1. The External Environment for Developing Countries January 2009 The World Bank Development Economics Prospects Group

2. Global industrial production plummets into 4 th quarter of 2008... manufacturing production, ch% (saar) Source: DEC Prospects Group. OECD Developing World

3. Source: Thomson/Datastream, Morgan Stanley (*USD index)....while worries about recession and banks push markets lower in January equity market indices (LCU)* Sep-15-2008 = 100. MSCI (Emerging Markets) TOPIX (Japan) DJIA (USA) DAX (Germany)

4. Industrial countries

5. U.S. employment losses in 2008 sum to 2.6 million...worst since 1945 change in non-farm employment, ‘000 Source: U.S. Department of Labor. monthly change 3mma change

6. Falling exports, orders and production pressure U.S. GDP export volumes, durable goods orders and IPmfg, ch% saar Source: Department of Commerce, Federal Reserve. Export volumes [R] Durable goods orders [R] Production [L]

7. Source: Thomson/Datastream. Interbank market rates- and yield on ten-year note easing Fed Funds target- and effective rates; Libor and T-note 10 yr Fed Funds Target LIBOR 6 months T-note 10-year Fed Funds Effective

8. Japan’s exports and production point to severe 4 th quarter downturn export volumes and manufacturing output, ch% saar Source: Bank of Japan and Japan Cabinet Office. Industrial production [L] Export volumes [R]

9. Household spending turns to the doldrums in the last months of 2008 household expend, retail sales [L]; Tokyo consumer confidence [R] Source: Japan Cabinet Office. HH spending [L] Consumer confidence [R] Retail sales [L]

10. Source: Thomson/Datastream. Yen strength on unwinding “carry trades” supports BOJ ease Yen/USD rate (inverse) [right]; TIBOR and JGB 10-year [left] Yen/dollar (inverse) [R] TIBOR 6 months [L] JGB- ten year [L]

11. European confidence plummets while ECB asesses economic damage Euro Area consumer confidence [L]; IFO overall [R] Source: Eurostat-- Thomson/Datastream. IFO overall [R] EC Consumer confidence [L]

12. Production now in sharp decline across the Euro Area manufacturing production, ch% (saar) Source: Eurostat. Germany France Italy Euro Area

13. Source: Thomson/Datastream. Euro interbank rates fall quickly adding pressure on the currency Euribor and Bund- 10 yr [L]; USD per Euro [R] USD per Euro [R] EURIBOR 6 months [L] Bund, ten-year [L]

14. Industrial production

15. Developing countries’ IP plunges, mirroring high-income countries real IP (3m/3m saar) Source: Thomson/Datastream, DECPG. High-income Developing countries

16. East Asia and Central and Eastern Europe hit hardest real IP (3m/3m saar) ECA East Asia, excl China Source: Thomson/Datastream, DECPG.

17. Dramatic IP contraction in export intensive economies real IP (6m/6m saar) Hungary Turkey Czech Republic Korea Taiwan Source: Thomson/Datastream, DECPG.

18. International trade

19. Major OECD imports contract in step with domestic demand import volumes: 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 exports in decline export volumes: China, India, Mexico and Jordan ch% 3mma y/y Source: National Agencies through Thomson/Datastream. China India Jordan Mexico

21. Source: Department of Commerce. U.S. trade balance improves sharply in November on plummeting oil price Goods balance Oil balance Non-oil balance goods balance, and oil- and non-oil balances ($bn)

22. Oil prices

23. Oil prices appear to stabilize amid OPEC production cuts $/ bbl mb/d Oil price [L scale] OPEC-11 Production (x Angola) [R] Source: IEA and DECPG Commodities Group.

24. Growth in U.S. Oil Demand (yr/yr) kb/d Source: IEA and DECPG Commodities Group.

25. WTI Futures Prices - NYMEX Jan 15 09 $/bbl Monthly contract prices to Dec 2013 on select dates in 2008-09 Oct 31 Sep 30 Aug 29 Dec 24 Source: NYMEX and DECPG Commodities Group.

26. Non-oil commodity prices

27. Agriculture price declines begin to moderate 2000=100 Source: Datastream and DECPG Commodities Group.

28. Metal prices rebound slightly on index rebalancing $/ton‘ 000 tons Copper price LME stocks Source: LME and DECPG Commodities Group.

29. Global steel production plunging mn tons Source: Datastream and DECPG Commodities Group.

30. International Finance

31. A difficult year for emerging market capital flows Source: DECPG Finance Team.

32. Equities post modest gains in December percentage change (in local currency) Source: Bloomberg and DECPG Finance Team. 2008 Oct NovDec

33. Source: JPMorgan-Chase and DECPG Finance Team. Sharp widening in EM bond spreads at year-end 2008 Yen/USD rate (inverse) [right]; TIBOR and JGB 10-year [left] EMBIG annual retruns [Left] EMBIG spread [Right]

34. Currencies

35. Source: Thomson/Datastream. yen/U SD USD/Euro (inverse) Dollar falls on Fed rate cut until ECB reduction seen as sure USD per Euro (inverse) [Left] and Yen per USD [right]

36. Interest differentials well in favor of stronger euro since November USD Libor and EURIBOR (6 months), percent EURIBOR 6 months USD LIBOR 6 months Source: Thomson/Datastream.

37. Dollar mixed against EM currencies LCU per USD indexes, Sept-15 2008=100 [*increase = weaker LCU] Turkish lira Brazilian real Korean won Russian rouble

38. The External Environment for Developing Countries January 2009 The World Bank Development Economics Prospects Group