Global

World Bank Cuts 2015 Global Growth Forecast to 2.8%. The World Bank downgraded its outlook for global economic growth this year amid a broad-based slowdown in emerging markets and softer output in the U.S. The development institution on Wednesday said that it now expects the world economy to grow by 2.8%, 0.2 percentage point slower than it estimated in January. “Global growth has yet again disappointed,” said World Bank Chief Economist Kaushik Basu. Sharp contractions in Brazil and Russia, alongside weaker growth in Turkey, Indonesia and scores of other developing economies are offsetting healthier growth in Europe and Japan, the bank said in its Global Economic Prospects report. The bank expects global economic growth in 2016 to accelerate to 3.3%, barring trouble in emerging markets as the U.S. Federal Reserve moves toward raising rates. (Reuters)

Asia-Pacific

Thailand Holds Key Interest Rate After Two Unexpected Cuts. Thailand’s central bank held its benchmark interest rate after two consecutive cuts and said the economic recovery will be gradual, with exports likely to contract this year. The Bank of Thailand held its one-day bond repurchase rate at 1.5%, with monetary policy committee members voting unanimously, it said on Wednesday. Finance Minister Sommai Phasee said last week there is no need for further rate cuts as they will hurt savers, while Deputy Governor Paiboon Kittisrikangwan earlier said additional easing would do little to boost expansion. (Bloomberg)

Turkey’s Economy Grows Faster than Forecast. Turkey’s economy grew faster than estimated during the first quarter of the year as domestic demand gained speed. GDP expanded 2.3% in the January-to-March period, compared with 2.6% during the previous quarter, the statistics agency said on its website on Wednesday. The median estimate in a survey of 15 analysts was 1.7%. Household demand, which makes up roughly two-thirds of GDP, grew 4.5% during the first quarter compared with 2.4% during the preceding three-month period. The surprise boost GDP got from strong demand may curb expectations for a loosening in monetary policy amid political uncertainty following the June 7 elections. (Bloomberg)

China Vehicle Sales Fall Again in May. Vehicle sales in China fell for a second straight month in May, the first such consecutive drop since late 2011, highlighting the weakness in the world's second biggest economy. Passenger and commercial vehicle sales in China totaled 1.9 million vehicles last month, falling 0.4% year-on-year and following on a 0.5% fall in April, the China Association of Automobile Manufacturers (CAAM) said at a Beijing news briefing on Wednesday. The last time annual sales declined two consecutive months was October-November 2011. (Reuters)

China Approves $19.3 Billion of Airport, Rail Projects. China's top economic planner said it had given the green light to over 120 billion yuan ($19.34 billion) worth of airport and railway projects, the latest slew of infrastructure approvals as Beijing looks to avert a sharp slowdown in the economy. China's National Development and Reform Commission said on its website on Wednesday it had approved seven projects, including the 14.5 billion yuan expansion of an airport on the holiday island of Hainan. Separately, the State Council, said departments and regional governments alike would see their budgets shrink "appropriately" next year if they do not spend most of their allocated cash this year. (Reuters)

NZ Central Bank Cuts Rates. New Zealand's central bank cut its benchmark cash rate for the first time in four years on Thursday and kept the door open to more easing as it expects demand to weaken. The Reserve Bank of New Zealand cut its official cash rate (OCR) to 3.25% in its first easing since March 2011 catching many economists off guard, and projected a further cut in coming months as economic growth and inflation pressures remain persistently weak. (Reuters)

USA

Services Data Suggest Upward Revision to Q1 GDP. The U.S. economy was probably not as weak as has been reported in the first quarter, with data on Wednesday showing slightly stronger consumer spending than previously estimated. The Commerce Department's quarterly services survey, or QSS, showed consumption, including healthcare spending, increased at a faster clip than the government had assumed in its second estimate of gross domestic product published last month. JPMorgan said the data suggested first-quarter consumer spending could be bumped up by at least three-tenths of a percentage point to a 2.1% annual rate when the government publishes its third GDP estimate later this month. (Reuters)

