The External Environment for Developing Countries July 2009 The World Bank Development Economics...
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The External Environment for Developing Countries
July 2009The World Bank
Development EconomicsProspects Group
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09-10
-5
0
5
10
China
China at the forefront of the global economic recovery
industrial production, percent (month-on-month)
Source: Thomson/Datastream, Haver, DECPG.
World
USA
Germany
0
10
20
30
40
50
Source: Loanware and Bondware.
Bonds
Syndicated lending
Cross border bank flows to developing countries continue meagre
billions USD, 3-month moving average
Industrial countries
Employment losses ease… with potential positive effects on spending
retail volume growth (y/y) [L]; change in
employment (3mma) [R]
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09-10
-8
-6
-4
-2
0
2
-750
-550
-350
-150
50
250
Source: U.S. Departments of Commerce and Labor.
Retail sales [L]
Change in employment [R]
U.S. economic activity is stabilzing…but bank loan charge-offs surging
ISM composite economic activity index [left]; Bank charge-offs (% total C&I loans) [right]
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-090.3
0.5
0.8
1.0
1.3
1.5
1.8
2.0
37.5
40.0
42.5
45.0
47.5
50.0
52.5
55.0
Source: Institute for Supply Management; Federal Reserve Board.
C&I charge-offs [right]
ISM composite index [left]
U.S. trade developments may offer boost for 2nd quarter GDP
export and import volumes, ch% saar
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09-50.0
-37.5
-25.0
-12.5
0.0
12.5
25.0
Source: U.S. Department of Commerce.
Export volumes
Import volumes
Japan’s trade and production take a sharp leg up over May/June
export volumes and manufacturing output, ch% saar
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09-80
-60
-40
-20
0
20
40
60
Source: Bank of Japan and Japan Cabinet Office.
Production
Export volume
Labor markets deteriorate quicklywhile spending continues to falter
unemployment rate (%) [left]; retail sales, ch% yr-on-yr [right]
Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-093.5
4.0
4.5
5.0
5.5
-5
-4
-3
-2
-1
0
1
2
Source: Japan Cabinet Office.
Retail sales [right]
Unemployment rate % [left]
Japan’s inflation drops well into negative territory
Jan-07
Feb-07
Mar-
07
Apr-
07
May-
07
Jun-07
Jul-07
Aug-
07
Sep-07
Oct-07
Nov-
07
Dec-
07
Jan-08
Feb-08
Mar-
08
Apr-
08
May-
08
Jun-08
Jul-08
Aug-
08
Sep-08
Oct-08
Nov-
08
Dec-
08
Jan-09
Feb-09
Mar-
09
Apr-
09
May-
09
Jun-09
-6
-5
-4
-3
-2
-1
0
1
2
Source: Bank of Japan.
Toyko CPI and corporate goods prices, ch%, y/yHeadline CPI
Corporate goods prices (PPI)
European labor markets continue to weaken, but sentiment up on lower CPI unemployment rate (%) [left]; EC consumer
sentiment [right]
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-097.0
7.5
8.0
8.5
9.0
9.5
-35
-30
-25
-20
-15
-10
-5
0
Source: EUROSTAT and European Commission.
Euro Area consumer sentiment [right]
Unemployment rate % [left]
Euro Area CPI in negative ground
Jan-05Apr-05
Jul-05Oct-05
Jan-06Apr-06
Jul-06Oct-06
Jan-07Apr-07
Jul-07Oct-07
Jan-08Apr-08
Jul-08Oct-08
Jan-09Apr-09
-1
0
1
2
3
4
5
6
Source: Eurostat.
HICP headline and core, ch% y/y and EURIBOR (%)
EURIBOR
Headline HICP
HICP-core
Industrial production
Taiwan (China)Hungary
JapanSlovak Republic
SpainSlovenia
ItalyTurkey
GermanyKorea, Rep.
SingaporeThailand
South AfricaBulgariaPakistan
BrazilColombiaMalaysia
ArgentinaUnited States
United KingdomMexico
-60 -40 -20 0 20 40 60 80 100
Peak-to-trough de-clinepercent change
Percent of contraction reversed
Deep peak-to-trough declines in industrial production are now being reversed
Source: Thomson/Datastream, DECPG.
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09-10
-5
0
5
10
China
China at the forefront of the global economic recovery
industrial production, percent (month-on-month)
Source: Thomson/Datastream, Haver, DECPG.
World
USA
Germany
Global manufacturing looking up
Source: JPMorgan-Chase
JPMorgan global PMI summary - Manufacturing
Manufacturing Feb Mar Apr May JunOutput 33.4 35.3 41.3 46.9 50.4
New orders 31.4 35.9 43.8 48.5 49
Employment 35 35.9 38.2 39.5 42.2
Source: JPMorgan.
International trade
World export growth appears to be bottomingexports, ch% seasonally adjusted annual rates
(saar)
-65
-45
-25
-5
15
35
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09
Source: World Bank data.
