the external environment for developing countries december 2009 the world bank development economics...
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The External Environment for Developing Countries
December 2009The World Bank
Development EconomicsProspects Group
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G-3 exports now growing at double digits… a good omen for world trade
U.S. - Japan and Germany export volumes, ch% 3m/3m saar
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-60
-40
-20
0
20
40
60
United States
Japan
Germany
Source: World Bank, DEC Prospects Group.
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Gross capital flows increase rapidly in the final months of 2009 bond issuance, IPOs and syndicated bank lending, 3mma, billions US dollars
0
10
20
30
40
50
Mar Apr May June July Aug Sep Oct Nov
Latin America East Asia
Europe and Central Asia South Asia
SubSaharan Africa MENA
Source: World Bank, Development Prospects Group.
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Industrial countries
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-0.7
3.52.8
-6
-4
-2
0
2
4
6
Q2-2009 Q3-2009 Prelim Q3-2009 2nd
Source: Department of Commerce.
U.S. GDP marked down for third quarter to 2.8% on consumer and exports
growth of real GDP, and contributions to growth in percentage points
Stocks GovernmentConsumption
InvestmentNet exports
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Narrowing of job losses in Novemberwith new claims down substantially
change in employment (‘000, 3mma) [L]; claims for UNR insurance (‘000, 4wma) [R]
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-800
-700
-600
-500
-400
-300
-200
-100
0
100
300
350
400
450
500
550
600
650
700
Source: U.S. Department of Labor.
claims for unemployment insurance [R]
change in employment [L]
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Housing makes some progress in pulling out of recession– but risks remain
new and existing home sales, (ch% 3mma
y/y) [L]; “Affordability index” [R]
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-45
-30
-15
0
15
100
120
140
160
180
Source: Department of Commerce and National Association of Realtors.
Existing home sales [L]
New home sales [L]
Affordability index [R]
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2.7
4.8
1.3
-8
-4
0
4
8
Q2-2009 Q3-2009 Prelim Q3-2009 Revised
Source: Japan Cabinet Office.
Japan’s GDP growth marked down sharply to 1.3% in Q3-09 on invenstment
growth of real GDP, and contributions to growth in percentage points
Net ExportsStocks
ConsumptionGovernmentInvestment
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Japanese exports increase as demand from the U.S. and Europe comes into play
U.S. imports, Japan exports, (nominal USD) Japan IP-mfgr, ch% 3m/3m saar
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-80
-60
-40
-20
0
20
40
60
80
U.S. imports
Japan exports Japan IP mfgr
Source: World Bank, DEC Prospects Group.
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Japan’s deflation has yet to abate prompting BOJ liquidity provisions
Tokyo consumer prices [left]; corporate goods prices (PPI) [right], ch% y/y
Jan-97 Sep-98 May-00 Jan-02 Sep-03 May-05 Jan-07 Sep-08-3
-2
-1
0
1
2
3
-10
-8
-6
-4
-2
0
2
4
6
8
Source: Japan Cabinet Office.
consumer prices [L]
corporate goods prices [R]
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-9.2
-0.6
1.5
-10
-8
-6
-4
-2
0
2
4
Q1-2009 Q2-2009 Q3-2009 prelim
Source: Eurostat.
Euro Area GDP up 1.5% in Q3-09 (saar) on investment and stocks
growth of real GDP, and contributions to growth in percentage points
Net Exports Stocks
GovernmentConsumption
Investment
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Drivers for European growth continue mixed & uneven
GDP growth, third Quarter 2009 (ch%, saar)
Euro Area Germany France U.K.-8
-6
-4
-2
0
2
4
6
GDP PCE GDI Net-X *
Source: Eurostat. * contribution to growth.
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Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-0975
88
100
113
-35
-30
-25
-20
-15
-10
Euro Area sentiment buoyed by emergence from recession
IFO survey (overall and expectations) [left]; Euro Area consumer confidence [right]
IFO- expectations [L]
Source: IFO and European Commission.
Euro Area Consumer Confidence [R]
IFO- overall [L]
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Industrial production
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Jan-00 Jul-01 Jan-03 Jul-04 Jan-06 Jul-07 Jan-09-30
-25
-20
-15
-10
-5
0
5
10
15
World output recovering at a brisk pacegrowth of industrial production, ch% y/y and saar
Momentum (3m/3m saar)
Year-on-year growth
Source: World Bank, DEC Prospects Group.
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Jan-00 Jul-01 Jan-03 Jul-04 Jan-06 Jul-07 Jan-09-10
-5
0
5
10
15
20
25
30
35
China’s output growth is slowingindustrial production growth, ch% y/y and
saar
Source: World Bank, DEC Prospects Group.
Momentum (3m/3m saar)
Year-on-year growth
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Jan-00 Jul-01 Jan-03 Jul-04 Jan-06 Jul-07 Jan-09-50
-40
-30
-20
-10
0
10
20
30
Brazil’s IP grounded in domestic demandindustrial production growth, ch% y/y and
saar
Source: World Bank, DEC Prospects Group.
