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The External Environment for Developing Countries
November 2009The World Bank
Development EconomicsProspects Group
Global IP gaining momentum in the third quarter of 2009
growth %, 3 month saar
2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3-30
-25
-20
-15
-10
-5
0
5
10
15 High-income Developing excluding China Global
Source: World Bank, DEC Prospects Group.
2006 2007 2008 1H-09* Jul-Oct-09*0
1
2
3
4
5
Corporate bonds
Sovereign bonds
Banking
Equities
% share of GDP, 2009*=annualized
Gross capital inflows to developing countries surge in second half of 2009
Sources: Dealogic and World Bank
Industrial countries
-6.4
-0.7
3.5
-10
-8
-6
-4
-2
0
2
4
6
Q1-2009 Q2-2009 Q3-2009 flash
Source: Department of Commerce.
U.S. economy pulls out of recession with 3.5% growth in Q3-2009 (saar)
growth of real GDP, and contributions to growth in percentage points
Stocks InvestmentGovernmentConsumptionNet exports
A favorable employment turn in Octoberwith retail sales maintaining momentum retail sales growth (saar) [L]; change in employment
(‘000, 3mma) [R]
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09-24
-20
-16
-12
-8
-4
0
4
8
12
-800
-700
-600
-500
-400
-300
-200
-100
0
100
Source: U.S. Departments of Commerce and Labor.
Change in employment [R]
Retail sales [L]
Manufacturing has led recoverybut services emerging to growth
Headline PMI indices for manufacturing and services sector [50=+growth]
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-0930
35
40
45
50
55
Source: Institute for Supply Management.
PMI manufacturing
PMI Services
-12.2
2.74.8
-16
-12
-8
-4
0
4
8
Q1-2009 Q2-2009 Q3-2009 Prelim
Source: Japan Cabinet Office.
Japan’s GDP growth beats expectations for the third quarter at 4.8% (saar)
growth of real GDP, and contributions to growth in percentage points
Net ExportsStocks
GovernmentConsumption
Investment
Japan’s export- and production growth waning into the third quarter
export volumes and manufacturing production, ch% saar
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-80
-60
-40
-20
0
20
40
60
80
Source: Japan Cabinet Office.
Production
Goods export volumes
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009100
125
150
175
200
Source: Japan Cabinet Office.
New Japanese government inherits debt equivalent to 190% of GDP
general government balance as a share of GDP in percent
Euro Area emerges from recessionon growth in the ‘Big-3” economies
GDP growth, q/q percentage change saar
-16
-12
-8
-4
0
4
Euro Area France Germany Italy U.K.
2009-Q1 2009-Q2 2009-Q3
Source: Eurostat.
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-60
-45
-30
-15
0
15
30
Euro Area production up in September on exports and stock rebuilding
manufacturing output, German and French export volumes, ch% (saar)
Germany exports
Source: Eurostat.
Euro Area IP
France exports
Houshold spending still a damper on growth
retail volume growth, Euro Area, Germany and France, (ch%, 3mma, y/y)
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-5
-4
-3
-2
-1
0
1
2
Source: EUROSTAT.
France retail volumes
Germany retail volumes
Euro Area retail volumes
Industrial production
Global IP picked-up sharply in the third quarter of 2009
growth %, 3 month saar
2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3-30
-25
-20
-15
-10
-5
0
5
10
15 High-income Developing excluding China Global
Source: World Bank, DEC Prospects Group.
High-income countries emerged to growth in output during 2009-Q3
growth %, 3 month saar
2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3-60.0
-40.0
-20.0
0.0
20.0
40.0 United States Euro Area Japan
Source: World Bank, DEC Prospects Group.
Capacity utilization- outside of Europe trending back toward pre-crisis levels
Argentina
Philippines
Mexico
United States
Brazil
Turkey
Thailand
Euro Area
0 10 20 30 40 50 60 70 80 90
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009
Source: Thomson Datastream and World Bank.
International trade
East Asian imports step up as Chinese import momentum begins to slow
imports, 3mma saar % change
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-80
-60
-40
-20
0
20
40
60
80
100Chinese imports
Other East Asian imports
Source: Haver Analytics.
