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European growth outturns disappoint in fourth quarter
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The External Environment for Developing Countries February 2010 The World Bank Development Economics Prospects Group
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The External Environment for Developing Countries February 2010 The World Bank Development Economics Prospects Group. European growth outturns disappoint in fourth quarter. growth of real GDP, ch % saar. Source: National Agencies. Industrial countries. - PowerPoint PPT Presentation
Transcript of European growth outturns disappoint in fourth quarter
The External Environment for Developing Countries
February 2010The World Bank
Development EconomicsProspects Group
European growth outturns disappoint in fourth quarter
United States Japan Euro Area-1
0
1
2
3
4
5
6
Q2-2009Q3-2009Q4-2009
Source: National Agencies.
growth of real GDP, ch% saar
Industrial countries
U.S. GDP growth jumps 5.7% in Q4-09 on stocks, investment and exports
Q2-2009 Q3-2009 Q4-2009-4
-2
0
2
4
6
-0.7
2.2
5.7
Prv Consumption Gvt Consumption Fixed Investmentchange in Stocks Net Exports GDP
Source: U.S. Department of Commerce.
growth of real GDP, and contributions to growth in percentage points
Improvements in labor markets continue to underpin increases in household outlays change in employment (‘000, 3mma) [L]; retail sales x
autos, ch% (saar) [R]
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10-800
-700
-600
-500
-400
-300
-200
-100
0
100
-25
-20
-15
-10
-5
0
5
10
Source: U.S. Departments of Labor and Commerce.
retail x autos [R]
change in employment [L]
U.S. exports up on increased overseas demand- net-X likely to add to growth
export and import volumes, ch% saar
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-50
-40
-30
-20
-10
0
10
20
30
40
Exports Imports
Source: U.S. Department of Commerce.
Japan’s GDP regains dynamic in Q4-09 on turn in capex to positive growth
Q2-2009 Q3-2009 Q4-2009-6
-4
-2
0
2
4
6
8
10
5.2
0.0
4.6
Prv Consumption Gvt Consumption Fixed Investmentchange in Stocks Net Exports GDP
Source: Japan Cabinet Office, EPA.
growth of real GDP, and contributions to growth in percentage points
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
-60-50-40-30-20-10
0102030
Large Mfg Small MfgLarge non-Mfg Small non-Mfg
Source: Bank of Japan.
Tankan for fourth quarter underlined a likely pick-up in investment
business conditions dispersion indices
Japan’s orders and exports revive in the last months of 2009
machinery orders, production and export volumes ch% (saar)
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-70
-50
-30
-10
10
30
50
70Production Orders
Exports
Source: Japan- METI.
Euro-Area growth held to 0.3% in Q4-09 on flat outturns for Germany
Euro Area Germany France-1
0
1
2
3 Q2-2009Q3-2009Q4-2009
Source: EuroStat.
growth of real GDP, ch% saar
European unemployment escalates continuing to dampen household spending
Euro Area unemployment rate (%) [L]; retail sales
volume, ch% (3mma, y/y) [R]
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-097.0
7.5
8.0
8.5
9.0
9.5
10.0
-3
-2
-1
0
1
Source: Eurostat.
retail sales [R]
unemployment rate [L]
German factory orders hit hard leading to weaker output growth
export orders, manufacturing production, ch% (saar)
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-70
-50
-30
-10
10
30
50Production
Export orders
Domestic orders
Source: Bundesbank.
Industrial production
Eurozone lost growth momentum in the fourth quarter on weak domestic demand
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-40
-30
-20
-10
0
10
20Eurozone
ECA
industrial production (percent change, saar)
Source: World Bank calculations based on Thomson Datastream data.
BICS production momentum supported by strong domestic and external demand
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-60
-40
-20
0
20
40
BrazilIndiaChinaSouth Africa
Source: World Bank calculations based on Thomson Datastream data.
industrial production (percent change, saar)
European and African emerging markets factory PMI above 50 “growth mark” in January
Czech Rep. Russia Hungary Turkey Poland South Africa
35
40
45
50
55Index sa, 50+ = Expansion
Source: JPMorgan-Chase.
International trade
Imports by the United States and China revive on fiscal stimulus measures
value of imports, year-over-year percent change
-40
-20
0
20
40
60China year-over-year growthUSA year-over-year growth
Source: U.S. Department of Commerce; Haver Analytics.
Increasing demand for capital- and consumer durable goods underpins exports of manufactures
Manufacturing exports in value terms, year-over-year % change
-40
-30
-20
-10
0
10
20
30
40
50
Israel MexicoPhilippines Turkey
Source: Haver Analytics.