Momentum (3m/3m saar)
Year-on-year growth
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International trade
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Imports strengthened in high income countries over the third quarter
import volumes, 3 mma seasonally adjusted percent change
-60
-40
-20
0
20
40
60
Developing imports
HIY imports
Source: World Bank, DEC Prospects Group.
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-1200
-1000
-800
-600
-400
-200
0
Annualized deficitDeficit minus oil
U.S. trade deficit narrows on stronger exports and lower oil imports
balance of trade (annualized), and deficit minus oil, $ billion
Source: U.S. Department of Commerce.
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Developing countries’ exports return to year-over-year growth in October
Export volumes, year-over-year percent change
-30
-20
-10
0
10
20
Source: World Bank, DEC Prospects Group.
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Oil prices
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Oil prices and OECD oil stocks
Jan-96Feb-96Mar-96Apr-96May-96Jun-96Jul-96Aug-96Sep-96Oct-96Nov-96Dec-96Jan-97Feb-97Mar-97Apr-97May-97Jun-97Jul-97Aug-97Sep-97Oct-97Nov-97Dec-97Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-090
20
40
60
80
100
120
140
2,300
2,400
2,500
2,600
2,700
2,800$/bbl million bbl
Oil price [L scale]
OECD stocks [R]
Source: IEA and DECPG Commodities Group.
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World oil consumption growthmillion barrels per day
1Q00
2Q00
3Q03
4Q04
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
Other
Oth Asia
China
OECD
TotalSource: IEA
mb/d
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WTI Futures Prices - NYMEX
60
70
80
90
100
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
DEC 10
$/bbl
Monthly contract prices to Dec 2014* for select dates in 2009
Jul 13
Nov 9
* Futures now extend to December 2018
Nov 30
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Non-oil commodity prices
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100
150
200
250
300
350
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Grains
Fats & Oils
Other Food
Beverages
Agriculture prices strengthen on grains and beverages
non-oil prices, index 2000=100.(2000=100)
Source: Datastream and DECPG Commodities Group.
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Copper prices and LME stocks
Jan-02Jul-0
2Jan-03
Jul-03Jan-04
Aug-04Feb-05
Aug-05Feb-06
Aug-06Mar-0
7Sep-07
Mar-08Sep-08
Apr-09Oct-0
91,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0
100
200
300
400
500
600
700
800
900
1,000
$/ton ‘000 tons
Copper price
LME stocks
Source: LME and DECPG Commodities Group.
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Global steel production rebounds
Jan-98Feb-98Mar-98Apr-98May-98Jun-98Jul-98Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99Jul-99Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-00Mar-00Apr-00May-00Jun-00Jul-00Aug-00Sep-00Oct-00Nov-00Dec-00Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-100
10000
20000
30000
40000
50000
60000 OtherChinaOther Asia Pacific
mil tons
Source: DECPG Commodities Group.
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International Finance
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Flows to emerging markets ease to a still-strong $35 billion in November
Source: DECPG Finance Team.
Gross capital flows to developing countries
$ billion
H1 Q3 Total H1 Q3 Oct Nov YTD
Total 258 82 390 109 94 53 35 291
Bonds 53 9 65 35 33 27 12 107
Banks 151 63 257 42 29 6 9 85
Equity 54 10 68 32 32 20 14 98
Lat. America 61 18 90 37 34 30 8 109
Bonds 17 1 20 15 18 17 6 55
E. Europe 99 35 157 22 19 9 8 58
Bonds 27 7 35 13 11 5 4 32
Asia 69 18 98 44 32 12 16 105
Bonds 7 0 7 6 3 5 2 16
Others 28 11 45 7 8 2 2 19
2008 2009
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2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4*
2
4
6
8
10
12
14
200
300
400
500
600
Terms of borrowing for EM bond issuance have improved
average maturity in years [L]; average launch spreads (bps) [R]
Source: Bloomberg and DECPG staff calculations.
cost of borrowing [right]
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Robust returns to EM equities in 2009
U.S. Govt Bond
Commodities
MSCI Developed
EM bond (EMBIG)
CEMBI1
Developed high-yield
MSCI EM
-15 0 15 30 45 60
Year-to date December
Source: JPMorgan-Chase and Reuters.
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Currencies
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Oct-08 Jan-09 Apr-09 Jul-09 Oct-091.230
1.270
1.310
1.350
1.390
1.430
1.470
1.510
1.550 85.00
87.50
90.00
92.50
95.00
97.50
100.00
102.50
105.00
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar jumps in response to favorable jobs numbers and BOJ’s QE
USD per Euro (inverse) [Left] and Yen per USD [right]
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Recent pickup in net capital flows to U.S. shows distinct flight to quality
net flows: U.S. Treasuries, private securities (bn$ 3mma)
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-20
0
20
40
60
80
100
Source: U.S. Treasury TICs Database and JP Morgan-Chase.
Treasuries
Private sector securities
Total net inflow
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70
80
90
100
110
120
130
EM nominal effective exchange rates move toward appreciation NEERs, index Jan-2007 = 100.
Source: World Bank, DECPG.
Brazil
Turkey
South Africa Mexico
India
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The External Environment for Developing Countries
December 2009The World Bank
Development EconomicsProspects Group