1. Hans Timmer World Bank March 1, 2011 Transformational Changes in the Global Economy Trade, finance and commodities after the crisis

2. Trade, Finance, and Commodities Trade dynamics illustrate that developing countries have become the drive of global growth

3. Financial markets still show the reverberations of the financial crisis Trade, Finance, and Commodities

4. Trade dynamics illustrate that developing countries have become the drive of global growth Financial markets still show the reverberations of the financial crisis Food price increases reflect major changes in commodity markets Trade, Finance, and Commodities

5. Source: The World Bank

6. Japan’s export growth was largely driven by Asian import demand during crisis Source: World Bank, DEC Prospects Group Contribution to annualized q/q growth (%)

7. Source: World Bank, DEC Prospects Group Developing countries’ imports stronger than their exports

8. Share of developing countries in global trade more than doubled during last 20 years Source: Comtrade data via WITS

9. Source: The World Bank

12. Developing countries have become driver of global trade Sustained strong growth in developing countries is more crucial than rebalancing for global recovery Developing countries should take the lead in trade negotiations

13. Decline and recovery in capital flows was very concentrated Source: The World Bank

14. Bank NPLs remain elevated in Europe and Central Asia

15. Capital flows put upward pressure on many currencies Real-effective exchange rate, January 2009=100 Source: International Monetary Fund

16. Weak bank-lending implies private capital flows will not recover to pre-crisis levels for some time Net private capital flows to developing countries, $ billion Source: The World Bank in billionsPercent of GDP

17. From FDI inflow…… Percent of GDP

18. …to FDI outflows

19. Developing countries’ role in financial markets will dramatically increase Developing countries aim to become less dependent on dollar and US monetary policy. Coming decade will show shift from ingoing FDI to outgoing FDI. While high-income countries look for regulating financial markets, developing countries need to deepen markets, partly through liberalizing them.

20. The recent boom was one of the largest, longest lasting and involved all commodities MUV-deflated US$ (2000=100) Source: World Bank Agriculture Metals Oil

21. Source: The World Bank

22. Commodity intensity of demand, index 1971 = 1 Technological progress increases the efficiency of resource use Source: World Bank.

23. Most major countries have passed the point where food demand grows much faster than population Source: World Bank Note: Curve fitted on a log scale

24. Globally, agricultural productivity growth exceeds demand growth Source: Productivity (Coelli and Rao, 2005); Food demand, FAO (2006) Projected annual average growth rates 2000-2030, per cent

25. Production (history) and demand (forecasts) (annual average percent change) Source: FAO (history) and FAO/OECD (forecasts)

26. Causes of the boom Sharp increase in Chinese demand for metals Decades of weak prices, during which as much as ½ of global demand was being met from idle capacity Impact of oil prices on agricultural prices Adverse weather patterns Larger role of financial market

27. High oil prices affect food prices Source: DEC Prospects Group. Oil < $50 Oil > $50

28. Improving our capacity to respond to commodity cycles Domestic policy agenda – Improve targeting of social welfare schemes – Invest in rural infrastructure and agricultural R&D – Be prepared to react rapidly because of long-term costs of even a relatively short bout of high food prices Global policy agenda – Proceed with trade liberalization, including improved disciplines governing export bans – Increase the financial independence of World Food Program – Improve information flows and coordination of food stocks

29. Hans Timmer World Bank March 1, 2011 Transformational Changes in the Global Economy Trade, finance and commodities after the crisis