European exports boost region’s trade surplus to 5 year peak
Euro Area exports & imports, ch% saar, and trade balance in billion euros
-50
-40
-30
-20
-10
0
10
20
30
40
-9
-7
-5
-3
-1
1
3
5
7BOT €bn [R] Exports ch% [L] Imports ch% [L]
Source: EuroStat.
Oil prices
Crude oil prices relatively flat in recent months
Jan-08Feb-08
Apr-08May-08
Jun-08Aug-08
Sep-08Nov-08
Dec-08Feb-09
Mar-09May-09
Jun-09Aug-09
Sep-09Nov-09
Dec-09Feb-10
25
50
75
100
125
150$/bbl
WTI
Dubai
Brent
Source: Thomson/Datastream and DEC Prospects Group.
OECD total oil stocksdays of forward consumption
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
48
50
52
54
56
58
60
62
Source: IEA and DECPG.
OPEC spare capacity (mb/d)
Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Jan-04Feb-04Mar-04Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-100
1
2
3
4
5
6
7
Source: IEA and DECPG.
Non-oil commodity prices
100
150
200
250
300
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Beverages
Raw Materials
Food
Agriculture prices buoyed by strong gains in rubber and sugar
(Index 2000=100)
Source: DECPG.
Metals prices fall sharply in early 2010
Jan-05 Jul-05 Feb-06 Sep-06 Mar-07 Oct-07 Apr-08 Nov-08 Jun-09 Dec-090
1,000
2,000
3,000
4,000
5,000$/ton
Lead
Zinc
Aluminum
Source: LME and DECPG.
Metals stocks continue to increaseas markets remain in surplus
Jan-05May-05
Sep-05Jan-06
May-06Sep-06
Jan-07May-07
Sep-07Jan-08
May-08Sep-08
Jan-09May-09
Sep-09Jan-10
1,000
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.
International Finance
Bonds underpin January flows
Source: DECPG.
$ billion 2010
H1 H2 Total Jan H1 H2 Dec Total Jan
Total 258 132 390 24 110 243 47 353 33 Bonds 53 12 65 9 36 80 7 115 21 Banks 151 106 257 9 43 86 29 128 5 Equity 54 14 68 6 32 77 11 109 7
0Lat. America 61 29 90 10 37 100 21 137 8 Bonds 17 3 20 5 15 47 5 62 7E. Europe 99 57 157 4 22 50 8 72 13 Bonds 27 7.7 35 2 13 20 1 33 7Asia 69 29 98 9 44 78 15 122 11 Bonds 7 0 7 2 6 10 0.1 16 7Others 28 17 45 1 7 14 2 21 0.2
2008 2009
Sovereign debt default risk has soarednotably for several EU countries
Source: Bloomberg and DECPG staff calculations.
5-year sovereign CDS spreads (basis points)
Current level (as of Feb. 15)
Before Greece debt crisis (end Oct-09)
Pre-Lehman (Sep. 12 2008)
Developed countries: Germany 45 21 9 U.S. 52 19 10 France 61 23 12 Japan 81 60 17 U.K. 92 50 22 Italy 130 74 44 Spain 139 72 40 Irealnd 158 138 31 Portugal 193 58 41 Greece 354 140 53
Emerging markets: China 85 80 72 Brazil 140 137 155 Mexico 140 168 134 Poland 146 116 72 South Africa 170 150 191 Russia 198 192 168 Turkey 202 190 276 Philippiness 203 178 240
Source: Bloomberg and World Bank staff calculations
January February* Year to date*
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
Mature markets Emerging markets EU U.S.
Source: Bloomberg and DECPG staff calculations.
*through February 15
EM equities underperform mature markets over 2010 to date
Local currency returns by period
Currencies
Jan-09 Apr-09 Jul-09 Oct-09 Jan-101.230
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)
Euro down 6.5% vs dollar in the month on Greek sovereign debt plight
USD per Euro (inverse) [Left] and Yen per USD [right]
Euro cross rates vary by trade partner broadly based on economic conditions
Polish zloty
Russian rouble
Turkish lira
Hungarian florint
Czech krona
U.S. dollar
Japanese yen
-25 -20 -15 -10 -5 0 5 10
Ch% 2010 to date ch% 2009
Source: Thomson/Datastream and World Bank.
Negative sign implies decline in local currency vs euro
The External Environment for Developing Countries
February 2010The World Bank
Development EconomicsProspects Group
