately
                                                 in Q1 13 after declining in the previous two quarters, and in Russia, it has remained above its
                                                 long-term average without a clear trend.


FIGURE 3                                                                         FIGURE 4
EEMEA consumer demand slowing                                                    Consumer confidence divergent trends

  10%                                                                              15
                                                                                                     Consumer confidence (difference to mean)
   8%                                                                              10
   6%                                                                                5
   4%
                                                                                     0
   2%
   0%                                                                               -5

  -2%                                                                             -10
                              Note: includes Russia, Poland, S.
  -4%                         Africa, Czech R., Hungary, Romania.                 -15
  -6%
                                                                                  -20
  -8%
    Feb-09            Feb-10           Feb-11           Feb-12      Feb-13        -25
                                                                                    Mar- 07 Mar- 08 Mar- 09 Mar- 10 Mar- 11 Mar- 12 Mar- 13
                       EEMEA real retail sales (weighted, % y/y)
                       EEMEA real wage (weighted, % y/y)                                    CEE-4 (avg)             Russia, Turkey, S. Africa, Israel (avg)
Source: National statistical offices, Haver Analytics                            Source: EC, national sources, Haver Analytics


19 April 2013                                                                                                                                                 36
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: EMERGING EUROPE, MIDDLE EAST AND AFRICA
Eldar Vakhitov, Daniel Hewitt, Christian Keller, Vladimir Pantyushin, Alia Moubayed, Piotr Chwiejczak, Peter Worthington
Review of last week’s data releases
Main indicators                               Period Previous Barclays Actual Comments
Czech: Current account (CZK bn)                Feb     6.0      -      27.7 Surge in surplus due to low income payments, rising trade surplus
Israel: CPI (% y/y)                            Mar     1.5     1.3     1.3   Inflation decelerates as expected on base effects
Poland: Current account (EUR bn)               Feb    -1.7      -      -0.9 Lower deficit compared with consensus forecast
Poland: Trade balance (EUR bn)                 Feb     0.0      -      0.6   Higher than consensus
Poland: CPI (% y/y)                            Mar     1.3     0.9     1.0   Lower than consensus – April print should inch down to 0.6% y/y
Romania: Current account YTD (EUR bn)          Feb     0.5      -      0.3   Surprising Jan-Feb C/A surplus due to narrowing of trade deficit
Russia: Industrial production (% y/y)          Mar    -2.1     2.0     2.6   Expected return to trend growth
Ukraine: Trade balance YTD (USD bn)            Feb     0.0     -0.9    -0.9 As expected, trade deficit remains wide
Turkey: Benchmark repo rate (%)                Apr    5.50     5.25    5.00 A larger-than-expected move, highlighting the CBT’s dovishness
Turkey: Overnight lending rate (%)             Apr    7.50     7.50    7.00 Given elevated credit growth, we had not expected a lower ceiling
Turkey: Overnight borrowing rate (%)           Apr    4.50     4.00    4.00 As expected by most, as a means to counter TRY appreciation
Ukraine: Retail trade YTD (% y/y)              Mar    14.8     15.0    13.4 Slight moderation, with further slowing likely in the near future
South Africa: CPI (% y/y)                      Mar     5.9     6.0     5.9   Slightly better than expected, due to subdued food inflation
South Africa: Retail Sales constant (% y/y)    Feb     2.2      -      3.8   Surprisingly strong, but could be due to volatility of data series
Israel: Trade balance (USD bn)                 Mar    -1.0      -      -1.1 Both exports and import volumes decline as balance improves
Russia: Real wages (% y/y)                     Mar     3.3     4.6     4.2 Seems to be on a lower trend compared to a few months ago
Russia: Retail sales real (% y/y)              Mar     3.0     3.2     4.4   Re-acceleration after February dip
Russia: Unemployment rate (%)                  Mar     5.8     5.8     5.7   Slightly lower
Russia: Investment (% y/y)                     Mar     0.3     1.2     -0.8 Another poor investment reading
Ukraine: Industrial production (% y/y)         Mar    -6.0     -5.0    -5.2 IP remains in recession
Poland: Sold Industrial output (% y/y)         Mar    -2.1     -1.8    -2.9 Lower demand limits production

Preview of week ahead
Tuesday 23 April                                              Period    Prev 2       Prev 1       Latest        Forecast          Consensus
 09:00 Poland: Retail sales (% y/y)                            Mar       -2.5          3.1         -0.8            0.0               0.4
 09:00 Poland: Unemployment rate (%)                           Mar       13.4         14.2         14.4           14.4              14.4
 13:00 Hungary: Deposit rate (%)                               Apr       5.50         5.25         5.00           4.50              4.75
Poland: We expect weak retail sales print. The labour market is weak but real rates are high; consumers are likely very careful
with their spending decisions.
Hungary: We expect the NBH to accelerate its easing cycle by cutting 50bp this month after eight consecutive monthly 25bp
cuts. We think the jump to 50bp is justified by the sharp declines in inflation to 2.2%, well below the 3% target, and the weak
economic performance. However, the recent announcement of unorthodox methods to loosen monetary policy could act as
an alternative to increasing the pace of cuts.
Wednesday 24 April                                            Period    Prev 2       Prev 1       Latest       Forecast          Consensus
12:30 Turkey: Industrial confidence                            Apr      102.1        107.5        112.1           -                  -
12:30 Turkey: Capacity utilization (%)                         Apr       72.4         72.2         72.7           -                  -
Turkey: On SA basis, capacity utilization made a more noticeable upward move in March. We expect this trend to continue.
Industrial confidence could be somewhat weaker after the strong showing in March.

Thursday 25 April                                             Period    Prev 2       Prev 1       Latest       Forecast          Consensus
10:30 South Africa: PPI (% y/y)                                Mar       5.4          5.8          5.4           5.2                5.3
      Ukraine: Current account (USD bn)                        Q1        -3.8         -4.0         -4.9          -2.0              -1.8
South Africa: We expect producer prices of manufactured goods to rise modestly, but PPI y/y rate to drop on base effects.
Ukraine: We expect the C/A deficit to remain large this year at c.USD13bn, although an improvement on 2012 (USD14.8bn).
Friday 26 April                                               Period    Prev 2       Prev 1       Latest       Forecast          Consensus
 08:00 Hungary: Unemployment rate (%)                          Mar       10.7         11.2         11.6           -                11.7
Hungary: While the Hungary economy appears to be past the bottom of the cycle, there are still no clear signs of recovery and
therefore unemployment could keep rising for a few more months.


19 April 2013                                                                                                                                     37
Barclays | Global Economics Weekly


OUTLOOK: LATIN AMERICA

                                        Split ways
Marco Oviedo                            • LatAm policymakers are once again refocusing on global events. Concerns about
+52 55 5241 3331                               falling commodity prices and softer global economic activity are gaining space.
marco.oviedo@barclays.com
                                        • The Brazilian Copom’s dovish rate hike reflects a split in the board and a new trend
                                               of weaker global growth could cut the cycle short.
Marcelo Salomon
+1 212 412 5717                         • We expect Banxico to keep rates at 4.0% and believe its view on flows, especially
marcelo.salomon@barclays.com                   coming from Japan, will be key.

                                        The global economic background should continue to dominate monetary policy decisions in
                                        LatAm. The Copom started hiking rates this week in Brazil, but it delivered a much more
                                        dovish-than-expected message in the communiqué. Global uncertainties were likely the
                                        catalyst, but the lack of conviction in the first upward movement of the cycle reaffirms our
                                        view that economic activity has a more important role than inflation in the BCB’s reaction
                                        function. In Mexico, Banxico meets on April 26, and although no surprises are anticipated –
                                        with the board expected to keep rates at 4.0% – its reading on the effects of the Japanese
                                        monetary policy expansion should help us understand how it perceives the balance of risks
                                        as the structural reform agenda pumps even more interest in the Mexican economy.

BCB started a tightening cycle,         Brazil’s Central Bank started a new tightening cycle with the Selic interest rate hike of 25bp to
but in a much more dovish way           7.5%, validating market expectations and anticipating the beginning of the tightening cycle.
than we expected                        However, the overall tone of the statement was unexpectedly dovish, in our view. The decision
                                        was split, and the two dissident votes were cast for no hikes.. This split was a big surprise to
                                        the market as well, which over the previous week had traded based on news articles (for
                                        example, “Food Prices rise and threaten inflation target,” O Globo, April 9, 2013 ) discussing
                                        the government’s pressure on the BCB. Figure 2 shows the Jan2014 DI swap contract, which
                                        two days before the decision embarked on a very hawkish trend, pricing the possibility that
                                        the government had already sanctioned a 50bp hike and that the BCB would sound hawkish.

