The External Environment for Developing Countries September 2009 The World Bank Development Economics Prospects Group

Liquidity in global inter-bank markets have virtually returned to normal conditions G-7 meeting Pre-crisis USD average Source: Thomson/Datastrea m. Dollar Euro The acute phase of the financial crisis has passed LIBOR-OIS spreads, basis points

The decline in industrial production has turned around industrial production, ch% (saar) OECD Developing World Source: National Agencies through Thomson /Datastream.

Industrial countries

U.S. consumer spending will come to support GDP outturns for third quarter real PCE and retail sales growth (saar) [L]; change in employment (‘000, 3mma) [R] Source: U.S. Departments of Commerce and Labor. Real PCE [L] Change in employment [R] Retail volumes [L]

Sectoral developments have been upbeat ISM headline Mfgr and Svcs indices [L]; capital goods orders, ch% (saar) [R] Source: Institute for Supply Management, Department of Commerce. Capital goods orders [R] ISM Manufacturing ISM Services

U.S. trade developments should offer modest boost to GDP as well goods export and import volumes, ch% saar Source: U.S. Department of Commerce. Export volumes Import volumes

Japan’s orders, exports and production take a huge leg up over June and July core machinery orders, export volumes and mfgr output, ch% saar Source: Bank of Japan and Japan Cabinet Office. Production Core machinery orders Goods export volumes

Source: Bank of Japan and DECPG calculations. Japan’s exports receive a boost from improved demand in Asia and United States contributions to growth of Japanese export volumes (yr/yr)

Japanese consumer spending retrenches as labor markets deteriorate quickly unemployment rate (%) [L]; household spending and retail sales, ch% (y/y) [R] Source: Japan Cabinet Office. Retail sales [R] Unemployment rate % [L] Household expenditure [R]

Euro Area GDP outturns improved broadly in second quarter GDP growth Q and Q2-2009, ch% (q/q saar) Source: European Commission and Eurostat.

German and French exports breach into positive territory, underpinning production goods export volumes ch% (saar) Germany Source: Eurostat. France

Household spending remains weak as spillovers from trade await consumer spending volumes, ch% (yr–on-yr) Source: EUROSTAT. Italy France Germany

Industrial production

The pace of decline in industrial production has turned around industrial production, ch% (saar) OECD Developing World Source: National Agencies through Thomson /Datastream.

East Asia in the fore, with a general uptrend across all regions Developing Industrial production, percentage change (saar) Latin America Europe & Central Asia South Asia Middle-East & North Africa East Asia & Pacific Source: National Agencies through Thomson /Datastream. industrial production, ch% (saar)

Growth recovery fastest among countries that had steepest declines– levels depressed Source: World Bank, DEC Prospects Group Oil producing countries Other MIC's and HIC's (incl LAC Resource exporters, US, UK) Countries with large imbalances and/or affected via trade channels Capital goods exporters industrial production

International trade

Source: National Agencies through Haver Analytics. Imports [L] Exports [L] Balance of trade [R]

Source: Netherlands Central Plan Bureau (CPB).

Source: Department of Commerce. U.S. current balance improves further in second quarter to 2.8% of GDP billions U.S. dollars Income Services Non-oil BOT Oil balance Transfers Current account

Oil prices

Oil prices supported by improving fundamentals $/ bbl mb/d Oil price [L scale] OPEC-11 Production [R] Source: IEA and DECPG Commodities Group.

U.S. crude oil inventories decline but remain high M bbl Source: U.S. Department of Energy and DECPG Commodities Group. 5-year high-low ranges

WTI Futures Prices - NYMEX Sep 11 $/bbl Monthly contract prices to Dec 2014* for select dates in 2009 Feb 18 Jul 13 Jun 11 Source: NYMEX.

Non-oil commodity prices

Agriculture prices higher on sharp gains in sugar, rubber and fats & oils (2000=100) Source: DECPG Commodities Group.

Metals prices increase on supply constraints $/ton Lead Copper Nickel Source: LME and DECPG Commodities Group.

Gold prices rise on concerns about the dollar, inflation and the economy per toz Gold in USD Gold in euros Source: LME and DECPG Commodities Group.

International Finance

Flows slowed in August in the wake of a surge in July bond issuance Source: DECPG Finance Team. Gross capital flows to emerging markets $ billion Total H1TotalJan-Aug H1JunJulyAugYTD Total Bonds Banks Equity Lat. America Bonds E. Europe Bonds Asia Bonds Others

Source: JPMorgan-Chase. Sovereign spread EMBI Corporate spread CEMBI Emerging Market bond spreads continue to narrow basis points

Source: Bloomberg. Developed markets Emerging markets Global equities continue uptrend MSCI indexes, Jan-2008 = 100.

Currencies

Source: Thomson/Datastrea m. yen/U SD USD/Euro (inverse) Dollar depreciation accelerates over August and September USD per Euro (inverse) [Left] and Yen per USD [right]

Source: Thomson/Datastrea m. US LIBOR - EURIBOR Euromarket interest differentials move against the greenback difference: USD 6-month LIBOR and EURIBOR 6-months (basis points)

Emerging market currencies continue gains against U.S. dollar percentage change (USD per LCU) (%) Source: Thomson/Datastrea m. Second quarter 2009 Third quarter 2009 Stronger Local Currency

The External Environment for Developing Countries September 2009 The World Bank Development Economics Prospects Group