The External Environment for Developing Countries May 2008 The World Bank Development Economics Prospects Group

First quarter GDP growth surprised to the upside across the OECD... real GDP growth, percent saar

...but step-up in inflation may pressure growth globally in coming quarters U.S. CPI, Euro Area HICP, median developing- country CPI, ch% y/y Source: National Sources through Thomson/Datastream. Euro Area Developing countries United States

Industrial countries

Source: Department of Commerce and DECPG calculations. U.S. GDP for Q surprises to the upside at 0.9% (saar) growth of real GDP, and contributions to growth in percentage points Net exports Change in Stocks Government Consumption Fixed Investment

Households reticent to spend as wage growth slows... confidence ebbs Personal income and consumption expenditures, ch% saar Source: U.S. Department of Commerce. Personal consumption expenditure Personal income

U.S. inflation underpinned by food, fuels, and imports under a sliding dollar Headline CPI, PPI- and Import price indexes, ch% 3mma y/y Source: U.S. Department of Commerce. PPI Import price CPI

Source: Japan Cabinet Office and DECPG calculations. Japan Q1-GDP surprises to the upside (3.3%) on exports and consumption growth of real GDP, and contributions to growth in percentage points Net exports Fixed Investment Consumption Government Change in Stocks

Japan’s exports and production take a leg down in April goods export volumes [R], IP manufacturing [L], ch% saar Source: Cabinet Office-- Thomson/Datastream. Exports [R] Production [L]

Japan’s manufacturers and households turn more pessimistic Tankan business conditions [left]; Tokyo consumer confidence [right] Source: Bank of Japan and Cabinet Office. Tankan (left) Consumer confidence (right )

Source: Eurostat and DECPG calculations. Euro Area Q1-GDP: powered by investment and growth in Germany growth of real GDP, and contributions to growth in percentage points Net exports Change in Stocks Fixed Investment Government Consumption

European consumer spending continues in the doldrums through April retail sales volumes, ch% 3mma year over year Source: Eurostat through Thomson/Datastream.

HICP near record highs pushed by energy costs HICP [left]; HICP energy [right], ch% year on year HICP [L] HICP Energy [R] Source: Eurostat through Thomson/Datastream.

Industrial production

US industrial production resilient in the first quarter... but growth is softening industrial production Source: World Bank, DECPG. Y/Y Q/Q, saar Forecast Old Forecast

Weaker growth in Euro Area hits countries that export to the Zone industrial production, year-on-year percent change Source: Thomson/Datastream. Hungary Turkey Czech Republic Forecast

Downturn in Chinese industrial production as export growth eases real IP (q/q saar) and exports (3m/3m, oya ) Source: Thomson/Datastream. Production Exports

High-tech Markets

International trade

Indo-Sino trade continues on rapid growth course goods exports: millions U.S. dollars Source: U.N. COMTRADE Database through WITS. China exports to India India exports to China

Chinese yuan continues to appreciate against the U.S. dollar in real terms real bilateral exchange rates, ch% year-on- year Source: Thomson/Datastream, DECPG calculations. Real yuan / Euro XR Real yuan / USD XR

Euro Area exports make some headway despite strength of the euro dollar per euro [L]; Euro Zone export volume [R], ch% saar Source: Eurostat and Thomson/Datastream. Dollar per Euro [L] Euro Area Exports [R]

Oil prices

Oil prices soar on expectations of tight markets $/ bbl million bbl WB Oil price [L scale] OECD stocks [R] Source: IEA and DECPG Commodities Group.

Distillate prices rise on ultra-low sulfur diesel constraints $/bbl Crude (WTI) Gasoline Distillate Price differentials relative to crude Source: Datastream and DECPG Commodities Group.

WTI Futures Prices - NYMEX May $/bbl Monthly contract prices to Dec 2013* on select dates in * No monthly futures prices for 2013 for contracts trading before Nov 07 Jan Aug Dec Mar Apr

Non-oil commodity prices

Rice prices surge on policy decisions resulting from fear of shortages c/bushel$/ton Wheat Rice Source: Datastream and DECPG Commodities Group.

Copper prices remain firm on low stocks and supply problems $/ton‘000 tons Copper price LME stocks Source: LME and DECPG Commodities Group.

Freight rates rise on strong demand for bulk materials and port congestion Baltic dry freight index Source: Datastream and DECPG Commodities Group.

International Finance

Bank lending falls sharply in April Source: DECPG Finance Team.

Trading in EM debt continues decline in 2008 Emerging Market debt trading volume in billions U.S. dollars Local market instruments Source: EMTA and and DECPG calculations. Eurobonds

Emerging market equities: strong in May EM and high-income equity markets, returns by period (%) Source: Bloomberg. High-income markets Emerging markets

Currencies

Source: Thomson/Datastream. yen/USD   USD/Euro (inverse) Dollar moves higher on expectations Fed rate cuts finished for near term USD per Euro (inverse) [Left] and Yen per USD [right]

A move up in USD LIBOR lends some support to the greenback Source: Datastream and DECPG calculations. LIBOR-6 months and EURIBOR 6-months, percent USD LIBOR EURIBOR

Mixed developments for USD versus range of currencies over 2008 to date change early-June 2008 vs. December 2007, percent Source: Thomson/Datastream. Appreciation of Local Currency 

The External Environment for Developing Countries May 2008 The World Bank Development Economics Prospects Group