                                        But in the statement accompanying this month’s decision, the BCB did not make any
                                        decisive strong hawkish statements either, quite on the contrary: at the same time it stated


FIGURE 1                                                                FIGURE 2
Inflationary pressures are a concern in Brazil (IPCA, % y/y)            The market reappraises the tightening cycle following the
                                                                        modest initial 25bp hike (Jan2014 DI swap contract, %)

% y/y                                                                    %
 14                                                                      8.5

 12

 10                                                                      8.0

   8

   6                                                                     7.5

   4

   2                                                                     7.0
   Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12                 Jan-13            Feb-13            Mar-13   Apr-13
                     IPCA         Food group          Services
Source: IBGE, Barclays Research                                         Source: Bloomberg, Barclays Research


19 April 2013                                                                                                                         38
Barclays | Global Economics Weekly


                                         that the high, resilient and dispersed inflationary process called for a monetary policy
                                         response (i.e., a hike), domestic – and especially external uncertainties – recommended
                                         cautious movements. These offsetting forces help us understand the bank’s actions. It had
                                         to act to re-anchor inflation expectations, but its concern about the global economic
                                         outlook (which is being marked by slower growth, excessive monetary policy expansion in
                                         the G3, and falling commodity prices) and even domestically, prevented a bolder move. The
The Copom’s dovish signals               minutes of this meeting (due out April 25) should help shed more light on the matter. We
imply to us that the cycle could         have revised our forecast and now expect the BCB to deliver three more consecutive 25bp
be even shorter than we are              rate hikes in the coming meetings, lifting the Selic rate up to 8.25% by August.
expecting, and the risk that
inflation remains high are               But starting a tightening cycle by sending a dovish signal, in our view, has a cost. It implies
growing                                  that the risks are skewed for a smaller cycle than what we have been forecasting. If inflation
                                         falls at a faster-than-expected pace or growth (domestic or abroad) underperforms
                                         expectations, we believe the Copom could call off the hikes. More importantly, there is a
                                         growing risk that re-anchoring of inflation expectations, which we believe is critical, will take
                                         longer and could keep inflation at a higher level.

                                         In Mexico, the next monetary policy meeting will take place on April 26. At the previous one,
                                         the board implemented a 50bp “once-for-all” cut of the reference rate. It made clear that
                                         this cut was not the beginning of an easing cycle. Moreover, the board said that it expected
                                         annual inflation to increase in March, but to decline later in the second half of the year,
                                         without compromising the inflation convergence to its target (3% +-1%). The recent
                                         inflation prints are confirming this trend, as annual inflation jumped to 4.25% in March.
Banxico should sound a bit
more hawkish, but no changes             However, the increase was a bit higher than expected. With perishable food prices the reason
are expected. More interesting           for the unexpected rise, we do not expect a reaction from Banxico in the next meeting; it should
will be its take on Japanese QE          maintain the reference rate at 4.0%. The board probably would add some hawkish tone as it
and flows                                continues to monitor inflation pressures in the short run. The board will offer its view of the
                                         recent monetary policies announced by the Bank of Japan and how it has increased the already
                                         abundant global liquidity. On the other hand, the Mexican economy is still subject to high
                                         expectations as the structural reform agenda is advancing fast and the flows to the economy
                                         continue supporting low rates in the domestic market and strong levels of the MXN. In this
                                         context, more accommodative language by the board for the medium term in the communiqué
                                         or in the minutes is possible, suggesting that further monetary action cannot be ruled out.



FIGURE 3                                                                FIGURE 4
Food prices lifting inflation in Mexico                                 Flows continue to drag Mexican yields down, especially in
                                                                        the longer end of the curve

% y/y                                                                   %
 12                                                                      8.0
                                                                         7.5
 10
                                                                         7.0
   8
                                                                         6.5
   6                                                                     6.0
                                                                         5.5
   4
                                                                         5.0
   2
                                                                         4.5
   0                                                                     4.0
   Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12                 Apr-12     Jun-12    Aug-12     Oct-12   Dec-12     Feb-13 Apr-13
                    Headline inflation       Food inflation                                          30-year         10-year
Source: INEGI, Barclays Research                                        Source: Bloomberg, Barclays Research


19 April 2013                                                                                                                              39
Barclays | Global Economics Weekly


DATA REVIEW & PREVIEW: LATIN AMERICA
Alejandro Arreaza, Sebastián Brown, Guilherme Loureiro, Bruno Rovai, Marco Oviedo, Sebastian Vargas

Review of the week’s data releases

Main indicators                             Period     Previous Barclays   Actual       Comments

Peru: Unemployment rate, %                   Mar         6.4       -        6.4         Fast growth keeps labor market tight
Peru: Economic activity index, % y/y         Feb         6.2      5.9       5.0         Construction sector deceleration leads to growth moderation
Brazil: Selic overnight rate, %                                                         BCB hiked the Selic rate in a split decision (two members voted
                                             Apr         7.25     7.25      7.50
                                                                                        for maintening rates), bringing a dovish statement, in our view.


Preview of the week ahead
Monday 22 April                                                  Period       Prev 2            Prev 1         Latest       Forecast      Consensus
    9:00     Mexico: Retail sales, % y/y                           Feb            3.5            -1.8            1.8           -0.8            -
Mexico retail sales: We expect the retail sales index to decrease by 0.2% m/m sa, following a 2.1% m/m expansion in the previous
month. Our forecast is influenced by the drop of 0.7% m/m sa in auto sales and the contraction of 1.4% m/m sa in consumption of
goods imports.
Wednesday 24 April                                               Period       Prev 2            Prev 1         Latest       Forecast      Consensus
    9:00     Mexico: Bi-weekly CPI, % 2w/2w                        Apr         0.15              0.24           0.52           -0.40           -
    9:00     Mexico: Bi-weekly CPI core, % 2w/2w                   Apr         0.18              0.24           0.26           0.04            -
    9:30     Brazil: Current account balance, USD bn               Mar         -8.4              -11.4          -6.6           -6.0            -
Mexico Bi-weekly CPI: There was important downward pressure in this release: perishable food prices should decline after the
strong jump during the previous fortnight, in addition to the first round of electricity prices decreasing, reflecting the beginning of
government subsidies. Core inflation should be well behaved, while headline infaltion should peak at 4.40% y/y.
Thursday 25 April                                                Period       Prev 2            Prev 1         Latest       Forecast      Consensus
    7:30     Brazil: COPOM meeting minutes                         Apr             -               -              -              -             -
    8:00     Brazil: Unemployment rate, %                          Mar            4.6             5.4            5.6            6.0           5.9
    9:00     Mexico: Economic activity index, % y/y                Feb            3.9             1.4            3.2            0.8            -
   15:00     Argentina: Industrial Production, % y/y               Mar         -3.4               0.2           -4.4             -            0.0
Brazil COPOM meeting minutes: Following the decision of hiking the Selic rate by 25bp, in the minutes we expect a more detailed
view on the drivers behind the reasoning of the two dissedent members who voted for maintaining rates in the April meeting. The
minutes could give us some color on what risk factors could interrupt the tightening cycle.

Mexico IGAE: We expect this monthly GDP proxy to expand by 0.6% m/m sa during February, accelerating from the previous 0.2%
print. Nonetheless, growth trend should soften to 1.1% 3m/3m saar. Should our estimate prove correct, our Q1 13 real GDP tracker
would remain at our forecast of 2.0% q/q saar.
Friday 26 April                                                  Period       Prev 2            Prev 1         Latest       Forecast      Consensus
      -      Colombia: Overnight lending rate, %                   Apr         4.00              3.75           3.25           3.25          3.25
    7:30     Chile: BCCh meeting minutes                           Apr             -               -              -              -             -
    9:00     Mexico: Trade balance, USD mn                         Mar        961.7            -2866.4          46.1             -             -
    9:30     Brazil: Total outstanding loans, BRL bn               Mar       2368.3             2366.1         2384.0            -             -
   10:00     Mexico: Overnight rate, %                             Apr         4.50              4.50           4.00           4.00          4.00
Chile BCCh meeting minutes: The pre-meeting speculation of a possible intervention in the currency market quickly faded after the
BCCh’s press release barely mentioned the CLP as a factor in its decision to keep rates on hold. While last week’s weakening of the
CLP against the USD makes an intervention less of a pressing concern, we will still look at the minutes to see whether an
intervention was considered at all by the BCCh board.

Mexico overnight rate: No change in the overnight rate is expected at this meeting. We expect some hawkish tone as inflation has
accelerated; however, the board’s assessment of the ongoing global monetary easing and capital inflows to the country could
provide more color on Banxico’s next move.




