Download - Source: Thomson/Datastream
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The External Environment for Developing Countries
March 2009The World Bank
Development EconomicsProspects Group
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2.0
2.3
2.5
2.8
3.0
3.3
Jan-09 Jan-09 Jan-09 Feb-09 Mar-09 Mar-094.5
5.0
5.5
6.0
6.5
Source: Thomson/Datastream.
Federal Reserve’s “quantitative easing” spurs quick fall in long rates
U.S. ten-year T-note, 30-year fixed- and ARM mortgage rates, percent
Ten-year note [left]
30-year fixed mortgage [right]
Variable ARM rate [right]
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556065707580859095
100105
Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Source: Thomson/Datastream.
... sustaining longest equity rally since end-2008
Indexes: 100 on September 15, 2008 [Lehman Brothers]
MSCI-Emerging Markets
CAC- France
DJIA USA
Topix Japan
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Industrial countries
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2.8
-0.5
-3.8
-6.2
-8
-6
-4
-2
0
2
4
6
Q2-2008 Q3-2008 Q4-2008 F Q4-2008 R
Source: Department of Commerce and DECPG calculations.
U.S. GDP revised to substantial 6.2% decline in fourth quarter 2008
growth of real GDP, and contributions to growth in percentage points
StocksGovernmentConsumption
InvestmentNet Exports
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Continued employment losses affecting incomes and retail spending
retail sales growth (saar) [L]; change in employment (3mma) [R]
-30
-25
-20
-15
-10
-5
0
5
10
15
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09-800
-600
-400
-200
0
200
400
Source: U.S. Departments of Commerce and Labor.
Retail sales [L]
Change in employment [R]
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Virtual collapse in manufacturing and exports pressures growth further
durable goods orders, export volumes and mfgr output, ch% saar
-25
-20
-15
-10
-5
0
5
10
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09-50-40-30-20-10010203040
Source: Federal Reserve, Department of Commerce.
Orders [right]
Production [left]
Exports [right]
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Japan’s trade and production falling from a veritable “cliff” through February
export volumes and manufacturing output, ch% saar
-60
-50
-40
-30
-20
-10
0
10
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09-80
-60
-40
-20
0
20
40
60
Source: Bank of Japan and Japan Cabinet Office.
IP [Left]
Export volume [R]
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-15-12-9-6-30369
1215
Q1-2008 Q2-2008 Q3-2008 Q4-2008Source: National Sources through Thomson/Datastream.
United States and Asia account for the bulk of the decline in Japan’s exports contributions to growth in percentage
points
USAMENA
EUOther
AsiaTotal
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Japan’s liquidity inches higher
-2-101234567
01/31/2007 07/31/2007 01/31/2008 07/31/2008 01/30/2009
Source: Bank of Japan.
growth of M-0, M1 and ‘L’, ch%, y/y‘L’ (Broad money)
M-1
M-0
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2.8
-1.0 -1.0
-5.7
-8
-6
-4
-2
0
2
4
Q1-2008 Q2-2008 Q3-2008 Q4-2008
Source: EUROSTAT and DECPG calculations.
GDP in Euro Area falls sharply on investment and exports
growth of real GDP, and contributions to growth in percentage points
StocksConsumptionGovernmentInvestmentNet Exports
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Trade is sapping the German economy of any forward momentum
export orders and factory output, ch% saar
-70-60-50-40-30-20-10
0102030
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Source: EUROSTAT through Thomson/Datastream.
Export orders
IP Manufacturing
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European labor markets begin to weaken, sentiment falls quickly
growth in the number of EA unemployed [left] EC consumer sentiment [right]
-15
-10
-5
0
5
10
15
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09-35
-30
-25
-20
-15
-10
-5
0
Source: EUROSTAT and European Commission.
Euro Area consumer sentiment [right]
growth in the number of unemployed (y/y), % [left]
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Industrial production
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-25
-20
-15
-10
-5
0
5
10
15
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Manufacturing output collapses across high-income OECD countries
manufactures output, ch% (3m/3m saar)
USA
Eurozone
-56.5%Japan
Source: Thomson/Datastream, DECPG.
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-40
-30
-20
-10
0
10
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Industrial output decline intensifies in Europe
industrial production ch% (3m/3m saar)
Germany
Italy
Spain
France
Source: Thomson/Datastream, DECPG.
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-50.0
-37.5
-25.0
-12.5
0.0
12.5
25.0
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Industrial output collapses in ECA as trade partners fall deeper into recession
industrial production, ch% (3m/3m saar)
Czech Republic
Europe and Central Asia
Hungary
Turkey
Source: Thomson/Datastream, DECPG.
