1. The External Environment for Developing Countries September 2008 The World Bank Development Economics Prospects Group

2. Commodities retrace a part of gains on falling demand and rising supply... commodity price indices, January 2006=100 Source: DECPG Commodities Group. Energy Non-Energy Grains Metals / Minerals

3. Source: Thomson/Datastream.... while equity markets see a steeper economic downturn ahead DJI, DAX, TOPIX, and MSCI-Dev, indexes Jan 1- 08 =100 Dow Jones DAX MSCI-EM Topix

4. Industrial countries

5. Source: Department of Commerce and DECPG calculations. U.S. Q2-GDP grows 3.3% powered by external trade and the consumer growth of real GDP, and contributions to growth in percentage points Net X Invest PCE Gvt dStok

6. U.S. loses jobs for an eighth consecutive month in August change in non-farm payroll employment, ‘000 Source: U.S. Department of Labor. monthly change 3mma change

7. U.S. inflation will increase for a time after commodity prices retreat Headline and Core, CPI and PPI indexes, ch% saar Source: Thomson/Datastream, DECPG. PPI Headline PPI Core CPI Headline CPI Core

8. Source: Cabinet Office and DECPG calculations. Japan Q2-GDP falls sharply on consumer and dissapointing exports growth of real GDP, and contributions to growth in percentage points Net X Invest PCE dStok

9. Japan’s housholds and business see darker times ahead Tokyo consumer confidence [L], Tankan business conditions* [R] Source: Cabinet Office and Bank of Japan. Consumer confidence [L] Tankan [R]

10. Japan’s export markets turn sluggish contribution to growth of Japan’s export volumes (%) Source: Bank of Japan, DECPG calculations

11. Source: EuroStat and DECPG calculations. Euro Area Q2 GDP falls 0.8% on drop in investment, weak exports growth of real GDP, and contributions to growth in percentage points Change in Stocks Government Net Exports Consumption Investment

12. European purchasing power hit hard by energy prices Retail sales volume, ch% y/y [R], HICP-energy, ch% y/y [L] Source: Eurostat through Thomson/Datastream. HICP-Energy [L] France [R] Germany [R] Italy [R]

13. German exports continue decline in July-- in step with export orders export volumes and overseas factory orders, ch% 3mma Source: Bundesbank-- Thomson/Datastream. Export volume Export orders

14. Industrial production

15. Eurozone IP plummets on weaker internal and external demand real IP, ch% (6m/6m, saar) France Germany Eurozone Source: Thomson/Datastream, DECPG.

16. Industrial production weakening in developing countries outside China real IP, ch% (3m/3m saar) Developing countries excluding China [left scale] China [right scale] Source: Thomson/Datastream, DECPG.

17. Export growth and fiscal stimulus cushion U.S. output from deeper decline real IP ch% (saar) IP 3m/3mIP 6m/6m Source: Thomson/Datastream, DECPG.

18. International trade

19. OECD import volumes contract in the second quarter import volumes, ch% (y/y) [left], ch% saar [right] Source: NL CPB and Thomson/Datastream. 3m/3m saar [R] 12m/12m annual [L]

20. China’s exports ease gradually into 2008 export volumes, ch% (y/y) [left], ch% saar [right] Source: NL CPB and Thomson/Datastream. 3m/3m saar [R] 12m/12m annual [L]

21. LAC exports follow U.S. imports annual volume growth ch% (12m/12m) U.S. imports LAC exports Source: NL CPB and Thomson/Datastream.

22. Oil prices

23. Crude oil prices plunge on increasing concerns about demand $/bbl WTI Brent Dubai Source: Datastream and DECPG Commodities Group.

24. Growth in U.S. oil demand million barells per day, 3mma (y/y) mb/d Source: IEA and DECPG Commodities Group.

25. WTI Futures Prices - NYMEX SEP 9 2008 $/bbl Monthly contract prices to Dec 2013* on select dates in 2007-08 Jan 16 Aug 15 Dec 31 Jul 3 2008 Jul 31 2008 Source: NYMEX and DECPG Commodities Group.

26. Non-oil commodity prices

27. Corn, soybean, wheat prices decline on improving supply prospects c/bushel Soybeans Corn Wheat Source: Datastream and DECPG Commodities Group.

28. Metals prices fall on increasing concerns about demand Cu Zn $/ton Ni $/ton Zinc Copper Nickel Source: LME and DECPG Commodities Group.

29. Gold prices drop on dollar appreciation $/toz$/euro Gold price $/euro Source: LME and DECPG Commodities Group.

30. International Finance

31. Captial flows depressesd over July / August Source: DECPG Finance Team.

32. Global equities continue decline Mature- and Emerging Market indices, ch% Source: Thomson/Datastrea m. Emerging Markets Mature Markets

33. Source: Thomson/Datastream. EM credit spreads widen in step with increasing risk aversion EMBIG spreads, basis points [L], Equity volatility index [R] EMBIG spreads [L] Vix index [R]

34. Currencies

35. Source: Thomson/Datastream. yen/U SD USD/Euro (inverse) Dollar rebounds sharply vis-à-vis the euro USD per Euro (inverse) [Left] and Yen per USD [right]

36. European prospects dim... a key factor in the dollar’s rebound Consensus forecasts for 2008 GDP growth, by month prepared. Source: Consensus Economics Ltd. Germany USA Euro Area

37. Source: Thomson/Datastream. Dollar broadly higher against emerging market currencies LCU per USD indexes, Jan1 2008=100 [*increase = weaker LCU] Turkish lira Brazilian reis Indonesian rupiah Korean won Philippine peso

38. FOCUS September 2008 U.S. takeover of Fannie and Freddie...market implications

39. Takeover of Fannie & Freddie followed by drop in mortgage rates... mortgage spreads in basis points Source: Federal Reserve Governors. 30-year fixed mortgage rate – Fed funds rate 30-year fixed mortgage rate – 30-year T-Note rate

40. Source: Bloomberg Data Service.... and lower yields on U.S. Agency debt yield on 30-year Fannie Mae bonds less Treasury bond (basis points)

41. ...as fiscal outlook deteriorates U.S. federal debt held by the public, % of GDP Source: Congressional Budget Office.

42. The External Environment for Developing Countries September 2008 The World Bank Development Economics Prospects Group