Import recovery in China grounded in capital-and consumer goods
imports, year-over-year % change
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09-60
-40
-20
0
20
40
60Consumer goods
Machinery and other equipment
Source: Haver Analytics.
German and Japanese export volumes surge on rising external demand
developing import volumes, German and Japanese export volumes, 3mma saar % change
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09-80
-60
-40
-20
0
20
40
60
Developing country imports
German exports
Japanese exports
Source: World Bank, DEC Prospects Group.
Oil prices
Oil prices break out of recent range… but market still well supplied
23
24
25
26
27
28
29
30
31
32
0
20
40
60
80
100
120
140
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
$/bbl mb/d
Oil price [L scale]
OPEC Production [R]
Source: IEA and DECPG Commodities Group.
OECD total oil stocksdays of forward consumption
1Q91
2Q91
3Q91
4Q91
1Q92
2Q92
3Q92
4Q92
1Q93
2Q93
3Q93
4Q93
1Q94
2Q94
3Q94
4Q94
1Q95
2Q95
3Q95
4Q95
1Q96
2Q96
3Q96
4Q96
1Q97
2Q97
3Q97
4Q97
1Q98
2Q98
3Q98
4Q98
1Q99
2Q99
3Q99
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
1Q10
49
50
51
52
53
54
55
56
57
58
59
60
61
62
Source: IEA and DECPG Commodities Group.
WTI Futures Prices - NYMEX
30
40
50
60
70
80
90
100
Jan-09 Jan-11 Jan-13 Jan-15 Jan-17
Nov 11
$/bbl
Monthly contract prices to Dec 2017* for select dates in 2009
Feb 18
Jul 13
*Monthly prices interpolated for 2015-17
Non-oil commodity prices
Grains prices rise on late U.S harvest
Jan-04Jan-04Jan-04Jan-04Jan-04Feb-04Feb-04Feb-04Feb-04Feb-04Mar-04Mar-04Mar-04Mar-04Mar-04Mar-04Apr-04Apr-04Apr-04Apr-04Apr-04May-04May-04May-04May-04May-04May-04Jun-04Jun-04Jun-04Jun-04Jun-04Jul-04Jul-04Jul-04Jul-04Jul-04Jul-04Aug-04Aug-04Aug-04Aug-04Aug-04Sep-04Sep-04Sep-04Sep-04Sep-04Sep-04Oct-04Oct-04Oct-04Oct-04Oct-04Nov-04Nov-04Nov-04Nov-04Nov-04Dec-04Dec-04Dec-04Dec-04Dec-04Dec-04Jan-05Jan-05Jan-05Jan-05Jan-05Feb-05Feb-05Feb-05Feb-05Feb-05Mar-05Mar-05Mar-05Mar-05Mar-05Mar-05Apr-05Apr-05Apr-05Apr-05Apr-05May-05May-05May-05May-05May-05May-05Jun-05Jun-05Jun-05Jun-05Jun-05Jul-05Jul-05Jul-05Jul-05Jul-05Jul-05Aug-05Aug-05Aug-05Aug-05Aug-05Sep-05Sep-05