The External Environment for Developing Countries February 2010 The World Bank Development Economics Prospects Group

European growth outturns disappoint in fourth quarter Source: National Agencies. growth of real GDP, ch% saar

Equity markets and the euro pressured by Greek sovereign debt fragility MSCI-EM$ index Source: Morgan-Stanley and Thomson/Datastream. DAX, Dow Jones Industrials and MSCI-EM indices, Sep-1 09=100. DAX Dow Jones

Industrial countries

U.S. GDP growth jumps 5.7% in Q4-09 on stocks, investment and exports 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] 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 Source: U.S. Department of Commerce.

Japan’s GDP regains dynamic in Q4-09 on turn in capex to positive growth Source: Japan Cabinet Office, EPA. growth of real GDP, and contributions to growth in percentage points

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) Source: Japan- METI.

Euro-Area growth held to 0.3% in Q4-09 on flat outturns for Germany 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] Source: Eurostat. retail sales [R] unemployment rate [L]

German factory orders hit hard leading to weaker output growth export orders, manufacturing production, ch% (saar) Source: Bundesbank.

Industrial production

Eurozone lost growth momentum in the fourth quarter on weak domestic demand industrial production (percent change, saar) Source: World Bank calculations based on Thomson Datastream data.

BICS production momentum supported by strong domestic and external demand 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 Index 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 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 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 Source: EuroStat.

Oil prices

Crude oil prices relatively flat in recent months $/bbl WTI Dubai Brent Source: Thomson/Datastream and DEC Prospects Group.

OECD total oil stocks days of forward consumption Source: IEA and DECPG.

OPEC spare capacity (mb/d) Source: IEA and DECPG.

Non-oil commodity prices

Agriculture prices buoyed by strong gains in rubber and sugar (Index 2000=100) Source: DECPG.

Metals prices fall sharply in early 2010 $/ton Lead Zinc Aluminum Source: LME and DECPG.

Metals stocks continue to increase as markets remain in surplus $/ton‘000 tons Copper price LME stocks Source: LME and DECPG.

International Finance

Bonds underpin January flows Source: DECPG.

Sovereign debt default risk has soared notably for several EU countries Source: Bloomberg and DECPG staff calculations.

*through February 15 EM equities underperform mature markets over 2010 to date Local currency returns by period

Currencies

Source: Thomson/Datastrea m. yen/U SD 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]

Stagnant European growth, equity declines add more pressure to euro downturn MSCI-EM$ index Source: Morgan-Stanley and Thomson/Datastream. DAX, Dow Jones Industrials and MSCI-EM indices, Sep-1 09=100. DAX Dow Jones

Euro cross rates vary by trade partner broadly based on economic conditions Source: Thomson/Datastream and World Bank. Negative sign implies decline in local currency vs euro

The External Environment for Developing Countries February 2010 The World Bank Development Economics Prospects Group