19 April 2013                                                                                                                                       40
Barclays | Global Economics Weekly


COUNTRY SNAPSHOT: AUSTRALIA
                                              2011                                       2012                                      2013                                  Calendar year average

% change q/q                       Q1       Q2       Q3       Q4          Q1          Q2          Q3          Q4       Q1        Q2          Q3           Q4          2011     2012    2013E 2014E
Nominal GDP (% chg, q/q)           0.9      2.3      1.7      0.3         0.4         1.2         -0.1        0.5      2.1       1.3         1.1          0.9         6.5       3.0     4.6      3.5
Real GDP (% chg, q/q)              -0.4     1.3      1.2      0.6         1.2         0.6         0.6         0.6      1.0       0.6         0.8          0.6
Real GDP (% chg, y/y)              1.8      2.4      2.9      2.7         4.4         3.7         3.1         3.1      3.0       2.9         3.1          3.1         2.4       3.6     3.0      2.3
 Private consumption               4.0      3.5      3.2      2.7         3.6         3.5         3.0         2.8      1.9       1.8         2.3          2.8         3.3       3.2     2.2      2.8
 Public consumption                2.7      2.2      2.4      2.8         4.0         4.4         2.9         1.6      -0.1      -1.7        -0.3     -0.1            2.5       3.2    -0.6      0.9
 Investment                        4.2      4.5      10.1     9.8         10.4        11.9        5.7         5.9      5.3       5.7         7.1          5.7         7.2       8.4     6.0   -4.4
 Net exports contribution (pp)     -2.4     -2.3     -2.2     -1.9        -0.8        -0.4        0.2         0.7      0.7       0.2         -0.1     -0.4            -2.2      -0.1    0.1      2.0
 Inventories contribution (pp)     0.0      1.2      -0.1     0.1         0.4         -0.7        0.5         -0.1     -0.3      0.0         0.3      -0.1            0.3       0.0     0.1      0.0
Unemployment rate (%)              5.0      5.0      5.2      5.2         5.2         5.1         5.5         5.4      5.4       5.3         5.3          5.2         5.1       5.2     5.3      5.4
CPI inflation (y/y)                3.3      3.5      3.4      3.0         1.6         1.2         2.0         2.2      2.8       2.9         2.1          2.5         3.3       1.8     2.6      2.4
Underlying CPI (y/y)               2.4      2.9      2.7      2.8         2.3         2.1         2.4         2.3      2.6       2.6         2.5          2.5         2.7       2.3     2.6      2.3
Current account (% GDP)            -2.8     -2.0     -1.8     -2.5        -3.7        -3.0        -4.0        -3.9     -3.8      -3.9        -4.3     -4.3            -2.3      -3.7   -4.1   -3.5
RBA cash rate (period end, %)     4.75      4.75     4.75     4.25        4.25        3.50        3.50        3.00     3.00      3.00        3.00     3.00            4.25      3.00   3.00   3.00
Note: Calendar year except for fiscal balance, which is financial year end June. Source: Barclays Research


COUNTRY SNAPSHOT: BRAZIL
                                                   2011                                       2012                                      2013                                Calendar year average
% change q/q saar
(unless otherwise stated)             Q1       Q2       Q3          Q4          Q1          Q2          Q3       Q4         Q1         Q2           Q3          Q4 2011 2012E 2013E 2014E

Nominal GDP (in BRL)                  7.9     11.7      2.7         3.6      12.1           4.0      0.7        12.4      9.5          7.9          9.6         9.6     9.9      6.3    9.5      9.4
Real GDP                              3.2      2.6     -0.3         0.2         0.6         1.3      1.5         2.2      4.5          2.8          3.2         3.6     2.7      0.9    3.0      3.5
 Private consumption                  2.0      2.8     -0.2         3.5         3.7         2.8      4.1         4.7      4.7          3.6          4.1         4.1     4.1      3.1    4.2      4.0
 Public consumption                  -0.9      7.3     -2.1         2.1         6.2         4.8      0.1         3.1      4.1          3.6          3.6         4.1     1.9      3.2    3.3      3.6
 Investment                           7.3      3.5      0.2      -2.9        -8.6        -3.5        -7.3        1.9      3.2          2.0          3.2         4.1     4.7     -4.0    1.1      4.1
 Net exports (contr., % y/y)         -1.3     -1.2     -0.4      -0.5        -0.2        -0.5           0.6      0.2      0.2          0.4         -0.9     -0.4        -0.8     0.0   -0.2   -0.5
Industrial output (PA)                3.4      0.2     -4.2      -6.6        -3.9        -3.5        6.2         0.6      3.9       -1.5            2.3         2.7     0.4     -2.7    1.8      2.5
CPI inflation (% y/y)*                6.3      6.7      7.3         6.5         5.2         4.9      5.3         5.8      6.6          6.8          6.4         6.0     6.5      5.8    6.0      5.7
CPI inflation (% y/y, PA)             6.1      6.6      7.1         6.7         5.8         5.0      5.2         5.6      6.4          6.5          6.6         6.2     6.6      5.4    6.4      5.7
Unemployment rate % (PA)              6.1      6.0      6.0         5.7         5.7         5.6      5.3         5.4      5.7          5.8          5.8         5.9     6.0      5.5    5.8      5.9
Key Central Bank rate (EOP)* 11.75 12.25 12.00 11.00 9.75                                8.50       7.50        7.25     7.25       8.25        8.75 8.75 11.00 7.25                   8.75   8.75
Current account (% GDP)*             -2.3     -2.1     -2.0      -2.1        -2.1        -2.2        -2.2       -2.4      -2.5      -2.7           -2.8     -2.9        -2.1    -2.4   -2.9   -2.9
Government balance (% GDP)* -2.2              -2.1     -2.5      -2.6        -2.4        -2.6        -2.8       -2.5      -2.6      -2.8           -2.9     -3.0        -2.6    -2.4   -3.0   -2.9
Gross public debt (% GDP)*           54.5     54.5     54.6      54.2        56.2        57.3       58.8        58.6     58.6       58.5        58.5 58.5 54.2                  58.6   58.5   58.3
Gross external debt (% GDP)*         12.7     12.9     12.4      12.0        12.4        12.8 13.38 14.00 13.9                      13.7        13.6 13.3 12.0                  14.0   13.3   12.4
Note: *End of period for quarters and years. Source: IBGE, BCB, National Treasury, Barclays Research




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COUNTRY SNAPSHOT: CHINA
                                                   2011                       2012                                  2013                                       Calendar year average

% change y/y                         Q1      Q2       Q3     Q4     Q1     Q2        Q3         Q4      Q1        Q2           Q3          Q4       2011             2012         2013     2014

Real GDP                             9.8     9.5      9.2    8.9    8.1    7.6       7.4        7.9     7.7       7.8          8.0         8.1          9.3          7.8          7.9      8.1
Real GDP (q/q, saar)                 9.7     9.6      8.3    7.2    7.2    7.8       8.2        8.4     6.4       8.2          9.1         8.7          …             …            …        …
Consumption* (pp)                    6.1     5.0      5.0    5.2    6.4    4.7       4.2        4.1     4.3       4.0          4.2         4.0          5.2          4.1          4.0      4.4
Investment* (pp)                     3.8     4.5      4.4    4.5    2.4    4.0       3.9        3.9     2.3       3.3          3.7         3.9          4.5          3.9          3.9      3.8
Net exports contribution* (pp)       -0.1    0.1      0.1    -0.4   -0.7   -0.9      -0.4       -0.2    1.1       0.5          0.0         0.0          -0.4         -0.2         0.0      -0.1

Industrial output                    14.3   13.9      13.8   12.8   11.6   9.5       9.1        10      11.1      11.9        12.8         12.2         13.7         10.0         12.0     13.0
CPI inflation                        5.1     5.7      6.3    4.6    3.8    2.9       1.9        2.1     2.4       2.7          3.6         4.0          5.4          2.7          3.2      3.5
Unemployment rate (%)                4.1     4.1      4.1    4.1    4.1    4.1       4.1        4.1     4.0       4.0          4.0         4.0          4.1          4.1          4.0      4.0
Current account (% GDP)              0.1     2.6      2.3    2.0    1.4    2.8       3.6        1.7     2.5       2.5          2.5         2.5          1.9          2.3          2.5      2.5
Government balance (% GDP)            …       …       …       …     …       …        …          …       …         …            …           …            -1.1         -1.6         -2.0     -2.0
Key CB rate (period end, %)          6.06   6.31      6.56   6.56   6.56   6.31      6.00       6.00    6.00      6.00        6.00         6.00         6.56         6.00         6.00     6.00
Note: All numbers are expressed in y/y % change unless otherwise specified. *Contributions by GDP expenditure components are all reported as “year to date”
numbers officially. Source: Barclays Research


COUNTRY SNAPSHOT: EURO AREA
                                                   2011                            2012                                       2013                              Calendar year average

% change q/q                         Q1     Q2        Q3     Q4     Q1      Q2        Q3          Q4      Q1E       Q2E          Q3E             Q4E        2011 2012 2013E 2014E