Sep-05Sep-05Sep-05Sep-05Oct-05Oct-05Oct-05Oct-05Oct-05Nov-05Nov-05Nov-05Nov-05Nov-05Nov-05Dec-05Dec-05Dec-05Dec-05Dec-05Jan-06Jan-06Jan-06Jan-06Jan-06Jan-06Feb-06Feb-06Feb-06Feb-06Feb-06Mar-06Mar-06Mar-06Mar-06Mar-06Apr-06Apr-06Apr-06Apr-06Apr-06May-06May-06May-06May-06May-06May-06Jun-06Jun-06Jun-06Jun-06Jun-06Jun-06Jul-06Jul-06Jul-06Jul-06Jul-06Aug-06Aug-06Aug-06Aug-06Aug-06Aug-06Sep-06Sep-06Sep-06Sep-06Sep-06Oct-06Oct-06Oct-06Oct-06Oct-06Nov-06Nov-06Nov-06Nov-06Nov-06Nov-06Dec-06Dec-06Dec-06Dec-06Dec-06Jan-07Jan-07Jan-07Jan-07Jan-07Jan-07Feb-07Feb-07Feb-07Feb-07Feb-07Mar-07Mar-07Mar-07Mar-07Mar-07Apr-07Apr-07Apr-07Apr-07Apr-07Apr-07May-07May-07May-07May-07May-07Jun-07Jun-07Jun-07Jun-07Jun-07Jun-07Jul-07Jul-07Jul-07Jul-07Jul-07Aug-07Aug-07Aug-07Aug-07Aug-07Aug-07Sep-07Sep-07Sep-07Sep-07Sep-07Oct-07Oct-07Oct-07Oct-07Oct-07Oct-07Nov-07Nov-07Nov-07Nov-07Nov-07Dec-07Dec-07Dec-07Dec-07Dec-07Jan-08Jan-08Jan-08Jan-08Jan-08Jan-08Feb-08Feb-08Feb-08Feb-08Feb-08Mar-08Mar-08Mar-08Mar-08Mar-08Mar-08Apr-08Apr-08Apr-08Apr-08Apr-08May-08May-08May-08May-08May-08May-08Jun-08Jun-08Jun-08Jun-08Jun-08Jul-08Jul-08Jul-08Jul-08Jul-08Jul-08Aug-08Aug-08Aug-08Aug-08Aug-08Sep-08Sep-08Sep-08Sep-08Sep-08Oct-08Oct-08Oct-08Oct-08Oct-08Oct-08Nov-08Nov-08Nov-08Nov-08Nov-08Dec-08Dec-08Dec-08Dec-08Dec-08Dec-08Jan-09Jan-09Jan-09Jan-09Jan-09Feb-09Feb-09Feb-09Feb-09Feb-09Mar-09Mar-09Mar-09Mar-09Mar-09Mar-09Apr-09Apr-09Apr-09Apr-09Apr-09May-09May-09May-09May-09May-09May-09Jun-09Jun-09Jun-09Jun-09Jun-09Jul-09Jul-09Jul-09Jul-09Jul-09Jul-09Aug-09Aug-09Aug-09Aug-09Aug-09Sep-09Sep-09Sep-09Sep-09Sep-09Sep-09Oct-09Oct-09Oct-09Oct-09Oct-09Nov-09Nov-09200
400
600
800
1,000
1,200
1,400
1,600
0
100
200
300
400
500
600
700
800
c/bushel
Soybeans [left scale]
Corn [right scale]
Wheat [left scale]
Source: Datastream and DECPG Commodities Group.
Metals prices remain rangebound