Budget Deficit Drops to $82.4 Billion in May. The U.S. budget deficit for May dropped sharply from the level a year ago but much of the improvement reflected a calendar quirk. In its monthly budget report, the Treasury Department said Wednesday that the May deficit dropped to $82.4 billion, down from a deficit of $130 billion in May 2014. But last year's deficit was inflated because June 1 fell on a Saturday, requiring the government to mail out $35 billion in June benefit payments in May of last year. (AP)

Europe

U.K. Industrial Output Climbs 0.4% as Oil Production Surges. U.K. industrial production rose more than economists forecast in April as oil and gas output surged. Manufacturing unexpectedly contracted amid a decline in pharmaceuticals. Total production increased 0.4% from March, the Office for National Statistics said on Wednesday. Economists in a survey had forecast a 0.1% gain. Oil and gas extraction jumped 8.7%, the biggest increase in more than a year. Factory output fell 0.4%. A 0.1% increase was forecast. The fall in manufacturing highlights Britain’s reliance on domestic demand and consumption to fuel its recovery. (Bloomberg)

European Central Bank Economists Find That Austerity Works. A new paper published by European Central Bank economists argues that it is generally a good idea for countries that need to enact budget cuts and slash fiscal outlays to get it done quickly, as this can reduce the total fiscal pain and stabilize debt more quickly. “Simulations using plausible assumptions suggest that frontloading consolidation reduces the total consolidation effort and stabilises the debt ratio more quickly, although it does imply larger short-term reductions in output,” write the authors in a paper. The paper looks at the impact of fiscal consolidation on a country’s output, or what economists call the “fiscal multiplier.” The authors conclude that “even in the presence of a large fiscal multiplier, fiscal consolidation could initially lead to a higher debt ratio, but this effect will typically be reversed within a few years.” (WSJ)

Currencies

Dollar Drops after BoJ Head Hints Yen Decline Overdone. The dollar tumbled to two-week lows against the yen on Wednesday after Japan's chief central banker said the yen was "very weak" and unlikely to fall further. The dollar also dropped against the euro, which benefited from a rise in benchmark German 10-year bund yields to more than 1% for the first time since September. Bank of Japan Governor Haruhiko Kuroda, speaking to a Japanese lower house committee, rescued the yen from close to last week's 13-year trough of 125.86 per dollar to a high of 122.47 yen. Kuroda said the dollar may not necessarily rise versus the yen if the Federal Reserve raises interest rates as traders may have already priced in the possibility of a rate hike. The dollar last stood at 122.62 yen, off 1.3%, and was down 0.3% against the euro at $1.1312. Hit by the yen's advance and rallying commodity currencies, the dollar index slipped to a three-week low of 94.322 and was last off 0.55%. Sterling rose 1% to a three-week high against the dollar. (Reuters)

Commodities

Oil Jumps after U.S. Stockpile Draw. Oil rallied for a second straight day on Wednesday, with U.S. crude nearing a one-month high and gasoline hitting its highest price since November, as a big U.S. stocks drawdown boosted the outlook for summer fuel demand. The U.S. Energy Information Administration (EIA) reported that crude oil inventories shrank by 6.8 million barrels last week, four times more than forecast by analysts. The largest stockpile drop since last July came as refining demand for crude rose amid higher gasoline consumption. U.S. crude settled up $1.29, or 2.1%, at $61.43 barrel, after hitting a May 13 high of $61.82. Global crude benchmark Brent settled at $65.70, up 82 cents, or 1.3%. Its session peak was $66.36. (Reuters)

Gold Gets Boost from Soft Dollar. Gold prices rose for a third straight session on Wednesday, bolstered by a softer dollar and worries over the Greek debt crisis, but a looming U.S. interest rate increase and outflows from bullion-backed funds capped the upside. Spot gold climbed as much as 1.4% to a one-week high of $1,192.10 an ounce and was up 0.8% at $1,185.96 by 1905 GMT. Spot platinum was up 0.7% at $1,110 an ounce. Silver rose 0.2% to $15.97 an ounce, while palladium gained 0.3% to $742.25 an ounce. (Reuters)