Real GDP                            0.6     0.2       0.1    -0.3   0.0     -0.2      -0.1       -0.6     -0.1      0.2              0.3         0.3           ...          ...      ...    ...
Real GDP (saar)                     2.5     0.8       0.3    -1.2   -0.2    -0.7      -0.3       -2.3     -0.4      0.7              1.1         1.2           ...          ...      ...    ...
Real GDP (y/y)                      2.4     1.6       1.3    0.6    -0.1    -0.5      -0.6       -0.9     -0.9      -0.6         -0.2            0.6           1.5         -0.5    -0.3    1.4
Private consumption                 -0.1    -0.5      0.3    -0.7   -0.2    -0.5      -0.1       -0.4     -0.2      -0.1             0.0         0.1           0.1         -1.2    -0.7    0.6
Public consumption                  -0.2    0.0      -0.1    0.0    0.2     -0.1      -0.1       -0.1     -0.2      -0.1             0.0         0.0          -0.1         -0.1    -0.4    0.1
Investment                          1.9     -0.2     -0.3    -0.5   -1.4    -1.7      -0.8       -1.1     -0.5       0.1             0.4         0.4           1.6         -3.9    -1.8    2.1
- Residential construction          2.7     -0.7     -0.5    -0.3   -0.1    -1.2      0.0        -1.3     -0.6      -0.5             0.0         0.3           0.6         -1.9    -2.2    1.0
- Non-residential construction      1.8     -0.9     -1.0    -0.3   -2.3    -1.9      -0.6       -1.0     -0.5       0.0             0.4         0.4          -1.1         -5.1    -1.7    1.5
- Non-construction investment       1.4     0.5       0.1    -0.8   -1.8    -1.9      -1.4       -1.4     -0.5      0.6              0.7         0.6           3.9         -4.5    -1.8    3.7
Inventories contribution (pp)       0.0     0.3      -0.4    -0.4   -0.1    0.0       -0.3       -0.1     0.0       0.0              0.0         0.0           0.2         -0.7    -0.3    0.0
Final dom. demand cont. (pp)        0.3     -0.3      0.1    -0.5   -0.4    -0.6      -0.2       -0.4     -0.3      -0.1             0.1         0.1           0.3         -1.4     0.8    0.8
Net exports contribution (pp)       0.2     0.2       0.4    0.5    0.4     0.5       0.4         0.0     0.2       0.2              0.2         0.1           1.0          1.6     0.8    0.3
Industrial output (ex construct.)   0.8     -0.1      0.3    -1.5   -0.5    -0.5      0.1        -2.1     -0.6      -0.2         -0.2            -0.2          3.2         -2.3    -2.5    0.1
Employment (q/q)                    0.1     0.2      -0.2    -0.2   -0.3    -0.1      -0.1       -0.3     -0.2      -0.2         -0.1            0.0           0.3         -0.7    -0.3    0.2
Unemployment rate %                 9.9     9.9      10.2    10.6   10.9   11.3       11.5       11.8    12.0       12.2         12.3          12.5           10.2        11.4     12.2    12.5
CPI inflation (y/y)                 2.5     2.8       2.7    2.9    2.7     2.5       2.5         2.3     1.9       1.5              1.4         1.3           2.7          2.5     1.5    1.4
Core CPI (ex food/energy) y/y       1.1     1.5       1.3    1.6    1.5     1.6       1.6         1.5     1.4       1.3              1.3         1.2           1.4          1.5     1.3    1.2
Current account % GDP               0.0     -0.3      0.0    0.5    0.9     1.1       1.3         1.7     1.9       2.1              2.3         2.4           0.1          1.2     2.2    2.4
Government balance % GDP             ...     ...      ...     ...    ...     ...          ...     ...       ...         ...          ...          ...         -4.1         -3.3    -2.7    -2.1
Refi rate (period end %)            1.00 1.25        1.50    1.00   1.00   1.00       0.75       0.75    0.75       0.75         0.75          0.75           1.00        0.75     0.75    0.75
Note: All numbers expressed in % q/q unless otherwise specified. Source: Barclays Research




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COUNTRY SNAPSHOT: INDIA
                                             FY 11-12                             FY 12-13                             FY 13-14                      Fiscal year average

                                                                                                                                               2011- 2012- 2013- 2014-
% change y/y                        Q1       Q2      Q3       Q4        Q1       Q2        Q3      Q4       Q1        Q2        Q3      Q4      12    13    14    15

Real GDP                            7.5     6.5      6.0      5.3       5.5      5.3      4.5      5.5      5.5       5.6       6.5     6.8        6.2        5.2         6.2        7.0
Private consumption                 6.6     6.3      9.2      6.1       2.0      2.0      4.6      5.0      5.5       5.5       6.0     6.5        7.1        3.4         5.9        7.0
Public consumption                  8.4     10.7     8.1      4.1       8.3      8.0       1.9     5.0      4.0       4.0       7.0    8.0         7.6        5.5         5.9        7.3
Fixed investment                   13.9     3.8      -1.7     3.6      -4.6      -1.0     6.0      4.0      6.0       6.0       6.0     5.0        4.7        1.1         5.7        7.1

WPI inflation (y/y)                 9.6     9.7      9.0      7.5       7.5      7.9      7.3      6.8      6.1       5.9       5.9     6.1        9.0        7.4         6.0        5.5
Current account (% GDP)             …        …        …        …        …         …        …        …        …        …         …       …       -4.2       -4.8       -4.1           -3.5
General govt balance
                                    …        …        …        …        …         …        …        …        …        …         …       …       -8.1       -7.6       -7.2           -7.0
(% GDP)
Repo rate (period end, %)          7.50     8.25     8.50     8.50     8.00      8.00    8.00     7.50      7.00     7.00   7.00       7.00    8.50        7.50       7.00           7.00
Note: Values expressed in y/y % unless otherwise specified. India’s fiscal year begins in April and ends in March.
Source: Barclays Research


COUNTRY SNAPSHOT: JAPAN
                                                   2011                             2012                                 2013                      Calendar year average

% change                             Q1       Q2       Q3       Q4      Q1       Q2       Q3       Q4      Q1E       Q2E    Q3E       Q4E     2011       2012 2013E 2014E

Real GDP (q/q, saar)                 -7.0     -3.4    10.6      0.4     6.1      -0.9    -3.7      0.2     1.1       3.0    3.9       4.5     -0.6       2.0         1.1        2.6
Real GDP (q/q)                       -1.8     -0.9     2.5      0.1     1.5      -0.2    -0.9      0.0     0.3       0.7    1.0       1.1      -          -           -          -
Private consumption (q/q)            -1.4     0.8      1.4      0.5     1.2      -0.0    -0.5      0.5     0.4       0.3    0.3       0.6     0.5        2.4         1.1        -0.1
Public consumption (q/q)             0.1      0.3      0.3      0.3     1.5      0.4      0.4      0.7     0.5       0.3    0.4       0.6     1.5        2.7         1.9        1.7
Residential investment (q/q)         1.6      -2.4     5.0     -0.9     -1.7     2.2      1.7      3.5     1.4       1.8    2.7       2.7     5.5        2.9         9.1        3.7
Public investment (q/q)              -3.7     1.1     -1.0     -3.1     8.5      6.2      2.6      1.8     -1.4      0.4    1.9       2.7     -7.5       12.5        4.9        6.2
Capital Investment (q/q)             0.2      -0.4     1.9      8.0     -2.5     -0.1    -3.3     -1.5     0.9       1.5    1.8       1.5     3.3        2.1         0.3        5.3
Net exports (q/q)*                   -0.2     -1.0     0.8     -0.7     0.2      -0.3    -0.7     -0.2     -0.2      0.1    0.2       0.1     -0.9       -0.9       -0.6        0.6
Ch. Inventories (q/q)*               -0.7     -0.3     0.5     -0.4     0.3      -0.4     0.2     -0.2     0.1       0.1    0.1       0.1     -0.4       0.0         0.1        0.4
Nominal GDP (q/q)                    -2.2     -1.5     2.3     -0.1     1.4      -0.5    -1.0     -0.3     -0.2      0.4    0.9       1.0     -2.4       1.1        -0.2        3.1
Industrial output (q/q)              -1.5     -4.2     5.4      0.4     1.2      -2.0    -4.2     -2.0     1.7       2.0    3.1       3.8     -2.4       -0.3        1.4        7.0
Employment (q/q)                     0.2      -0.4    -0.2      0.4     0.4      -0.2     0.2      0.1     0.1       0.2    0.2       0.1     -0.1       0.5         0.3        0.5
Unemployment rate (%)                4.7      4.7      4.5      4.5     4.5      4.4      4.3      4.2     4.2       4.1    4.0       4.0     4.6        4.4         4.0        4.0
CPI inflation (y/y)                  -0.8     -0.3     0.2     -0.2     0.1      -0.0    -0.2     -0.1     -0.4      -0.2   0.1       0.4     -0.3       -0.1        0.0        2.2
Core CPI ex food/energy (y/y)        -1.4     -0.9    -0.5     -1.1     -0.6     -0.5    -0.6     -0.5     -0.6      -0.4   -0.2      -0.1    -1.0       -0.6       -0.3        1.4
Current account (% GDP)              3.1      1.6      2.1      1.4     1.3      1.3      0.7      0.5     0.6       0.3    0.3       0.3     2.0        1.0         0.4        0.6
Government balance (% GDP)            …        …          …     …        …        …        …       …        …        …      …         …       -9.5       -9.8       -10.6       -9.6
Overnight call rate                  0.10    0.10     0.10     0.10     0.10    0.10     0.10     0.10     0.10      0.10   0.10      0.10    0.10       0.10       0.10        0.10
Note: *Contribution. Central bank rates are for end of period %. Source: BoJ, Cabinet Office, METI, MIC, MoF, Barclays Research




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COUNTRY SNAPSHOT: MEXICO
                                                          2011                                            2012                       2013                   Calendar year average

% change q/q saar                           Q1          Q2           Q3           Q4       Q1        Q2      Q3      Q4    Q1     Q2     Q3       Q4     2011 2012E 2013E 2014E