Jan-04Jan-04Jan-04Jan-04Jan-04Jan-04Feb-04Feb-04Feb-04Feb-04Feb-04Mar-04Mar-04Mar-04Mar-04Mar-04Apr-04Apr-04Apr-04Apr-04Apr-04Apr-04May-04May-04May-04May-04May-04Jun-04Jun-04Jun-04Jun-04Jun-04Jun-04Jul-04Jul-04Jul-04Jul-04Jul-04Aug-04Aug-04Aug-04Aug-04Aug-04Aug-04Sep-04Sep-04Sep-04Sep-04Sep-04Oct-04Oct-04Oct-04Oct-04Oct-04Nov-04Nov-04Nov-04Nov-04Nov-04Nov-04Dec-04Dec-04Dec-04Dec-04Dec-04Dec-04Jan-05Jan-05Jan-05Jan-05Jan-05Feb-05Feb-05Feb-05Feb-05Feb-05Mar-05Mar-05Mar-05Mar-05Mar-05Mar-05Apr-05Apr-05Apr-05Apr-05Apr-05May-05May-05May-05May-05May-05Jun-05Jun-05Jun-05Jun-05Jun-05Jun-05Jul-05Jul-05Jul-05Jul-05Jul-05Aug-05Aug-05Aug-05Aug-05Aug-05Aug-05Sep-05Sep-05Sep-05Sep-05Sep-05Oct-05Oct-05Oct-05Oct-05Oct-05Oct-05Nov-05Nov-05Nov-05Nov-05Nov-05Dec-05Dec-05Dec-05Dec-05Dec-05Dec-05Jan-06Jan-06Jan-06Jan-06Jan-06Feb-06Feb-06Feb-06Feb-06Feb-06Mar-06Mar-06Mar-06Mar-06Mar-06Mar-06Apr-06Apr-06Apr-06Apr-06Apr-06May-06May-06May-06May-06May-06May-06Jun-06Jun-06Jun-06Jun-06Jun-06Jul-06Jul-06Jul-06Jul-06Jul-06Aug-06Aug-06Aug-06Aug-06Aug-06Aug-06Sep-06Sep-06Sep-06Sep-06Sep-06Oct-06Oct-06Oct-06Oct-06Oct-06Oct-06Nov-06Nov-06Nov-06Nov-06Nov-06Dec-06Dec-06Dec-06Dec-06Dec-06Dec-06Jan-07Jan-07Jan-07Jan-07Jan-07Feb-07Feb-07Feb-07Feb-07Feb-07Mar-07Mar-07Mar-07Mar-07Mar-07Mar-07Apr-07Apr-07Apr-07Apr-07Apr-07May-07May-07May-07May-07May-07May-07Jun-07Jun-07Jun-07Jun-07Jun-07Jul-07Jul-07Jul-07Jul-07Jul-07Jul-07Aug-07Aug-07Aug-07Aug-07Aug-07Sep-07Sep-07Sep-07Sep-07Sep-07Oct-07Oct-07Oct-07Oct-07Oct-07Oct-07Nov-07Nov-07Nov-07Nov-07Nov-07Nov-07Dec-07Dec-07Dec-07Dec-07Dec-07Jan-08Jan-08Jan-08Jan-08Jan-08Jan-08Feb-08Feb-08Feb-08Feb-08Feb-08Mar-08Mar-08Mar-08Mar-08Mar-08Apr-08Apr-08Apr-08Apr-08Apr-08Apr-08May-08May-08May-08May-08May-08Jun-08Jun-08Jun-08Jun-08Jun-08Jul-08Jul-08Jul-08Jul-08Jul-08Jul-08Aug-08Aug-08Aug-08Aug-08Aug-08Sep-08Sep-08Sep-08Sep-08Sep-08Sep-08Oct-08Oct-08Oct-08Oct-08Oct-08Oct-08Nov-08Nov-08Nov-08Nov-08Nov-08Dec-08Dec-08Dec-08Dec-08Dec-08Jan-09Jan-09Jan-09Jan-09Jan-09Jan-09Feb-09Feb-09Feb-09Feb-09Feb-09Mar-09Mar-09Mar-09Mar-09Mar-09Apr-09Apr-09Apr-09Apr-09Apr-09Apr-09May-09May-09May-09May-09May-09Jun-09Jun-09Jun-09Jun-09Jun-09Jun-09Jul-09Jul-09Jul-09Jul-09Jul-09Aug-09Aug-09Aug-09Aug-09Aug-09Aug-09Sep-09Sep-09Sep-09Sep-09Sep-09Oct-09Oct-09Oct-09Oct-09Oct-09Oct-09Nov-09Nov-090
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0
10,000
20,000
30,000
40,000
50,000
60,000
$/ton
Copper
Zinc
Nickel
$/ton
Source: LME and DECPG Commodities Group.