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International trade
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Growth of world trade in dollarsQ4-2008 / Q-4 2007 (%)
-16
-14
-12
-10
-8
-6
-4
-2
0
World USA Japan Euro Area Developingcountries
Source: National Agencies through Thomson/Datastream.
export values: ch% yr/yr
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-250
-200
-150
-100
-50
0
50
100
Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008
Source: Department of Commerce.
U.S. current balance improves in fourth quarter on falloff in goods
imports (notably oil)
IncomeServices
Non-oilBOT
Oil balance
Transfers
Current account
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World trade has averaged 10% growth per annum over the last 2 decades
export values (USD), ch%
-5
0
5
10
15
20
25
1991 1993 1995 1997 1999 2001 2003 2005 2007
Source: National Agencies through Haver Analytics.
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Oil prices
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OECD oil stocks remain high
0
20
40
60
80
100
120
140
Jan-00 Jan-02 Jan-04 Jan-06 Jan-082,300
2,400
2,500
2,600
2,700
2,800$/bbl million bbl
Oil price [L]
OECD stocks [R]
Source: IEA and DECPG Commodities Group.
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OPEC oil production drops sharply
22
24
26
28
30
32
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
mb/d
OPEC-11
Including Iraq
Source: IEA and DECPG Commodities Group.
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WTI Futures Prices - NYMEX
30
40
50
60
70
80
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Mar 16
$/bbl Monthly contract prices to Dec 2014* on select dates in 2009
Feb 18
Jan 15
Source: NYMEX.
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Non-oil commodity prices
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100
150
200
250
300
350
Jan-06 Jan-07 Jan-08 Jan-09
Grains
Fats & OilsBeverages
Other Food
Food prices slip in February on weak demand (2000=100)
Source: DECPG Commodities Group.
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Copper prices rise on Chinese restocking
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Jan-06 Jan-07 Jan-08 Jan-0950
100
150
200
250
300
350
400
450
500
550$/ton ‘000 tons
Copper price
LME stocks
Source: LME and DECPG Commodities Group.
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Freight rates revive on stronger trans-PAC bulk shipments
0
2,000
4,000
6,000
8,000
10,000
12,000
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09
$/ton
Baltic dry freight index
Source: Datastream and DECPG Commodities Group.
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International Finance
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Lending falters in early 2009 as banks deleverage and build capital
Source: DECPG Finance Team.
Gross capital flows to emerging markets
$ billionQ1 Total Jan Feb Q1 Total Jan Feb
Total 164 652 30 33 103 370 18 15 Bonds 58 146 7 2 12 65 9 6 Banks 79 312 17 28 71 257 10 9 Equity 26 194 6 3 20 48 0 0
Lat. America 38 156 9 4 19 80 9 10 Bonds 20 45 4 0 5 20 5 3E. Europe 82 247 5 16 36 155 6 1 Bonds 28 64 1 2 4 35 2 0Asia 27 188 14 9 38 92 3 3 Bonds 8 23 3 0 3 7 2 3Others 16 61 2 3 11 43 0 0
2007 2008 2009
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EM equities outperform mature markets over 2009 to date
-18-15-12-9-6-30369
12
January February March * Year to date *
Source: Morgan-Stanley through Thomson/Datastream
return by period
Emerging markets
Mature markets
* through March 13
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Sovereign credit risk has increased sharply across emerging markets
Sovereign CDS spreads in basis points
0 250 500 750 1,000 1,250 1,500
UkraineArgentina
KazakstanIndonesia
TurkeyPhilippines
RussiaBulgaria
South AfricaColombia
BrazilThailandMalaysia
Mexico
Source: Bloomberg and DECPG Finance Team.
// 4,600
// 3,680
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Currencies
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1.230
1.270
1.310
1.350
1.390
1.430
1.470
1.510
1.550
1.590
1.630
Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09
86
90
94
98
102
106
110
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar continues gains against euroand yen until FOMC of March 18
USD per Euro (inverse) [Left] and Yen per USD [right]
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Net foreign purchases of U.S. assets turn to outflow as of the fourth quarter
net foreign purchases USD billions
-120-80-40
04080
120160200240280
Q1-2008 Q2-2008 Q3-2008 Q4-2008 Jan-09 (qr)
Treasuries Corp Bonds GSEs Equity Total
Source: U.S. Treasury ‘TICS’ database.
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Emerging market currencies down vs the dollar over 2009 to date
percentage change (USD per LCU) (%)
-30 -25 -20 -15 -10 -5 0 5
Rus Rbl
Pol zty
Hun frt
Mex pso
Cze crn
Tur lra
Brz rei
Ind rpe
Mys rgt
Indo rph
US NEER
Source: Thomson/Datastream.
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The External Environment for Developing Countries
March 2009The World Bank
Development EconomicsProspects Group