Real GDP                                    1.5         5.3          6.1          3.1      5.3       3.1     1.5     3.1   2.0    5.2    4.5      4.2    3.9     3.9     3.3     4.0
  Private consumption                       2.6         2.7      11.1             0.6      2.6       0.9     3.9     2.2   2.4    4.3    3.9      3.7    4.4     3.0     3.1     3.6
  Public consumption                        2.3         -1.1         6.9          4.6      2.2      -4.2     0.0     1.7   1.3    2.6    2.3      2.2    2.1     1.5     1.3     2.1
  Fixed investment                      13.6 10.3                    4.9          3.2     14.6       2.4     3.8     1.0   3.5    5.1    4.8      4.6    8.1     6.2     3.5     4.5
  Exports                               10.5            5.5      -0.5             3.6     15.2       2.9     -9.4   -0.5   -2.0   4.9    5.2      5.4    7.5     3.9     0.2     5.5
  Imports                               10.0            3.7          5.3          3.4     12.3 -3.0          -8.8    6.1   5.5    6.5    6.8      6.6    7.1     3.2     3.7     6.5
Industrial output                           5.6         2.3          2.9          5.6      5.8       1.8     2.2    -2.9   3.6    4.5    4.4      4.5    4.0     3.4     2.4     4.5
CPI inflation (% y/y, avg)                  3.5         3.3          3.4          3.5      3.9       3.9     4.6     4.1   3.7    4.2    3.4      3.6    3.4     4.1     3.7     3.7
Unemployment rate (%, avg)                  5.2         5.4          5.3          5.0      5.0       5.0     4.8     5.0   5.2    5.0    4.9      4.8    5.2     5.0     5.0     4.5
Key Central Bank rate (%, eop)*         4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.00 4.00 4.00 4.00                                                      4.50    4.50    4.00    4.00
Current account (% GDP)*                    …           …            …            …            …      …      …        …     …     …      …        …      -0.8    -0.8    -1.1    -0.8
Government balance (% GDP)*                 …           …            …            …            …      …      …        …     …     …      …        …      -2.5    -2.6    -2.0    -1.9
Gross public debt (% GDP)*                  …           …            …            …            …      …      …        …     …     …      …        …      35.3    35.5    34.5    33.7
Gross external debt (% GDP)*                …           …            …            …            …      …      …        …     …     …      …        …      24.4    28.6    28.7    28.3
Note: *End of period for quarters and years. Source: Haver Analytics, Barclays Research




COUNTRY SNAPSHOT: SOUTH AFRICA
                                                        2011                                          2012                           2013                   Calendar-year average

 % Change q/q saar                   Q1           Q2           Q3          Q4           Q1         Q2       Q3      Q4     Q1F    Q2F    Q3F      Q4F     2011    2012 2013F 2014F

 Real GDP                            4.8          1.9          1.9         3.3          2.5        3.4      1.2     2.1    2.8    3.2    3.4      3.5     3.5      2.5    2.7    3.4
 Real GDP (y/y)                      4.0          3.7          3.2         3.0          2.4        2.8      2.6     2.3    2.4    2.3    2.9      3.2     3.5      2.5    2.7    3.4
 Private consumption                 6.3          3.1          3.2         4.4          4.0        3.2      2.7     2.4    2.8    3.1    3.3      3.4     4.8      3.5    2.9    3.5
 Public consumption                  9.3        -0.5           4.8         7.8          1.9        3.7      8.3     -0.7   2.7    2.6    2.6      2.6     4.6      4.2    2.7    2.5
 Investment                          5.8          5.2          6.8         7.3          4.6        5.4      5.6     4.3    4.6    4.5    4.6      4.8     5.0      5.2    5.5    5.6
 Exports                             7.3          6.1          8.0         4.4          -3.0       -6.1     1.6     -4.3   1.9    3.6    4.9      6.0     5.9      0.1    1.1    6.7
 Imports                             7.0          6.7         18.5 11.0                 4.8        -0.5    12.0 -12.4 10.4        8.3    7.0      7.2     9.7      6.3    4.2    7.4
 Industrial output (y/y)             4.7          0.7          2.4         2.0          1.0        2.0      2.4     2.8    0.5     ...      ...    ...    2.5      2.1     ...    …
 CPI inflation (y/y)                 3.9          4.6          5.4         6.1          6.1        5.8      5.1     5.6    5.7    6.0    6.8      6.3     5.0      5.7    6.2    5.7
 Core CPI ex food/energy (y/y) 3.0                3.3          3.9         4.1          4.4        4.5      4.6     4.8    5.1    5.5    5.8      60      3.5      4.6    5.6    5.8
 Current account (% GDP)             -2.6 -3.1                -4.1         -3.6         -5.0       -6.7    -6.8     -6.5   -6.3   -6.2   -6.2     -6.3    -3.4    -6.3    -6.3   -6.5
 Government balance (% GDP)*          ...         ...          ...          ...          ...        ...     ...      ...    ...    ...      ...    ...    -4.4    -3.9    -5.2   -4.6
 Repurchase rate (period end, %) 5.5              5.5          5.5         5.5          5.5        5.5      5.0     5.0    5.0    5.0    5.0      5.0     5.5      5.0    5.0    5.5
Note: All numbers expressed in q/q saar % unless otherwise specified; * Consolidated budget figures represent financial years (ie, FY 09/10 = 2010). Source: SARB,
Statistics South Africa, National Treasury, Absa Capital




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COUNTRY SNAPSHOT: SOUTH KOREA
                                                       2012                                               2013E                                            2014E                                 Calendar year average

 % Change                                Q1          Q2           Q3           Q4           Q1           Q2          Q3          Q4E          Q1E Q2E                 Q3E         Q4E      2011        2012        2013E 2014E

 Real GDP (q/q, saar)                    3.3         1.2          0.2          1.1          3.2          4.9         7.4         5.3          3.2         2.0         3.2         4.1
 Real GDP (y/y)                          2.8         2.4          1.6          1.5          1.4          2.3         4.1         5.2          5.2         4.4         3.4         3.1          3.7           2.1     3.3    4.0
 Private consumption                     1.3         1.0          1.7          2.7          2.5          2.8         3.1         3.2          3.0         3.0         2.9         3.0          2.4       1.7         2.9    3.0
 Public consumption                      4.9         3.6          3.5          3.5          1.5          1.5         1.5         1.5          1.5         1.5         1.2         1.5          2.1       3.9         1.5    1.4
 Investment                              3.7         -2.6         -2.5         -4.2         -4.5         2.5         8.0         13.0         7.8         7.0         4.7         4.0          -1.0      -1.4        4.8    5.9
 Industrial output                       3.6         1.1          -1.0         -0.1         1.7          3.6         6.5         4.6          2.5         3.0         4.0         5.1          6.0       0.9         4.1    3.7
 Unemployment rate (%)                   3.4         3.3          3.1          3.0          3.5          3.3         3.2         3.2          3.5         3.3         3.3         3.3          3.4       3.2         3.3    3.4
 CPI inflation (y/y)                     3.0         2.4          1.6          1.7          1.5          1.9         2.3         2.3          2.5         2.7         3.1         3.7          4.0           2.2     2.0    3.0
 Current account (% GDP)                 1.0         4.0          5.1          …            …            …           …           …            …           …           …           …            2.3           3.8     2.3    1.9
 Government balance (% GDP)              …           …            …            …            …            …           …           …            …           …           …           …            -1.6      -1.1       -0.7    0.0
 Key CB rate (period end, %)             3.25 3.25 3.00 2.75                                2.75 2.75 2.75 2.75                               3.00 3.00 3.00 3.25                              3.25     2.75        2.75    3.25
Note: All numbers expressed in y/y basis unless otherwise specified. Source: Barclays Research


COUNTRY SNAPSHOT: UNITED KINGDOM

                                               2011                                                  2012                                             2013                                      Calendar year average

% Change q/q                      Q1           Q2          Q3           Q4           Q1           Q2           Q3          Q4          Q1           Q2          Q3          Q4          2011          2012         2013    2014

Real GDP                          0.5         0.1          0.6       -0.1          -0.1         -0.4           0.9       -0.3          0.0          0.2         0.3         0.4          ...           ...          ...     ...
Real GDP (saar)                   2.0         0.3          2.5       -0.5          -0.3         -1.5           3.8       -1.2        -0.1           1.0         1.4         1.5          ...           ...          ...     ...
Real GDP (y/y)                    1.4         0.8          0.8          1.1          0.5          0.0          0.4         0.2         0.2          0.9         0.3         0.9         1.0           0.3          0.6     1.8
 Private consumption             -1.0        -0.2       -0.2            0.4          0.3          0.7          0.2         0.3       -0.1           0.1         0.1         0.1         -0.8          1.2          0.6     0.9
 Public consumption              -0.3         0.5          0.0          0.3          2.9        -1.7           0.3         0.6       -0.2           0.2         0.1         0.0         -0.3          2.2          0.2     -0.6
 Investment                      -2.4        -0.2          0.6       -0.3            0.5          1.7        -0.4        -0.2        -0.7           0.8         0.7         0.7         -2.9          1.5          0.5     6.0
 Inventories (q/q cont.)         -0.1         0.4          0.9       -0.8          -0.3           0.2          0.4       -0.4        -0.2         -0.1          0.1         0.2         0.3           -0.1         -0.2    0.3
 Net exports (q/q cont.)          1.4        -0.3       -0.3            0.5        -0.7         -0.8           0.4       -0.2          0.4          0.1         0.0         0.0         1.4           -0.9         0.4     0.1
 Nominal GDP                      1.0         0.1          2.0          0.0        -0.3           0.1          2.0       -0.3          0.8          1.0         1.0         1.1         3.4           1.7          3.2     4.4