Gold prices surge above $1,100/toz
Jan-04Jan-04Jan-04Jan-04Jan-04Feb-04Feb-04Feb-04Feb-04Feb-04Mar-04Mar-04Mar-04Mar-04Mar-04Mar-04Apr-04Apr-04Apr-04Apr-04Apr-04May-04May-04May-04May-04May-04May-04Jun-04Jun-04Jun-04Jun-04Jun-04Jul-04Jul-04Jul-04Jul-04Jul-04Jul-04Aug-04Aug-04Aug-04Aug-04Aug-04Sep-04Sep-04Sep-04Sep-04Sep-04Sep-04Oct-04Oct-04Oct-04Oct-04Oct-04Nov-04Nov-04Nov-04Nov-04Nov-04Dec-04Dec-04Dec-04Dec-04Dec-04Dec-04Jan-05Jan-05Jan-05Jan-05Jan-05Feb-05Feb-05Feb-05Feb-05Feb-05Mar-05Mar-05Mar-05Mar-05Mar-05Mar-05Apr-05Apr-05Apr-05Apr-05Apr-05May-05May-05May-05May-05May-05May-05Jun-05Jun-05Jun-05Jun-05Jun-05Jul-05Jul-05Jul-05Jul-05Jul-05Jul-05Aug-05Aug-05Aug-05Aug-05Aug-05Sep-05Sep-05Sep-05Sep-05Sep-05Sep-05Oct-05Oct-05Oct-05Oct-05Oct-05Nov-05Nov-05Nov-05Nov-05Nov-05Nov-05Dec-05Dec-05Dec-05Dec-05Dec-05Jan-06Jan-06Jan-06Jan-06Jan-06Jan-06Feb-06Feb-06Feb-06Feb-06Feb-06Mar-06Mar-06Mar-06Mar-06Mar-06Apr-06Apr-06Apr-06Apr-06Apr-06May-06May-06May-06May-06May-06May-06Jun-06Jun-06Jun-06Jun-06Jun-06Jun-06Jul-06Jul-06Jul-06Jul-06Jul-06Aug-06Aug-06Aug-06Aug-06Aug-06Aug-06Sep-06Sep-06Sep-06Sep-06Sep-06Oct-06Oct-06Oct-06Oct-06Oct-06Nov-06Nov-06Nov-06Nov-06Nov-06Nov-06Dec-06Dec-06Dec-06Dec-06Dec-06Jan-07Jan-07Jan-07Jan-07Jan-07Jan-07Feb-07Feb-07Feb-07Feb-07Feb-07Mar-07Mar-07Mar-07Mar-07Mar-07Apr-07Apr-07Apr-07Apr-07Apr-07Apr-07May-07May-07May-07May-07May-07Jun-07Jun-07Jun-07Jun-07Jun-07Jun-07Jul-07Jul-07Jul-07Jul-07Jul-07Aug-07Aug-07Aug-07Aug-07Aug-07Aug-07Sep-07Sep-07Sep-07Sep-07Sep-07Oct-07Oct-07Oct-07Oct-07Oct-07Oct-07Nov-07Nov-07Nov-07Nov-07Nov-07Dec-07Dec-07Dec-07Dec-07Dec-07Jan-08Jan-08Jan-08Jan-08Jan-08Jan-08Feb-08Feb-08Feb-08Feb-08Feb-08Mar-08Mar-08Mar-08Mar-08Mar-08Mar-08Apr-08Apr-08Apr-08Apr-08Apr-08May-08May-08May-08May-08May-08May-08Jun-08Jun-08Jun-08Jun-08Jun-08Jul-08Jul-08Jul-08Jul-08Jul-08Jul-08Aug-08Aug-08Aug-08Aug-08Aug-08Sep-08Sep-08Sep-08Sep-08Sep-08Oct-08Oct-08Oct-08Oct-08Oct-08Oct-08Nov-08Nov-08Nov-08Nov-08Nov-08Dec-08Dec-08Dec-08Dec-08Dec-08Dec-08Jan-09Jan-09Jan-09Jan-09Jan-09Feb-09Feb-09Feb-09Feb-09Feb-09Mar-09Mar-09Mar-09Mar-09Mar-09Mar-09Apr-09Apr-09Apr-09Apr-09Apr-09May-09May-09May-09May-09May-09May-09Jun-09Jun-09Jun-09Jun-09Jun-09Jul-09Jul-09Jul-09Jul-09Jul-09Jul-09Aug-09Aug-09Aug-09Aug-09Aug-09Sep-09Sep-09Sep-09Sep-09Sep-09Sep-09Oct-09Oct-09Oct-09Oct-09Oct-09Nov-09Nov-09200
300
400
500
600
700
800
900
1,000
1,100
1,200
per toz
Gold in US$
Gold in euros
Source: LME and DECPG Commodities Group.
