MOMR June 2016

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World Economy
20 OPEC Monthly Oil Market Report – June 2016
Graph 3.2: Japanese retail trade Graph 3.3: Japanese PMI indices
The ongoing weakness in the Japanese economy is also reflected in the latest PMI
numbers provided by Markit. The PMI for manufacturing activity again points at a slow-
down of the sector, which dropped from 48.2 in April to 47.7 in May. In contrast, the
services sector PMI pointed at modest improvements in the sector, moving to 50.4 in
May from 49.3 in April.
The growth forecast for 2016 remains at 0.5%. However, some risks remain and the
situation will need close monitoring in the coming months. The 2015 growth level has
been revised up slightly by the statistical office to now stand at 0.6%, compared to
0.5% in the previous estimate.
South Korea
The GDP growth rate during the 1Q16 stood at a slightly revised 2.8%, which is in line
with expectations, but better than the first estimate of 2.7%. Also, exports recovered
and grew by 1.5% y-o-y in May, after numerous months of decline. The decline in
exports in the 1Q16 stood at an average rate of 5.7% y-o-y. The relative weakness in
industrial output has been confirmed, to some extent, by the latest PMI numbers for the
manufacturing sector. However, this indicator also turned at least slightly positive in
May, when it stood at 50.1, above the growth indicating level of 50. After already
having taken into consideration the current growth trend, the GDP growth forecast
remains unchanged at 2.7% for 2016, following estimated growth of 2.6% in 2015.
OECD Europe
Euro-zone
After the Euro-zone’s surprisingly better-than-expected 1Q GDP growth of 0.6% q-o-q
at a seasonally adjusted rate, output seemed to slow down slightly but remains at a
relatively healthy level. The additional monetary stimulus from the European Central
Bank (ECB) is also showing some positive effects on short-term economic growth in
the Euro-zone, although it seems to be becoming less effective and the consequences
of negative interest rates remain uncertain. Numerous challenges to the economy
continue to persist with ongoing sovereign debt issues in Greece, the uncertainty of the
outcome of a UK referendum on exiting the EU, the still weak banking system and the
slow improvements in the Euro-zone’s labour market.
-0.8
-10
-8
-6
-4
-2
0
2
4
6
Apr 15May 15Jun 15Jul 15Aug 15Sep 15Oct 15Nov 15Dec 15Jan 16Feb 16Mar 16Apr 16
Sources: Ministry of Economy, Trade and Industry
and Haver Analytics.
% change y-o-y
50.4
47.7
47
48
49
50
51
52
53
54
May 15Jun 15Jul 15Aug 15Sep 15Oct 15Nov 15Dec 15Jan 16Feb 16Mar 16Apr 16May 16
Index
Sources: Markit, Japan Materials Management
Association and Haver Analytics.
Services PMI
Manufacturing PMI