Industrial output                 0.1        -1.3       -0.2         -1.2          -0.2         -0.9           0.6       -2.1        -0.5         -0.2          0.0         0.1         -0.6          -2.4         -2.1    1.0
Employment                        0.4         0.0       -0.6            0.3          0.4          0.7          0.3         0.6       -0.1           0.0         0.0         0.0         0.5           1.2          0.7     0.2
Unemployment rate %               7.8         7.9          8.3          8.4          8.2          8.0          7.8         7.6         7.7          7.8         7.8         7.9         8.1           7.9          7.8     8.0
CPI inflation y/y                 4.1         4.4          4.7          4.7          3.5          2.7          2.4         2.7         2.8          3.0         3.0         2.5         4.5           2.8          2.8     2.6
Core CPI y/y                      3.2         3.3          3.2          3.2          2.5          2.1          2.1         2.4         2.2          2.6         ...         ...         3.2           2.3           ...     ...
Current account % GDP            -1.2        -0.5       -2.2         -1.4          -3.1         -4.4         -3.9        -3.6        -3.8         -3.5        -3.6        -3.7          -1.3          -3.7         -3.7    -3.6
Govt. balance % GDP*               ...         ...          ...          ...          ...          ...         ...         ...          ...         ...         ...         ...         -7.9          -5.3         -6.6    -5.7
Bank Rate (EOP, %)               0.50        0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50                                                                                     0.50          0.50         0.50    0.50
Note: *Fiscal year forecasts, 2012 = FY 12-13; excludes the impact of financial sector interventions. Source: ONS, Barclays Research




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COUNTRY SNAPSHOT: UNITED STATES
                                                        2012                              2013                             2014                 Calendar year average

% Change q/q saar                           Q1       Q2      Q3       Q4      Q1       Q2      Q3       Q4      Q1      Q2       Q3      Q4     2011 2012 2013 2014

Real GDP                                    2.0     1.3      3.1     0.4      3.0     1.5      2.0     2.0      2.5     2.5      2.5     2.5     1.8    2.2    1.9    2.3
 Private consumption                        2.4     1.5      1.6     1.8      2.3     1.0      2.0     2.5      2.5     2.5      2.5     2.5     2.5    1.9    1.8    2.3
 Public consumption and invest.            -3.0     -0.7     3.9     -7.0    -3.5     -3.5    -3.5     -3.5    -1.0     -1.0    -0.5     -0.5   -3.1 -1.7 -3.1 -1.9
 Residential investment                    20.5     8.5     13.5     17.6    20.0     15.0    12.0    12.0     10.0    10.0      8.0     8.0    -1.4 12.1 15.5 10.5
 Equip. & software investment               5.4     4.8     -2.6     11.8     5.0     10.0    10.0    10.0      7.9     8.0      6.0     6.0    11.0 6.9       7.1    8.3
 Structures investment                     12.9     0.6      0.0     16.7     4.0     5.0      5.0     5.0      6.0     6.0      6.0     6.0     2.8 10.8 5.9         5.6
 Net exports ($bn, real)                   -416    -407     -395    -385     -384    -383     -386    -393     -398    -403     -406    -408 -408 -401 -387 -404
 Net exports (contr to GDP, pp)             0.1     0.2      0.4     0.3      0.0     0.0     -0.1     -0.2    -0.2     -0.2    -0.1    -0.1     0.1    0.0    0.1   -0.2
Final sales                                 2.4     1.7      2.4     1.9      1.9     1.3      1.9     2.0      2.4     2.5      2.4     2.4     2.0    2.1    1.9    2.2
Ch. inventories ($bn, real)                56.9     41.4    60.3     13.3    45.0     51.0    54.0    54.0     55.0    56.0     57.0    58.0 31.0 43.0 51.0 56.5
Ch. inventories (contr to GDP, pp)         -0.4     -0.5     0.7     -1.5     1.0     0.2      0.1     0.0      0.0     0.0      0.0     0.0    -0.1    0.1    0.1    0.0
GDP price index                             2.0     1.6      2.7     1.0      0.9     0.2      2.8     2.6      2.3     2.3      2.3     2.3     2.1    1.8    1.4    2.3
Nominal GDP                                 4.2     2.8      5.9     1.3      3.9     1.7      4.8     4.6      4.9     4.9      4.8     4.8     4.0    4.0    3.3    4.6
Industrial output                           5.4     2.9      0.3     2.3      5.0     3.0      4.0     4.0      5.0     5.0      5.0     5.0     3.4    3.6    3.2    4.6
Employment (avg mthly chg, K)               262     108     152      209     168      150     175      175     200      200     200      200    175 183 167 200
Unemployment rate (%)                       8.2     8.2      8.0     7.8      7.7     7.6      7.4     7.2      7.1     6.9      6.8     6.6     8.9    8.1    7.5    6.8
CPI inflation (%y/y)                        2.8     1.9      1.7     1.9      1.7     1.3      1.6     1.8      1.8     2.4      2.4     2.4     3.2    2.1    1.6    2.3
Core CPI (%y/y)                             2.2     2.3      2.0     1.9      1.9     1.9      2.1     2.3      2.4     2.6      2.7     2.8     1.7    2.1    2.0    2.6
PCE price index (%y/y)                      2.4     1.6      1.5     1.6      1.2     1.1      1.4     1.6      1.9     2.3      2.3     2.3     2.4    1.8    1.3    2.2
Core PCE price index (%y/y)                 1.9     1.8      1.6     1.5      1.2     1.2      1.4     1.7      1.9     2.1      2.3     2.4     1.4    1.7    1.4    2.2
Current account (%GDP)                     -3.5     -3.0    -2.8     -2.8    -2.7     -2.8    -2.8     -2.8    -2.8     -2.9    -2.9     -2.9   -3.1 -3.0 -2.8 -2.9
Federal budget bal. (%GDP)                                                                                                                      -8.7 -7.0 -5.3 -4.5
Federal funds rate (%)                    0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25
Note: All numbers expressed in q/q saar % unless otherwise specified. The budget balance is fiscal year. Source: BEA, BLS, Federal Reserve, US Treasury, Barclays Research




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GLOBAL WEEKLY CALENDAR
Sunday 21 April                                                                     Period           Prev 2        Prev 1        Latest    Forecast      Consensus
  22:45 New Zealand: Net migration                                                  Mar              -110.0         370.0         550.0              -               -

Monday 22 April                                                                     Period           Prev 2        Prev 1        Latest    Forecast      Consensus
    -      Ireland: Troika starts tenth review of Irish Bailout program
  11:00    E17: ECB Executive Board Cœuré speaks at the ES2 Conference in Vienna
  12:30    US: New York Fed President Dudley (FOMC voter) speaks in New York
  17:00    France: CB Noyer speaks at "Paris EUROPLACE international financial forum 2013" in New York
  03:00    New Zealand: Credit card spending, % m/m                     Mar          1.0      -2.5       3.3                                        -                -
  07:00    Swi: M3, % y/y                                               Mar          9.9       9.4       9.8                                        -                -
  08:00    Taiwan: Export orders, % y/y                                 Mar          8.5      18.0     -14.5                                        -              1.8
  14:00    E17: 'Flash' consumer confidence index                       Apr        -23.9     -23.6     -23.5                                        -            -24.0
  14:00    US: Existing home sales, mn saar                             Mar         4.90      4.94      4.98                                     5.05             5.00

Tuesday 23 April                                                                    Period           Prev 2        Prev 1        Latest    Forecast      Consensus
    -      Netherlands: Parliament votes on Cyprus aid package
  12:00    Hungary: Deposit rate, %                                                 Apr                5.50        5.25       5.00              4.50            4.75
  21:00    New Zealand: RBNZ official cash rate, %                                  Apr               2.50        2.50        2.50              2.50            2.50
  01:45    China: Flash HSBC manufacturing PMI, index                               Apr                52.3       50.4        51.6                  -           51.4
  05:00    Singapore: CPI, % y/y                                                    Mar                 4.3         3.6         4.9               4.1            3.6
  06:00    Swi: Trade balance, € bn                                                 Mar                 0.9         2.1         2.0                 -            1.7
  06:45    France: Business climate index                                           Apr                  87          90          90                 -             89
  06:58    France: "Flash" manufacturing PMI, index                                 Apr                42.9        43.9        44.0             44.0            44.0
  06:58    France: Flash services PMI, index                                        Apr                43.6        43.7        41.3              42.4           42.0
  07:28    Germany: "Flash" manufacturing PMI, index                                Apr                49.8        50.3        49.0             50.0            49.0
  07:28    Germany: "Flash" services PMI, index                                     Apr                55.7        54.7        50.9              52.0           51.0
  07:30    Sweden: Unemployment rate (sa), %                                        Mar           7.6 (8.0) 8.4 (8.0) 8.5 (8.2)             8.5 (8.1)               -
  07:58    E17: "Flash" manufacturing PMI, index                                    Apr                47.9        47.9        46.8              46.8           46.7
  07:58    E17: "Flash" services PMI, index                                         Apr                48.6        47.9        46.4              46.8           46.6
  07:58    E17: "Flash" composite PMI, index                                        Apr                48.6        47.9        46.5              46.7           46.3
  08:00    Italy: Retail sales sa, % m/m (y/y)                                      Feb          0.0 (-2.4) -0.1 (-3.4) -0.5 (-3.0)               0.0               -
  08:00    Italy: Consumer confidence index                                         Apr                84.7        86.0       85.2              85.0                -
  08:00    Taiwan: Industrial production, % y/y                                     Mar                 2.1       19.1       -11.5                1.0            1.8
  08:30    UK: PSNBx, £bn                                                           Mar               14.8       -11.9          2.8             15.4            15.5
  08:30    UK: PSNB, £bn                                                            Mar               12.6       -10.3          4.4             13.8            13.5
  08:30    UK: PSNCR, £bn                                                           Mar               17.0       -20.7         -1.5             10.0            22.0
  10:00    UK: CBI industrial trends, total orders                                  Apr                 -20         -14         -15                 -            -14
  12:58    US: "Flash" Markit PMI index                                             Apr                56.1       55.2        54.9                  -           54.5
  13:00    US: FHFA purchase-only HPI, % m/m (y/y)                                  Feb           0.5 (5.5) 0.5 (5.6) 0.6 (6.5)             0.6 (6.9)             0.7
  14:00    US: New home sales, k saar                                               Mar                381         431         411               425             419
  23:50    Japan: Corporate services price index, % y/y                             Mar                -0.4        -0.2         0.1              -0.5           -0.4
  02:00    Japan: Liquidity Enhancement Auction                                                                                                            ¥ 300 bn
  08:30    Spain : 3m (19Jul2013) & 9m (24Jan2014) Letras                                                                                                     € 4 bn
  17:00    US: 2y Note Auction                                                                                                                              $ 35 bn

