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The External Environment for Developing Countries July 2009 The World Bank Development Economics Prospects Group
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China at the forefront of the global economic recovery industrial production, percent (month-on-month) Source: Thomson/Datastream, Haver, DECPG. World USA Germany
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Source: Loanware and Bondware. Bonds Syndicated lending Cross border bank flows to developing countries continue meagre billions USD, 3-month moving average
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Industrial countries
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Employment losses ease… with potential positive effects on spending retail volume growth (y/y) [L]; change in employment (3mma) [R] Source: U.S. Departments of Commerce and Labor. Retail sales [L] Change in employment [R]
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U.S. economic activity is stabilzing… but bank loan charge-offs surging ISM composite economic activity index [left]; Bank charge-offs (% total C&I loans) [right] Source: Institute for Supply Management; Federal Reserve Board. C&I charge-offs [right] ISM composite index [left]
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U.S. trade developments may offer boost for 2 nd quarter GDP export and import volumes, ch% saar Source: U.S. Department of Commerce. Export volumes Import volumes
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Japan’s trade and production take a sharp leg up over May/June export volumes and manufacturing output, ch% saar Source: Bank of Japan and Japan Cabinet Office. Production Export volume
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Labor markets deteriorate quickly while spending continues to falter unemployment rate (%) [left]; retail sales, ch% yr-on-yr [right] Source: Japan Cabinet Office. Retail sales [right] Unemployment rate % [left]
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Japan’s inflation drops well into negative territory Source: Bank of Japan. Toyko CPI and corporate goods prices, ch%, y/y Headline CPI Corporate goods prices (PPI)
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European labor markets continue to weaken, but sentiment up on lower CPI unemployment rate (%) [left]; EC consumer sentiment [right] Source: EUROSTAT and European Commission. Euro Area consumer sentiment [right] Unemployment rate % [left]
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German orders and production revive in April and May factory orders and industrial production ch% saar Domestic orders Industrial production Source: Bundesbank. Export orders
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Euro Area CPI in negative ground Source: Eurostat. HICP headline and core, ch% y/y and EURIBOR (%) EURIBOR Headline HICP HICP-core
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Industrial production
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Deep peak-to-trough declines in industrial production are now being reversed Source: Thomson/Datastream, DECPG.
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China at the forefront of the global economic recovery industrial production, percent (month-on-month) Source: Thomson/Datastream, Haver, DECPG. World USA Germany
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Global manufacturing looking up Source: JPMorgan-Chase
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International trade
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World export growth appears to be bottoming exports, ch% seasonally adjusted annual rates (saar) Source: World Bank data.
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Global imbalances ease moderately as U.S. deficit and China surplus narrow goods trade balance, U.S. $-bn, seasonally adjusted, annualized China United States Source: National Agencies through Thomson/Datastream.
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Eurozone exports begin to support more moderate declines in production IP and exports, ch% seasonally adjusted annual rates (saar) Source: Eurostat. Exports Industrial Production
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Oil prices
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Oil prices and OECD oil stocks $/bbl million bbl Source: IEA and DECPG Commodities Group.
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World Oil Production (mb/d) Source: IEA and DECPG Commodities Group. Non-OPEC Non-OPEC x FSU OPEC
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WTI Futures Prices - NYMEX Jul 13 $/bbl Monthly contract prices to Dec 2014* for select dates in 2009 Feb 18 Jun 11 Source: NYMEX.
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Non-oil commodity prices
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Food prices edged higher in June (2000=100) Source: DECPG Commodities Group.
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Metals prices ease following large gains in first-half 2009 Source: LME and DECPG Commodities Group. Copper Nickel Aluminium
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Freight rates fall on slowdown in bulk trade Source: Datastream and DECPG Commodities Group.
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International Finance
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Flows slowed in June; first-half volumes halved from a year earlier Source: DECPG Finance Team.
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Source: Loanware and Bondware. Bonds Syndicated lending Cross border bank flows remain well below the levels seen in previous years billions USD, 3-month moving average
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EM assets rebound from recent corrections MSCI equity index, USD [left]; EM bonds spreads, bps [right] Source: Morgan-Stanley and JPMorgan-Chase. EMBIG spreads [right] MSCI equity index [left]
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Currencies
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Source: Thomson/Datastrea m. yen/U SD USD/Euro (inverse) Dollar weakens vs yen… trading range around $1.40 against euro USD per Euro (inverse) [Left] and Yen per USD [right]
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Dollar slips vs EM currencies in seconed quarter percentage change (USD per LCU) (%) Source: Thomson/Datastrea m. First quarter 2009 Second quarter 2009 Stronger Local Currency
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Source: Department of Commerce. U.S. current balance improves sharply in first quarter to 2.9% of GDP billions U.S. dollars Income Services Non-oil BOT Oil balance Transfers Current account
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FOCUS Developments in real effective exchange rates
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Real effective exchange rates depreciate in most of the world’s largest economies January 2008 = 100 Source: Thomson/Datastream, Haver, DECPG. China Japan USA Euro Area
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Real effective appreciation for commodity exporters’ as commodity prices stage a comeback January 2008 = 100 Australia Canada Brazil South Africa Source: Thomson/Datastream, Haver, DECPG.
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REERs bounce off lows of early 2009 in countries exporting capital goods and autos BIS effective exchange rate, broad Indices,January 2008 = 100 Source: Bank for International Settlements. Czech Republic Hungary South Korea
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The External Environment for Developing Countries July 2009 The World Bank Development Economics Prospects Group
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NOT USED in STRMG Using formats for new charts
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Leading indicators point to bottom in U.S. and E.U., cont’d slowdown in Japan Composite Leading Indicators % ch, (y/y, sa) Source: OECD, July 2009. Euro Area United States Japan
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Diverse developing-country GDP outturns for first-quarter 2009 GDP ch% saar Source: Haver Analytics.
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Source: Department of Commerce and DECPG calculations. U.S. GDP revised to substantial 6.2% decline in fourth quarter 2008 growth of real GDP, and contributions to growth in percentage points Stocks Government Consumption Investment Net Exports
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EM equities outperform mature markets over 2009 to date Source: Morgan-Stanley through Thomson/Datastream return by period Emerging markets Mature markets * through March 13
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Sovereign credit risk has increased sharply across emerging markets Sovereign CDS spreads in basis points Source: Bloomberg and DECPG Finance Team. // 4,600 // 3,680
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Manufacturing output collapses across high-income OECD countries manufactures output, ch% (3m/3m saar) USA Eurozone -56.5% Japan Source: Thomson/Datastream, DECPG.
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Industrial output collapses in ECA as trade partners fall deeper into recession industrial production, ch% (3m/3m saar) Czech Republic Europe and Central Asia Hungary Turkey Source: Thomson/Datastream, DECPG.
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Net foreign purchases of U.S. assets turn to outflow as of the fourth quarter net foreign purchases USD billions Source: U.S. Treasury ‘TICS’ database.
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