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

2. Source: Thomson/Datastream. Federal Reserve’s “quantitative easing” spurs quick fall in long rates U.S. ten-year T-note, 30-year fixed- and ARM mortgage rates, percent Ten-year note [left] 30-year fixed mortgage [right] Variable ARM rate [right]

3. Source: Thomson/Datastream.... sustaining longest equity rally since end-2008 Indexes: 100 on September 15, 2008 [Lehman Brothers] MSCI-Emerging Markets CAC- France DJIA USA Topix Japan

4. Industrial countries

5. 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

6. Continued employment losses affecting incomes and retail spending retail sales growth (saar) [L]; change in employment (3mma) [R] Source: U.S. Departments of Commerce and Labor. Retail sales [L] Change in employment [R]

7. Virtual collapse in manufacturing and exports pressures growth further durable goods orders, export volumes and mfgr output, ch% saar Source: Federal Reserve, Department of Commerce. Orders [right] Production [left] Exports [right]

8. Japan’s trade and production falling from a veritable “cliff” through February export volumes and manufacturing output, ch% saar Source: Bank of Japan and Japan Cabinet Office. IP [Left] Export volume [R]

9. Source: National Sources through Thomson/Datastream. United States and Asia account for the bulk of the decline in Japan’s exports contributions to growth in percentage points USA MENA EU Other Asia Total

10. Japan’s liquidity inches higher Source: Bank of Japan. growth of M-0, M1 and ‘L’, ch%, y/y ‘L’ (Broad money) M-1 M-0

11. Source: EUROSTAT and DECPG calculations. GDP in Euro Area falls sharply on investment and exports growth of real GDP, and contributions to growth in percentage points Stocks Consumption Government Investment Net Exports

12. Trade is sapping the German economy of any forward momentum export orders and factory output, ch% saar Source: EUROSTAT through Thomson/Datastream. Export orders IP Manufacturing

13. European labor markets begin to weaken, sentiment falls quickly growth in the number of EA unemployed [left] EC consumer sentiment [right] Source: EUROSTAT and European Commission. Euro Area consumer sentiment [right] growth in the number of unemployed (y/y), % [left]

14. Industrial production

15. Manufacturing output collapses across high-income OECD countries manufactures output, ch% (3m/3m saar) USA Eurozone -56.5% Japan Source: Thomson/Datastream, DECPG.

16. Industrial output decline intensifies in Europe industrial production ch% (3m/3m saar) Germany Italy Spain France Source: Thomson/Datastream, DECPG.

17. 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.

18. International trade

19. Growth of world trade in dollars Q4-2008 / Q-4 2007 (%) Source: National Agencies through Thomson/Datastream. export values: ch% yr/yr

20. Source: Department of Commerce. U.S. current balance improves in fourth quarter on falloff in goods imports (notably oil) Income Services Non-oil BOT Oil balance Transfers Current account

21. World trade has averaged 10% growth per annum over the last 2 decades export values (USD), ch% Source: National Agencies through Haver Analytics.

22. Oil prices

23. OECD oil stocks remain high $/ bbl million bbl Oil price [L] OECD stocks [R] Source: IEA and DECPG Commodities Group.

24. OPEC oil production drops sharply mb/d OPEC-11 Including Iraq Source: IEA and DECPG Commodities Group.

25. WTI Futures Prices - NYMEX Mar 16 $/bbl Monthly contract prices to Dec 2014* on select dates in 2009 Feb 18 Jan 15 Source: NYMEX.

26. Non-oil commodity prices

27. Food prices slip in February on weak demand (2000=100) Source: DECPG Commodities Group.

28. Copper prices rise on Chinese restocking $/ton‘000 tons Copper price LME stocks Source: LME and DECPG Commodities Group.

29. Freight rates revive on stronger trans-PAC bulk shipments $/ton Baltic dry freight index Source: Datastream and DECPG Commodities Group.

30. International Finance

31. Lending falters in early 2009 as banks deleverage and build capital Source: DECPG Finance Team.

32. 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

33. 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

34. Currencies

35. Source: Thomson/Datastream. yen/U SD USD/Euro (inverse) Dollar continues gains against euro and yen until FOMC of March 18 USD per Euro (inverse) [Left] and Yen per USD [right]

36. 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.

37. Emerging market currencies down vs the dollar over 2009 to date percentage change (USD per LCU) (%) Source: Thomson/Datastrea m.

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