Global imbalances ease moderately as U.S. deficit and China surplus narrow
goods trade balance, U.S. $-bn, seasonally adjusted, annualized
-1,200
-1,000
-800
-600
-400
-200
0
200
400
600
Jan-02 Dec-02 Nov-03 Oct-04 Sep-05 Aug-06 Jul-07 Jun-08 May-09
China
United States
Source: National Agencies through Thomson/Datastream.
Eurozone exports begin to support more moderate declines in production
IP and exports, ch% seasonally adjusted annual rates (saar)
-55
-35
-15
5
25
Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09
Source: Eurostat.
Exports
Industrial Production
Oil prices
Oil prices and OECD oil stocks
2300
2400
2500
2600
2700
2800
0
20
40
60
80
100
120
140
Jan-96 Jan-98 Jan-00 Jan-09 Jan-09 Jan-09 Jan-09
$/bbl million bbl
Source: IEA and DECPG Commodities Group.
World Oil Production (mb/d)
30
35
40
45
50
55
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: IEA and DECPG Commodities Group.
Non-OPEC
Non-OPEC x FSU
OPEC
WTI Futures Prices - NYMEX
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
30
40
50
60
70
80
90
Jul 13
$/bblMonthly contract prices to Dec 2014* for
select dates in 2009
Feb 18
Jun 11
Source: NYMEX.
Non-oil commodity prices
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10100
150
200
250
300
350
GrainsFats & Oils
Other Food
Beverages
Food prices edged higher in June(2000=100)
Source: DECPG Commodities Group.
Metals prices ease following large gains in first-half 2009
Jan-05 Jun-05Dec-05 Jun-06
Dec-06 Jun-07Nov-07
May-08Nov-08
May-091000
2000
3000
4000
5000
6000
7000
8000
9000
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
55000
Source: LME and DECPG Commodities Group.
Copper
Nickel
Aluminium
Freight rates fall on slowdown in bulk trade
Jan-06Mar-06
Jun-06Aug-06
Oct-06Jan-07
Mar-07Jun-07
Aug-07Nov-07
Jan-08Apr-08
Jun-08Sep-08
Nov-08Feb-09
Apr-09Jul-09
0
2000
4000
6000
8000
10000
12000
Source: Datastream and DECPG Commodities Group.
International Finance
Flows slowed in June; first-half volumes halved from a year earlier
Source: DECPG Finance Team.
Gross capital flows to emerging markets
$ billion 2007
Total H1 H2 Total H1 Apr May Jun
Total 652 258 132 389 106 14 24 21
Bonds 146 53 12 65 36 6 8 3 Banks 312 151 106 257 37 2 9 6 Equity 194 54 14 68 33 5 7 12
Lat. America 156 61 29 90 34 2 5 7
Bonds 45 17 3 20 15 2 1 2E. Europe 247 99 57 157 22 4 7 5 Bonds 64 27 8 35 13 3 5 1
Asia 188 69 29 98 42 7 10 9 Bonds 23 7 0 7 6 1 1 0Others 61 28 17 44 7 0 3 1
20092008
0
10
20
30
40
50
Source: Loanware and Bondware.
Bonds
Syndicated lending
Cross border bank flows remain well below the levels seen in previous years
billions USD, 3-month moving average
EM assets rebound from recent corrections MSCI equity index, USD [left]; EM bonds spreads,
bps [right]
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09450
500
550
600
650
700
750
800
850
400
450
500
550
600
650
700
750
Source: Morgan-Stanley and JPMorgan-Chase.
EMBIG spreads [right]
MSCI equity index [left]
Currencies
Jul-08 Oct-08 Jan-09 Apr-09 Jul-091.230
1.270
1.310
1.350
1.390
1.430
1.470
1.510
1.550
1.590
1.630 86
90
94
98
102
106
110
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar weakens vs yen… trading range around $1.40 against euro USD per Euro (inverse) [Left] and Yen per USD
[right]
Dollar slips vs EM currencies in seconed quarter
percentage change (USD per LCU) (%)
Rus Rbl
Hun frt
Mex pso
Cze crn
Tur lra
Brz rei
Ind rpe
Indo rph
US NEER
-30 -25 -20 -15 -10 -5 0 5 10 15
Source: Thomson/Datastream.
First quarter 2009Second quarter 2009
Stronger Local Currency
FOCUSDevelopments in real effective exchange
rates
Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-0990
100
110
120
130
Real effective exchange rates depreciate in most of the world’s largest economies
January 2008 = 100
Source: Thomson/Datastream, Haver, DECPG.
China
Japan
USA Euro Area
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-0960
70
80
90
100
110
120
Real effective appreciation for commodity exporters’ as commodity prices stage a comeback
January 2008 = 100
Australia
Canada
Brazil
South Africa
Source: Thomson/Datastream, Haver, DECPG.
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-0960
70
80
90
100
110
120
REERs bounce off lows of early 2009 in countries exporting capital goods and autos
BIS effective exchange rate, broad Indices ,January 2008 = 100
Source: Bank for International Settlements.
Czech Republic
Hungary
South Korea
The External Environment for Developing Countries
July 2009The World Bank
Development EconomicsProspects Group