Wednesday 24 April                                                                  Period           Prev 2        Prev 1        Latest    Forecast      Consensus
  12:30    E17: ECB Executive Board Member Mersch speaks on "Prospects for the euro and Europe" in Germany
  13:00    E17: ECB VP Constâncio presents ECB annual report 2012 in Brussels
    -      Vietnam: CPI, % y/y                                      Apr          7.07       7.02       6.64                                        -                 -
  01:00    Australia: Skilled vacancies, % m/m                      Mar          -2.5       -1.7       -1.5                                        -                 -
  01:30    Australia: Headline CPI, % q/q                           Q1            0.5        1.4        0.2                                      0.7               0.7
  01:30    Australia: RBA trimmed mean, % q/q                       Q1            0.6        0.7        0.6                                      0.6               0.5
  01:30    Australia: RBA weighted median, % q/q                    Q1            0.7        0.8        0.5                                      0.5               0.5
  08:00    Germany: IFO business climate index                      Apr         104.3      107.4      106.7                                    107.0             106.3
  08:00    Germany: IFO current assessment index                    Apr         108.1      110.2      109.9                                    110.0             109.5
  08:00    Germany: IFO business expectations index                 Apr         100.7      104.6      103.6                                    104.0             103.0
Note: All times reported in GMT. Some data or events are boxed to indicate their importance to financial markets. Market events are highlighted in light blue.


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Wednesday 24 April                                                                  Period           Prev 2        Prev 1        Latest    Forecast      Consensus
  08:30    UK: BBA lending data                                                     Mar                   -             -             -             -                -
  10:00    UK: CBI distributive trades, total sales                                 Apr                17.0           8.0           0.0             -                -
  12:30    US: Durable goods orders, % m/m                                          Mar                 3.6          -3.7           5.6          -2.4             -2.9
  12:30    US: Durable goods ex transportation, % m/m                               Mar                 0.8           3.0          -0.7           0.5              0.7
  13:00    Belgium: Business confidence index                                       Apr               -13.2         -11.0         -15.0             -            -14.0
  13:00    Mexico: First half bi-weekly CPI, % 2w/2w                                Apr                0.15          0.24          0.52         -0.40                -
  23:00    Korea: Preliminary GDP, % y/y                                            Q1                  2.4           1.6           1.5           1.4              1.4

Thursday 25 April                                                                   Period           Prev 2        Prev 1        Latest    Forecast      Consensus
  07:55    E17: ECB Executive Board Member Asmussen speaks at Bellwether Europe conference in London
  08:00    Philippines: BSP policy rate, %                      Apr              3.50      3.50       3.50      3.50                                            3.50
    -      Thailand: Customs exports, % y/y                     Mar              13.5      16.1       -5.8       4.7                                             1.8
    -      Philippines: Fiscal balance, PHP bn                  Mar           -115.7     -19.5      -11.7          -                                               -
  07:00    Spain: Unemployment rate, %                          Q1               24.6      25.0       26.0         -                                            26.5
  08:30    UK: GDP preliminary release, % q/q (y/y)             Q1         -0.4 (0.0) 0.9 (0.4) -0.3 (0.2) 0.0 (0.2)                                       0.1 (0.4)
  09:30    South Africa: PPI, % y/y                             Mar               5.4       5.8        5.4       5.2                                             5.3
  12:30    US: Initial jobless claims, k (4wma)                 20-Apr    388 (355) 348 (359) 352 (361) 355 (361)                                                351
  13:00    Mexico: Economic activity index, % y/y               Feb               3.9       1.4        3.2       0.8                                               -
  16:00    France: Jobseekers net change (sa), k                Mar               8.0     43.9        18.4         -                                               -
  21:00    Korea: Expected price change 6m ahead, index         Apr              141       137        138          -                                               -
  22:45    New Zealand: Trade balance, NZD mn                   Mar            530.3    -287.2      414.4          -                                          470.0
  22:45    New Zealand: Exports, NZD bn                         Mar               4.1       3.3        3.9         -                                             4.3
  22:45    New Zealand: Imports, NZD bn                         Mar               3.6       3.6        3.5         -                                             3.8
  23:30    Japan: Nationwide CPI, % y/y                         Mar              -0.1      -0.3       -0.7      -0.9                                            -0.8
  23:30    Japan: Nationwide CPI ex. perishables, % y/y         Mar              -0.2      -0.2       -0.3      -0.5                                            -0.4
  23:30    Japan: Nationwide CPI ex. food and energy, % y/y     Mar              -0.6      -0.7       -0.9      -0.8                                            -0.8
  23:30    Japan: Tokyo CPI, % y/y                              Apr              -0.5      -0.9       -1.0      -0.6                                            -0.8
  23:30    Japan: Tokyo CPI ex. perishables, % y/y              Apr              -0.5      -0.6       -0.5      -0.4                                            -0.4
  23:30    Japan: Tokyo CPI ex. food and energy, % y/y          Apr              -0.9      -1.0       -0.8      -0.8                                            -0.7

Friday 26 April                                                                     Period           Prev 2        Prev 1        Latest    Forecast      Consensus
    -      France: President Hollande visits China
    -      Spain: Releases its "Stability and convergence programme" and "National reform programme"
    -      Japan: BoJ Target rate, %                               Apr              0.10       0.10        0.10                                  0.10               -
    -      Colombia: Overnight lending rate, %                     Apr             4.00        3.75       3.25                                   3.25            3.25
  07:15    E17: ECB Executive Board Member Asmussen speaks on "Global growth through M&A?" in Frankfurt
  14:00    Mexico: Overnight rate, %                               Apr             4.50        4.50       4.00                                   4.00             4.00
    -      Thailand: Manufacturing production, % y/y               Mar             23.0        10.2        -1.2                                   1.7                -
  05:00    Singapore: Industrial production, % y/y                 Mar               1.6        -0.1     -16.6                                   -3.0             -3.1
  06:45    France: Consumer confidence indicator, index            Apr                85          86         84                                     -               83
  07:00    Swi: KoF leading indicator                              Apr               1.1         1.0        1.0                                     -              1.0
  07:15    Sweden: Consumer confidence index                       Apr              -2.9        -1.0        2.8                                   4.5                -
  07:15    Sweden: Economic tendency indicator, index              Apr              90.3       95.1       95.4                                  96.1                 -
  07:15    Sweden: Manufacturing confidence Indicator, net balance Apr               -16         -11        -10                                    -9                -
  08:00    E17: M3, % m/m (y/y)                                    Mar        -0.1 (3.5) 0.4 (3.5) 0.2 (3.1)                                    (3.0)            (3.0)
  08:00    E17: Loans to private sector (adjusted), % m/m (y/y)    Mar       -0.2 (-0.2) -0.1 (-0.5) 0.0 (-0.4)                                (-0.2)                -
  12:30    US: Preliminary GDP, % q/q saar                         Q1                1.3         3.1        0.4                                   3.0              3.0
  12:30    US: Preliminary consumer spending, % q/q saar           Q1                1.5         1.6        1.8                                   2.3              2.7
  12:30    US: Preliminary GDP price index, % q/q saar             Q1                1.6         2.7        1.0                                   0.9              1.4
  13:55    US: Michigan consumer sentiment- f index                Apr              77.6       78.6     72.3 P                                   72.5            73.5
Note: All times reported in GMT. Some data or events are boxed to indicate their importance to financial markets. Market events are highlighted in light blue.




