The External Environment for Developing Countries
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The External Environment for Developing Countries January 2009 The World Bank Development Economics Prospects Group. Global industrial production plummets into 4 th quarter of 2008... manufacturing production, ch% (saar). Developing. World. OECD. Source: DEC Prospects Group.

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Source dec prospects group

The External Environment for Developing CountriesJanuary 2009The World BankDevelopment EconomicsProspects Group


Global industrial production plummets into 4 th quarter of 2008 manufacturing production ch saar

Global industrial production plummets into 4th quarter of 2008...manufacturing production, ch% (saar)

Developing

World

OECD

Source: DEC Prospects Group.


Source dec prospects group

...while worries about recession and banks push markets lower in January equity market indices (LCU)* Sep-15-2008 = 100.

DJIA (USA)

DAX (Germany)

MSCI (Emerging Markets)

TOPIX (Japan)

Source: Thomson/Datastream, Morgan Stanley (*USD index).


Industrial countries

Industrial countries


U s employment losses in 2008 sum to 2 6 million worst since 1945 change in non farm employment 000

U.S. employment losses in 2008 sum to 2.6 million...worst since 1945change in non-farm employment, ‘000

3mma change

monthly change

Source: U.S. Department of Labor.


Source dec prospects group

Falling exports, orders and production pressure U.S. GDPexport volumes, durable goods orders and IPmfg, ch% saar

Export volumes [R]

Production [L]

Durable goods orders [R]

Source: Department of Commerce, Federal Reserve.


Source dec prospects group

Interbank market rates- and yield on ten-year note easing Fed Funds target- and effective rates; Libor and T-note 10 yr

LIBOR 6 months

T-note 10-year

Fed Funds Target

Fed Funds Effective

Source: Thomson/Datastream.


Source dec prospects group

Japan’s exports and production point to severe 4th quarter downturnexport volumes and manufacturing output, ch% saar

Export volumes [R]

Industrial production [L]

Source: Bank of Japan and Japan Cabinet Office.


Source dec prospects group

Household spending turns to the doldrums in the last months of 2008household expend, retail sales [L]; Tokyo consumer confidence [R]

HH spending [L]

Retail sales [L]

Consumer confidence [R]

Source: Japan Cabinet Office.


Source dec prospects group

Yen strength on unwinding “carry trades” supports BOJ ease Yen/USD rate (inverse) [right]; TIBOR and JGB 10-year [left]

JGB- ten year [L]

Yen/dollar (inverse) [R]

TIBOR 6 months [L]

Source: Thomson/Datastream.


Source dec prospects group

European confidence plummets while ECB asesses economic damageEuro Area consumer confidence [L]; IFO overall [R]

IFO overall [R]

EC Consumer confidence [L]

Source: Eurostat-- Thomson/Datastream.


Production now in sharp decline across the euro area manufacturing production ch saar

Production now in sharp decline across the Euro Areamanufacturing production, ch% (saar)

Germany

Euro Area

Italy

France

Source: Eurostat.


Source dec prospects group

Euro interbank rates fall quickly adding pressure on the currency Euribor and Bund- 10 yr [L]; USD per Euro [R]

EURIBOR 6 months [L]

Bund, ten-year [L]

USD per Euro [R]

Source: Thomson/Datastream.


Industrial production

Industrial production


Developing countries ip plunges mirroring high income countries real ip 3m 3m saar

Developing countries’ IP plunges, mirroring high-income countriesreal IP (3m/3m saar)

Developing countries

High-income

Source: Thomson/Datastream, DECPG.


East asia and central and eastern europe hit hardest real ip 3m 3m saar

East Asia and Central and Eastern Europe hit hardestreal IP (3m/3m saar)

ECA

East Asia, excl China

Source: Thomson/Datastream, DECPG.


Dramatic ip contraction in export intensive economies real ip 6m 6m saar

Dramatic IP contraction in export intensive economiesreal IP (6m/6m saar)

Czech Republic

Taiwan

Hungary

Turkey

Korea

Source: Thomson/Datastream, DECPG.


International trade

International trade


Source dec prospects group

Major OECD imports contract in step with domestic demandimport volumes: U.S, Japan, Germany and U.K. ch% 3mma y/y

Germany

U.K.

Japan

United States

Source: National Agencies through Thomson/Datastream.


Developing exports in decline export volumes china india mexico and jordan ch 3mma y y

Developing exports in decline export volumes: China, India, Mexico and Jordan ch% 3mma y/y

China

India

Mexico

Jordan

Source: National Agencies through Thomson/Datastream.


U s trade balance improves sharply in november on plummeting oil price

U.S. trade balance improves sharply in November on plummeting oil price

goods balance, and oil- and non-oil balances ($bn)

Oil balance

Non-oil balance

Goods balance

Source: Department of Commerce.


Oil prices

Oil prices


Oil prices appear to stabilize amid opec production cuts

Oil prices appear to stabilize amid OPEC production cuts

$/bbl

mb/d

OPEC-11 Production (x Angola) [R]

Oil price [L scale]

Source: IEA and DECPG Commodities Group.


Growth in u s oil demand yr yr

Growth in U.S. Oil Demand (yr/yr)

kb/d

Source: IEA and DECPG Commodities Group.


Wti futures prices nymex

WTI Futures Prices - NYMEX

Monthly contract prices to Dec 2013 on select dates in 2008-09

$/bbl

Aug 29

Sep 30

Oct 31

Jan 15 09

Dec 24

Source: NYMEX and DECPG Commodities Group.


Non oil commodity prices

Non-oil commodity prices


Source dec prospects group

Agriculture price declines begin to moderate

2000=100

Source: Datastream and DECPG Commodities Group.


Metal prices rebound slightly on index rebalancing

Metal prices rebound slightly on index rebalancing

$/ton

‘000 tons

Copper price

LME stocks

Source: LME and DECPG Commodities Group.


Global steel production plunging

Global steel production plunging

mn tons

Source: Datastream and DECPG Commodities Group.


International finance

International Finance


A difficult year for emerging market capital flows

A difficult year for emerging market capital flows

Source: DECPG Finance Team.


Equities post modest gains in december percentage change in local currency

Equities post modest gains in Decemberpercentage change (in local currency)

Nov

Dec

Oct

2008

Source: Bloomberg and DECPG Finance Team.


Source dec prospects group

Sharp widening in EM bond spreads at year-end 2008 Yen/USD rate (inverse) [right]; TIBOR and JGB 10-year [left]

EMBIG annual retruns [Left]

EMBIG spread [Right]

Source: JPMorgan-Chase and DECPG Finance Team.


Currencies

Currencies


Source dec prospects group

Dollar falls on Fed rate cutuntil ECB reduction seen as sure USD per Euro (inverse) [Left] and Yen per USD [right]

USD/Euro (inverse)

yen/USD

Source: Thomson/Datastream.


Source dec prospects group

Interest differentials well in favorof stronger euro since November USD Libor and EURIBOR (6 months), percent

EURIBOR 6 months

USD LIBOR 6 months

Source: Thomson/Datastream.


Dollar mixed against em currencies lcu per usd indexes sept 15 2008 100 increase weaker lcu

Dollar mixed against EM currencies LCU per USD indexes, Sept-15 2008=100 [*increase = weaker LCU]

Turkish lira

Brazilian real

Korean won

Russian rouble

Source: Thomson/Datastream.


Source dec prospects group

The External Environment for Developing CountriesJanuary 2009The World BankDevelopment EconomicsProspects Group


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