2. Global Development Finance 1999 Main Messages

3. Global Economic Environment Main Messages n n Global output slowdown deeper than anticipated   Developing countries terms of trade, exports, external finance deteriorate   Recession-level growth likely in 1999   Downside risks: Japan, Brazil, U.S. stock market, protectionism

4. World industrial production (3-month moving average, y/y) Note: World = developing countries + G-7 + other industrial countries + Asian NIEs. Source: Datastream and DECPG staff estimates. Percent

5. Export growth for World, Latin America and Asia Crisis 4 Countries* (current US$, 3-month moving average, y/y)

6. Current account balances, 1996-1998 Source: IMF International Financial Statistics and World Bank -100 -75 -50 -25 0 25 50 75 100 US$ billions All developing countries East Asia and Pacific Latin America and Caribbean 199619971998

7. Source: World Bank. Price index for energy and non-energy commodities

8. Private Capital Flows Main Messages   Capital market financing deteriorated further in 1998   Enhanced risk perceptions likely to slow recovery of flows   FDI resilient in face of financial crisis   Financial crisis reduced prospects for growth in FDI flows

9. Net flows from international capital markets to developing countries Source: Debtor Reporting System US$ billions 0 20 40 60 80 100 120 140 160 199019911992199319941995199619971998 a Loans Bonds Portfolio equity flows

10. Spreads on Brady Bonds & U.S. high yield bonds Basis points Source: Bloomberg and World Bank 200 600 1000 1400 1800 Jan-95Jan-96Jan-97Jan-98Jan-99 200 600 1000 1400 1800 US High Yield Bond Spread Brady Bond Spread

11. Monthly averages: emerging market bond financing versus bank lending 0 5 10 15 20 1st Half2nd HalfJan-AprMay-JulAug-SepOct-Dec Bond financing Bank lending Source: Euromoney Bondware / Loanware and World Bank 1997 1998 US$ billions

12. FDI flows to developing countries, and their share of global FDI, 1991-98 Source: World Bank Debt Reporting System

13. FDI flows by region Source: World Bank Debtor Reporting System

14. FDI flows to crises countries Source: World Bank Debt Reporting System a. Preliminary 0 1 2 3 4 5 6 7 1992199319941995199619971998 Indonesia Malaysia Thailand Rep. Of Korea Philippines US$ billions

15. Official Flows and Debt Restructuring Main Messages   Aid remains low   Improved policies have increased aid effectiveness   Sovereign and banking system debt restructured, but not corporate debt   Rescue packages helped alleviate systemic risk and reduced the cost of adjustment in crisis countries

16. ODA from major countries, 1990-97

17. Poverty and Policy, 1996 Source: World Bank

18. International rescue packages for crisis countries Source: IMF and World Bank