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GLOBAL KEY EVENTS
                             Apr-13 May-13            Jun-13     Jul-13    Aug-13    Sep-13     Oct-13    Nov-13   Dec-13   Jan-14   Feb-14   Mar-14
Forthcoming central bank announcement dates
North America
FOMC meeting                    -        1               19        31         -         18        30         -       18      29        -        19
FOMC minutes                   10       22                -        10        21          -         -        20        -       -        -         -
Fed's Beige Book               17        -                5        17         -          4        16         -        4       -        -         -
Bank of Canada                 17       29                -        17         -         4         23         -        4       -        -         -
Europe
ECB "policy" meeting            4        2               6          4         1         5          2        7        5        9        -        -
ECB monthly bulletin           11       9               13         11        8         12         9        14       12       16        -        -
ECB "non-policy" meeting       18       16              20         18         -        19         17       21       19        -        -        -
Bank of England                3-4     8-9              5-6        3-4      31-1       4-5       9-10      6-7      4-5      8-9      5-6      5-6
BoE Inflation Report            -       15               -          -         7         -          -       13        -        -       12        -
BoE minutes                    17       22              19         17        14        18         23       20       18       22       19       19
Riksbank                       17        -               -          3         -         5         24        6       17        -        -        -
SNB                             -        -              20          -         -        19          -        -       12        -        -        -
Norges Bank                     -        8              20          -         -        19         24        -        5        -        -        -
Asia/RoW
Bank of Japan                3-4, 26  21-22            10-11     10-11      07-08     04-05    03-04,31   20-21    19-20      -        -        -
BoJ minutes                     9      2,27             14        17         13        10         9        6,26     26        -        -        -
Reserve Bank of Australia       2        7               4         2          6         3         1         5        3        -        -        -
RBNZ                            -        -              13         -          -        12         -          -      12        -        -        -
Key international meetings
IMF/IBRD                      19-21      -               -         -          -                 11-13       -        -        -        -        -
ECOFIN                         12       14              21         9          -         -         -         -        -        -        -        -
G20                            18        -              6-7      19-20        -        5-6        -         -        -        -        -        -
Elections
Austria (General)               -        -                          -         -        29         -         -        -        -        -        -
                                                                                          #
Germany (Regional)              -        -                -         -         -        15         -         -        -        -        -        -
Germany (Parliamentary)         -        -                -         -         -        22         -         -        -        -        -        -
Norway (Parliamentary)          -        -                -         -         -         9         -         -        -        -        -        -
Italy (Local)                   -     26-27               -         -         -         -         -         -        -        -        -        -
Australia (General)             -        -                -         -         -         -        31 Oct-01 Nov       -        -        -        -
Spain (Local)                  Apr       -                -         -         -         -         -         -        -        -        -        -
Malaysia (General)              -        5                -         -         -         -         -         -        -        -        -        -
Note: # Bavaria
Source: Central banks, IMF, European Commission, Reuters, Bloomberg, Market News, Barclays Research




19 April 2013                                                                                                                                        49
Barclays | Global Economics Weekly


CALENDAR OF FORTHCOMING CRITICAL EVENTS FOR THE EURO AREA

Date          Country       Event                                           Likely outcome: our assessment

April, 2013
April         Spain         Local elections
April         Euro area     Member states submit national reform
                            programmes (NRPs) and stability and
                            convergence programmes (SCPs)
19-21 Apr     Global        IMF/World Bank annual meeting
22-Apr        Ireland       Troika starts tenth review of Irish Bailout
                            program
23-Apr        Netherlands   Parliament votes on Cyprus aid package
24-Apr        Italy         €1.0bn BTPei Linker Auctions
26-Apr        Spain         Releases its stability and convergence
                            programme (SCPs) and National reform
                            programme (NRPs)
29-Apr        Belgium       €3.25bn BGB Auctions
29-Apr        Italy         €8bn BTP Auctions
May, 2013
May           Euro area     Proposal for country-specific recommendations
                            (european semester) by the European
                            Commission
Early May     Cyprus        IMF board to approve the bailout funds
May           EU            France and Germany present joint proposal for The proposal will include ways to boost economic growth, improve
                            closer economic and monetary union            competitiveness and address common demographic challenges.
02-May        Euro area     ECB Governing Council meeting
03-May        Euro area     Publication of the spring 2013 EC forecasts
09-May        Spain         €4.0bn SPGB Auctions
13-May        Euro area     Eurogroup meeting (Brussels)
13-May        Italy         €5.0bn BTP Auctions
13-May        Italy         €1.0bn CCT Auctions
14-May        EU            ECOFIN meeting (Brussels)
15-May        Italy         President Napolitano's mandate expires
22-May        EU            EU Summit (Brussels)
23-May        Spain         €2.0bn SPGB Auctions
26-27 May Italy             Local elections
28-May        Italy         €2.5bn CTZ Auctions
28-May        Italy         €1.0bn BTPei Auctions
30-May        Italy         €6.0bn BTP Auctions
June, 2013
06-Jun        Euro area     ECB Governing Council meeting
06-07 Jun     G20           G20 Meeting
20-Jun        Euro area     Eurogroup meeting (Luxembourg)
21-Jun        EU            ECOFIN meeting (Luxembourg)
27-28 Jun     EU            EU Summit (Brussels)                            Heads of State and Government are to endorse country-specific
                                                                            recommendations marking the conclusion of the European
                                                                            semester cycle.




19 April 2013                                                                                                                            50
Barclays | Global Economics Weekly


Date            Country             Event                           Likely outcome: our assessment

July, 2013
04-Jul          Euro area           ECB Governing Council meeting
08-Jul          Euro area           Eurogroup meeting (Brussels)
09-Jul          EU                  ECOFIN meeting (Brussels)
19-20 Jul       G20                 G20 Meeting
27-28 Jun       EU                  EU Summit (Brussels)
August, 2013
01-Aug          Euro area           ECB Governing Council meeting
September, 2013
05-Sep          Euro area           ECB Governing Council meeting
05-06 Sep       G20                 G20 Meeting
09-Sep          Norway              Parliamentary Elections
15-Sep          Germany             Local elections (Bavaria)
22-Sep          Germany             Parliamentary elections
Note: All the times are local. Source: Barclays Research




19 April 2013                                                                                        51
Barclays | Global Economics Weekly


GLOBAL ECONOMICS RESEARCH
Global
Julian Callow                         Michael Gavin                        Tal Shapsa
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Alejandro Grisanti                    Cooper Howes                         Guilherme Loureiro                        Peter Newland
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Ex-Brazil, Mexico                     +1 212 526 3099                      +55 11 3757 7372                          +1 212 526 3153
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+27 11 895 5368                       +44 (0)20 313 46225                  +49 69-7161 1825                          +44 (0)20 7773 4637
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Senior Economist – EMEA               European Economist                   Senior European Economist                 Senior Economist – Middle East
+44 (0) 20 3134 3522                  +44 (0)20 3555 0862                  +33 (0) 1 4458 3236                       & North Africa
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Asia-Pacific
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Head of Research, Asia Pacific        Head of Emerging Asia Research       Head of Japan Research                    Regional Economist – India,
+65 6308 3217                         +65 6308 2625                        +81 3 4530 1130                           Malaysia, Thailand
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                                                                                                                     rahul.bajoria@barclays.com
James Barber, CFA                     Jian Chang                           Joey Chew                                 Kieran Davies
Japan Research                        Regional Economist – China,          Regional Economist – Singapore            Economist – Australia and
+81 3 4530 1542                       Hong Kong                            +65 6308 3211                             New Zealand
james.barber@barclays.com             +852 2903 2654                       joey.chew@barclays.com                    +61 4660 09006
                                      jian.chang@barclays.com                                                        kieran.davies@barclays.com
Yiping Huang                          Wai Ho Leong                         Kyohei Morita                             Yuichiro Nagai
Chief Economist, Emerging Asia        Senior Regional Economist – Korea,   Chief Economist, Japan                    Japan Economist
+852 2903 3291                        Malaysia, Singapore, Taiwan          +81 3 4530 1688                           +81 3 4530 1064
yiping.huang@barclays.com             +65 6308 3292                        kyohei.morita@barclays.com                yuichiro.nagai@barclays.com
                                      waiho.leong@barclays.com
Siddhartha Sanyal                     Prakriti Sofat                       Nick Verdi                                Lingxiu (Steven) Yang
Chief Economist, India                Regional Economist – Indonesia,      FX Strategist, Asia-Pacific ex-Japan      Regional Economist – China,
+91 22 6719 6177                      Philippines, Sri Lanka, Vietnam      +65 6308 3093                             Hong Kong
siddhartha.sanyal@barclays.com        +65 6308 3201                        nick.verdi@barclays.com                   +852 2903 2653
                                      prakriti.sofat@barclays.com                                                    lingxiu.yang@barclays.com




19 April 2013                                                                                                                                         52
Analyst Certification
We, Michael Gapen, Peter Newland, Cooper Howes, Dean Maki, Antonio Garcia Pascual, Fabrice Montagne, Apolline Menut, Simon Hayes, Blerina Uruçi,
James Barber, CFA, Kyohei Morita, Yuichiro Nagai, Jian Chang, Yiping Huang, Steven Lingxiu Yang, Rahul Bajoria, Wai Ho Leong, Siddhartha Sanyal, Joey
Chew, Daniel Hewitt, Piotr Chwiejczak, Christian Keller, Alia Moubayed, Vladimir Pantyushin, Eldar Vakhitov, Peter Worthington, Marco Oviedo, Marcelo
Salomon, Alejandro Arreaza, Sebastián Brown, Guilherme Loureiro, Bruno Rovai, Sebastian Vargas, Kieran Davies, Jeff Gable and Julian Callow, hereby
certify (1) that the views expressed in this research report accurately reflect our personal views about any or all of the subject securities or issuers referred
to in this research report and (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views
expressed in this research report.

Each research report excerpted herein was certified under Reg AC by the analyst primarily responsible for such report as follows: I hereby certify that: 1)
the views expressed in this research report accurately reflect my personal views about any or all of the subject securities referred to in this report and; 2)
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