International Finance
Flows to emerging markets surge to $50 billion in October… a new record
Source: DECPG Finance Team.
Gross capital flows to developing countries
$ billion 2007
Total H1 Q3 Total H1 Q3 Sep Oct
Total 652 258 82 390 109 94 41 51
Bonds 146 53 9 65 35 34 12 26
Banks 312 151 63 257 40 27 14 6
Equity 194 54 10 68 33 33 15 20
Lat. America 156 61 18 90 36 34 19 30
Bonds 45 17 1 20 15 19 11 17
E. Europe 247 99 35 157 22 20 3 8
Bonds 64 27 7 35 13 11 1 5
Asia 188 69 18 98 44 32 15 11
Bonds 23 7 0 7 6 3 1 4
Others 61 28 11 45 7 8 4 2
2008 2009
1-Jan-07 1-Jun-07 1-Nov-07 1-Apr-08 1-Sep-08 1-Feb-09 1-Jul-090
5
10
15
20
25
US Dol-lar-LI-BOR
EURO-LIBOR
Indian Rupee
Turkey
Low interest rates in high-income countries contribute to inflows to emerging markets
Three-month interbank interest rates (%)
Sources: Thomson Datastream and World Bank.
2002 2003 2004 2005 2006 2007 2008 2009-30
-20
-10
0
10
20
30
40
Deteriorating credit quality for EM sovereigns net rating: number of upgrades minus
downgrades*
Source: Bloomberg and DECPG staff calculations.
*Includes rating actions from Moody’s, S&P, and Fitch.
Currencies
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
1.590
1.630 86
90
94
98
102
106
110
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar’s fall from Spring peaks now 20% vs Euro…10% against yen
USD per Euro (inverse) [Left] and Yen per USD [right]
1990M011990M021990M031990M041990M051990M061990M071990M081990M091990M101990M111990M121991M011991M021991M031991M041991M051991M061991M071991M081991M091991M101991M111991M121992M011992M021992M031992M041992M051992M061992M071992M081992M091992M101992M111992M121993M011993M021993M031993M041993M051993M061993M071993M081993M091993M101993M111993M121994M011994M021994M031994M041994M051994M061994M071994M081994M091994M101994M111994M121995M011995M021995M031995M041995M051995M061995M071995M081995M091995M101995M111995M121996M011996M021996M031996M041996M051996M061996M071996M081996M091996M101996M111996M121997M011997M021997M031997M041997M051997M061997M071997M081997M091997M101997M111997M121998M011998M021998M031998M041998M051998M061998M071998M081998M091998M101998M111998M121999M011999M021999M031999M041999M051999M061999M071999M081999M091999M101999M111999M122000M012000M022000M032000M042000M052000M062000M072000M082000M092000M102000M112000M122001M012001M022001M032001M042001M052001M062001M072001M082001M092001M102001M112001M122002M012002M022002M032002M042002M052002M062002M072002M082002M092002M102002M112002M122003M012003M022003M032003M042003M052003M062003M072003M082003M092003M102003M112003M122004M012004M022004M032004M042004M052004M062004M072004M082004M092004M102004M112004M122005M012005M022005M032005M042005M052005M062005M072005M082005M092005M102005M112005M122006M012006M022006M032006M042006M052006M062006M072006M082006M092006M102006M112006M122007M012007M022007M032007M042007M052007M062007M072007M082007M092007M102007M112007M122008M012008M022008M032008M042008M052008M062008M072008M082008M092008M102008M112008M122009M012009M022009M032009M042009M052009M062009M072009M082009M092009M1075
100
125
150
175
200
Source: JPMorgan-Chase.
Nominal effective rate [NEER]
Dollar fall is half that of 2002-07… but decline compressed into 6 months
Indices, Jan 1990=100.
Real effective rate [REER]
25% decline
12% decline