The External Environment for Developing Countries

June 2009The World Bank

Development EconomicsProspects Group

Industrial countries

Largest recipients of TARP funds

Banks that borrowed funds under TARP Amount Borrowed ($bn)

Citigroup 50

Bank of America/Merrill Lynch 45

JPMorgan Chase 25

Wells Fargo 25

Goldman Sachs 10

Morgan Stanley 10

U.S. Bancorp 6.6

Bank of New York Mellon Corp. 2.5

State Street Corp 2.5

Source: U.S. Treasury

USA

Retail sales in U.S. weaken after initial rebound

U.S. retail sales values, index, Aug. 2009=100

Motor vehicles and parts

Total retail sales

Source: Thomson/Datastream, Commerce Department.

Core inflation falling Japanese consumer prices, year-over-

year percent change

Core inflation

Headline inflation

Source: Thomson/Datastream, OECD.

ECB interest rate and Inflation Eurozone consumer prices, year-over-

year percent change

Core inflation

Headline inflation

Source: Thomson/Datastream, OECD.

ECB Interest rate

Japanese exports to China In Billion Yen

Exports to China (RHS)

Total exports, excluding China (lhs)

Source: Thomson/Datastream

3.5

4.0

4.5

5.0

5.5

Jan-00 Jul-01 Jan-03 Jul-04 Jan-06 Jul-07 Jan-09

Unemployment close to 2003 Level Percentage of labor force

Unemployment rate

Source: Thomson/Datastream

Source: Eurostat

Euro Area Q1- Sharply lower as stock building turns negative

growth of real GDP, and contributions to growth in percentage points

StocksGovernmentConsumption

InvestmentNet Exports

Leading indicators for Europe lag those for the OECD

OECD composite leading indicators

Germany

OECD

Source: Thomson/Datastream, OECD.

Retail sales in U.S. weaken after initial rebound

U.S. retail sales values, index, Aug. 2009=100

Motor vehicles and parts

Total retail sales

Source: Thomson/Datastream, Commerce Department.

60

70

80

90

100

110

120

Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09

Japanese Industrial ProductionVolume Index, 2005 = 100

Industrial Production

Source: Thomson/Datastream

European unemployment begins to pick up quickly on soft economy

number of unemploymed (millions) [L], unemployment rate (%) [R]

Source: Eurostat.

Unemployment rate [R]

# of unemployed [L]

German factory orders moving towards a bottom in February?

factory orders, domestic and export, ch% saar

Source: Bundesbank.

Total

domestic orders

export orders

Industrial production

OECD industrial production down 34% in February (saar)

industrial output, ch% (3m/3m saar)

Developing countries

High-income OECD countries

Source: Thomson/Datastream, DECPG.

Continued declines across emerging markets (EAP an exception)

industrial production ch% (3m/3m saar)

East Asia

South Asia

Europe and Central Asia

Latin America

Source: Thomson/Datastream, DECPG.

NIEs and Thailand record positve monthly IP gains

industrial production ch% (m/m seasonally adjusted)

Hong Kong (SAR, China)

Thailand

Korea

Source: Thomson/Datastream, DECPG.

International trade

Pace of decline in trade is easing on a momentum basis

goods exports, nominal, qtr/qtr ch% (saar)

Developing Countries

Source: Thomson/Datastream

Oil prices

Crude oil prices rise on OPEC production cuts

$/bbl mb/d

Oil price [L scale]

OPEC Production [R]

Source: IEA and DECPG Commodities Group.

World Oil Consumption Growth (mb/d y/y)

Source: IEA and DECPG Commodities Group.

OECDNon-OECD

U.S. crude oil stocks rise on weak demandM bbl

5-year high-low ranges

Source: U.S. Dept Energy and DECPG Commodities Group.

Non-oil commodity prices

Food prices decline in March on weak demand (2000=100)

Source: DECPG Commodities Group.

Copper prices rebound on falling stocks

$/ton ‘000 tons

Copper price

LME stocks

Source: LME and DECPG Commodities Group.

Consumption Growth (% y/y)

Aluminum Copper Crude Oil

World China World China World China

2002-06average

7.5 19.9 3.0 9.6 2.0 9.1

2007 10.4 42.8 6.6 34.6 1.2 4.6

1H08 5.6 15.9 0.1 7.4 0.9 5.0

2H08 -6.0 -4.7 -3.5 1.8 -1.5 3.6

1Q09 -20.3 -10.4 -17.6 0.4 -3.7 -3.5

Source: DECPG Commodities Group.

International Finance

Capital flows down by two-thirds from first-quarter 2008 levels

Source: DECPG Finance Team.

Gross capital flows to emerging markets

$ billion

Q1 Total Q1 Total Jan Feb Mar Q1

Total 156 652 103 389 23 8 9 40

Bonds 58 146 12 65 9 7 2 18

Banks 72 312 71 257 8 1 5 13

Equity 26 194 20 68 6 1 2 8

Lat. America 42 156 19 90 9 3 4 17

Bonds 20 45 5 20 5 3 2 10

E. Europe 79 247 36 157 5 1 0 5

Bonds 27 64 2 35 2 1 0 3

Asia 24 188 38 98 8 4 2 14

Bonds 8 23 3 7 2 3 0 5

Others 11 61 11 44 0 1 2 3

2007 2008 2009

Strong returns to EM equities in 2009

Source: Morgan-Stanley through Thomson/Datastream

*as of April 17th

Total returns yr to date in local currency, %MSCI Developed

MSCI EM

MSCI BRICEM BIG Developed HY bond

Volume of EM IPOs has come to a standstill since September 2008

capital raised ($bn) [L], number of deals [R]

Source: Dealogic

# of deals [R]

Capital raised [L]

Currencies

Focus

The External Environment for Developing Countries

April 2009The World Bank

Development EconomicsProspects Group