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

2. A deep synchronous downturn for OECD countries in fourth quarter... growth GDP growth **, percentage change, q/q saar Source: World Bank and National Agencies ** Q4 JPMorgan. Japan Euro Area United States

3. ...with developing-country production now in decline, led by China industrial production percentage change, saar Source: World Bank data. China Developing excl China Developing

4. Industrial countries

5. Source: Department of Commerce and DECPG calculations. U.S. Q3-GDP drops 0.5% on massive retrenchment by the consumer growth of real GDP, and contributions to growth in percentage points

6. Key indicators point to deep U.S. recession in fourth quarter retail sales, mfgr IP % saar [L], change in employment [R] Source: Departments of Commerce and Labor; Federal Reserve. Industrial production [L] Retail sales [L] Change in non-farm employment (3mma, ‘000) [R]

7. Source: Thomson/Datastream. Fed cuts Funds target to 0.0-to 0.25% with heavy “flight to quality” underway Fed Funds target- and effective rates; T-note- 2yr, T-note 10 yr Fed Funds Target LIBOR 3 months T-note 10-year T-note 2-yr

8. Source: Japan Cabinet Office and DECPG calculations. Japan GDP drops 1.8% in Q3 on continuing negative trade outcomes growth of real GDP, and contributions to growth in percentage points Consumption Government Investment Stocks Net Exports

9. Japan’s export strength gives way to large-scale declines export volumes and manufacturing output, ch% saar Source: Bank of Japan and Japan Cabinet Office. Industrial production Export volumes

10. Japan’s bank lending starting to grow broad money and total bank lending ch% y/y Source: Bank of Japan. Bank lending Broad money

11. Source: Eurostat and DECPG calculations. Net exports pull Euro Area GDP further into recession in 3 rd quarter growth of real GDP, and contributions to growth in percentage points Change in stocks Government Consumption Investment Net Exports

12. German exports now in decline following sharp falloff in foreign orders export volume ch% 3mma y/y [L] and export orders, ch% saar [R] Source: Bundesbank-- Thomson/Datastream. Export volume [L] Export orders [R]

13. Inflation– an eventual “silver lining” for Europe? HICP total ch% y/y [L], HICP-energy, ch% y/y [R] Source: Eurostat through Thomson/Datastream. HICP-Total [L] HICP-Energy [R]

14. Industrial production

15. Downturn in IP across OECD to date as pronounced as in 2001 recession industrial production, ch% (3m/3m saar) Source: Thomson/Datastream, DECPG. USA Eurozone Japan

16. Weak global demand pressures industrial production in East Asia Source: Thomson/Datastream, DECPG. East Asia China industrial production, ch% (3m/3m saar) Indonesia Malaysia

17. IP now in decline across all regions Source: Thomson/Datastream, DECPG. All Developing East Asia industrial production, ch% (3m/3m saar) Europe and Central Asia Latin America

18. International trade

19. Key OECD imports compress as domestic demand falters import volume: U.S, Japan, Germany and U.K. ch% 3mma y/y Source: National Agencies through Thomson/Datastream. United States Japan Germany U.K.

20. Developing country export growth fades export values (USD): China, India, Mexico and Poland ch% 3mma y/y Source: National Agencies through Thomson/Datastream. China Poland India Mexico

21. Source: Department of Commerce. U.S. current balance improves slightly in third quarter on better balance on non-oil trade Income Services Non-oil BOT Oil balance Transfers Current account

22. Oil prices

23. Crude oil prices plunge back to 2004 levels on falling demand $/bbl World Bank Average Source: Datastream and DECPG Commodities Group.

24. Crude stocks rise on slumping demand and recovery from hurricane disruption M bbl 5-year high-low ranges Source: U.S. DOE and DECPG Commodities Group.

25. WTI Futures Prices - NYMEX Dec 15 $/bbl Monthly contract prices to Dec 2013* on select dates in 2008 Oct 31 Sep 30 Aug 29 Dec 5 Source: NYMEX and DECPG Commodities Group.

26. Non-oil commodity prices

27. Agriculture prices plummet on weak demand, falling oil costs and better supply prospects Index 2000=10 0 Source: Datastream and DECPG Commodities Group.

28. Metals prices plunge on sharp decline in demand Cu $/tonNi $/ton Copper Nickel Source: LME and DECPG Commodities Group.

29. Ocean freight rates sink on lack of demand and credit concerns Baltic dry freight index Source: Datastream and DECPG Commodities Group.

30. International Finance

31. Capital flows come to an effective halt over October and November Source: DECPG Finance Team.

32. Credit quality of EM sovereigns deteriorated in recent months Source: DECPG Finance Team.

33. Much greater refinancing risk for debt maturing in 2009 bonds & loans maturing in 2009 by region, billions dollars Source: Bondware/Loanwar e. Loans Bonds

34. Currencies

35. Source: Thomson/Datastream. yen/U SD USD/Euro (inverse) Dollar plummets since early December to reverse earlier gains USD per Euro (inverse) [Left] and Yen per USD [right]

36. Net foreign purchases of U.S. assets halved** over Jan-October 2008 net foreign purchases USD billions, 3mma Treasuries Source: U.S. Treasury ‘TICS’ database. ** Jan-Oct08 vs Jan-Oct07 GSEs Corporate bonds Equity

37. Source: Thomson/Datastream. Dollar surges... then retreats against EM currencies LCU per USD indexes, Jan1 2008=100 [*increase = weaker LCU] Turkish lira Brazilian real Indonesian rupiah Korean won Russian rouble

38. The External Environment for Developing Countries December 2008 The World Bank Development Economics Prospects Group