1. The External Environment for Developing Countries June 2010 The World Bank Development Economics Prospects Group

2. Overview

3. CDS spreads have risen by 60 bp or more in 7 European countries
Source: Bloomberg, World Bank.

4. Spreads have risen, but remain close to earlier levels
EMBI spreads, index January 1, 2010=100
Source: World Bank, JP Morgan.

5. Euro Area Crisis

6. CDS spreads for selected EMs Spreads on credit default swaps
STRMG brainstorm April 6, 2010
CDS spreads for selected EMs Spreads on credit default swaps
FIGURE 1.5
Theo’s new (Additional!) Industrial Production for Chapter 1 (This graph first calculates the 3-month moving averages for IP monthly data, then do m-o-m % change on an annualized basis). NOT SURE THAT THIS CHART WILL BE IN CHAPTER, BUT KEEP IN FOR NOW
Source: JP Morgan and World Bank data

7. Spreads on highly-indebted European bonds increasing again
10-year government bond spread over comparable German debt (basis points)
Sources: Bloomberg and DECPG staff calculation 7

8. Substantial uncertainty characterizes equity market developments
STRMG brainstorm April 6, 2010
Substantial uncertainty characterizes equity market developments
Dow Jones, DAX and CACI [Left], VIX and VSTOXX indices [Right]
FIGURE 1.5
Theo’s new (Additional!) Industrial Production for Chapter 1 (This graph first calculates the 3-month moving averages for IP monthly data, then do m-o-m % change on an annualized basis). NOT SURE THAT THIS CHART WILL BE IN CHAPTER, BUT KEEP IN FOR NOW
Source: Thomson/Datastream.

9. OECD developments

10. Consumer confidence and retail turnover fall in affected countries
Consumer confidence and retail turnover fall in affected countries** retail sales, ch% (3mma , y/y) [left]; consumer sentiment index, dispersion [right]
Source: National Agencies. ** Greece, Portugal and Spain.

11. Although exports are recovering, EU growth remains weak

12. German export orders, export volumes and production reviving in spring factory orders from abroad, export volumes, industrial production, ch% saar
Source: Eurostat

13. U.S. indicators point to favorable growth outturns for the second quarter capital goods orders, retail sales and export volumes, ch% (3m/3m, saar)
Source: U.S. Department of Commerce

14. Japanese industrial production catching up
Source: U.S. Department of Commerce

15. Developing country first quarter growth strong, save for ECA region
Source: Haver Analytics and World Bank data. 15

16. Country Focus: Hungary

17. Fiscal and External Balances – 2010 percent of GDP
Source: European Commission, BofA/ML

18. Composition of debt flows – Hungary (billions of U.S. dollars)
Source: Economist Intelligence Unit

19. External debt in Hungary percent of GDP
Source: Moody’s

20. Industrial Production

21. Euro Area output remains robust in April on demand for intermediate goods
Source: DECPG

22. ZEW economic sentiment deteriorated for all markets in June in the aftermath of the sovereign debt crisis
Source: ZEW Survey.

23. Momentum in China is easing gradually, but remains robust ,while growth in the U.S. stepped up in May
Source: DECPG

24. International Trade

25. Exports from some developing regions have returned to pre-crisis levels

26. Chinese capital goods exports to developing countries

27. Number of Trade Measures Implemented Worldwide and by the G20
Source: Global Trade Alert

28. Commodity Prices

29. Crude oil prices rebound
$/bbl
WTI
Brent
Dubai
Source: Datastream and DECPG.

30. U.S. oil demand surges (y/y) (3 month moving average)
kb/d
Source: U.S. EIA and DECPG.

31. Non-OPEC oil production rising
mb/d
Non-OPEC
Non-OPEC x FSU
OPEC
Source: IEA and DECPG.

32. Raw materials and beverage prices
remain strong in June
(2000=100)
Source: DECPG.

33. Metals prices stabilize
$/ton
‘000 tons
Aluminum price
LME stocks
Source: Datastream and DECPG.

34. Global steel production
(000 tons)
Source: IISI.

35. International Finance

36. Capital flows were sluggish in May
Source: DECPG.

37. European banks have big exposure to Europe’s troubled economies
Total claims by euro-zone banks at the end of 2009 ($ billion)
Sources: The Bank for International Settlements 37

38. EM assets rebounded from May sell-off
MSCI EM index in USD [L]; EMBIG bond index [R]
EM bond index [R]
EM equity index [L]
Sources: Bloomberg, JPMorgan, and DECPG staff calculation 38

39. Currencies and inflation

40. Dollar gains vs euro and yen continues but China RMB led to short-rally in other units USD per Euro (inverse) [Left] and Yen per USD [right]
USD/Euro (inverse)
yen/USD
Source: Thomson/Datastream.

41. China RMB rose on an effective basis recently
Currency indexes: USD per RMB; Dollar and RMB effective.
USD per RMB index
China effective
U.S. effective
Source: World Bank data.

42. Inflation among developing countries (save SAR) converging toward 5% pace headline consumer price index, ch% (yr-on-yr)
Source: National Agencies.

43. The External Environment for Developing Countries June 2010 The World Bank Development Economics Prospects Group