the external environment for developing countries april 2009 the world bank development economics...
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The External Environment for Developing Countries
April 2009The World Bank
Development EconomicsProspects Group
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09
Source: Federal Reserve, U.S. Treasury through Thomson/Datastream.
U.S. interest rate developmentssuggest Fed actions are having effect
USD-LIBOR and EURIBOR, 3 months,
percent
Treasury 10-yr
USD-LIBORFed Funds, effective
“Green shoots” sprouting in the U.S. economy?
-20
-15
-10
-5
0
5
Retail sales Existinghome sales
CPI inflation Mfgrproduction
Exportvolumes
Source: National Agencies through Thomson/Datastream.
Third quarter 2008
Fourth quarter 2008
2009 yr to date
Retail and IP, home sales, CPI and exports, ch% 3mma y/y
Industrial countries
70
75
80
85
90
95
100
105
110
115
Jan-09 Feb-09 Mar-09 Apr-09
Source: Thomson/Datastream.
U.S. equity rally: running ahead of the data? Indexes: 100 on January 1, 2009
NASDAQ
Dow Jones
U.S. retail sales bottom-out despitesubstantial job- and income losses
retail sales growth (saar) [L]; change in employment (3mma) [R]
-30
-25
-20
-15
-10
-5
0
5
10
15
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09
-800
-600
-400
-200
0
200
400
Source: U.S. Departments of Commerce and Labor.
Retail sales [L]
Change in employment [R]
-60
-50
-40
-30
-20
-10
0
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09
80
100
120
140
160
Sources: Department of Commerce, National Assn Realtors.
Some progress in U.S. home sales ...but foreclosures still boost supply
sales of new and existing homes ch% 3mma y/y [L]; NAR AI [R]
NAR Affordability index [R]
New home sales [L]
Existing home sales [L]
-9
-6
-3
0
3
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
-60
-45
-30
-15
0
15
30
Japanese conditions remain weak corporate services prices, all-sector
index [L], Tankan [R]
Corporate services prices (ch% y/y) [L]
All- sector index (ch% y/y) [L]
Source: Japan Cabinet Office, BOJ.
Tankan (Large Mfgr business conditions) [R]
-75
-50
-25
0
25
50
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09-60
-50
-40
-30
-20
-10
0
10
Japan exports and production declines flattening– but well “underwater”
goods export volume [L] and industrial output [R] ch% (saar)
Mfgr output [right]
Export volumes [left]
Source: Japan Cabinet Office.
Japanese household sentiment on the economy continues to sour household expenditure growth (y/y) [L]; Tokyo
confidence index [R]
-5
-4
-3
-2
-1
0
1
2
3
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
25
30
35
40
45
50
Source: Japan Cabinet Office.
HH expenditure [left]
Tokyo sentiment 3mma [right]
-1.0
-5.7-6.2
-8
-6
-4
-2
0
2
Q3-2008 Q4-2008-P Q4-2008-R
Source: Eurostat
Euro Area Q4-GDP revised to decline of 6.2% on trade and investment
growth of real GDP, and contributions to growth in percentage points
StocksGovernmentConsumption
InvestmentNet Exports
European unemployment begins to pick up quickly on soft economy
number of unemploymed (millions) [L], unemployment rate (%) [R]
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-096.5
7.0
7.5
8.0
8.5
Source: Eurostat.
Unemployment rate [R]
# of unemployed [L]
German factory orders moving towards a bottom in February?
factory orders, domestic and export, ch% saar
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Source: Bundesbank.
Total
domestic orders
export orders
Industrial production
-40
-30
-20
-10
0
10
20
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
OECD industrial production down 34% in February (saar)
industrial output, ch% (3m/3m saar)
Developing countries
High-income OECD countries
Source: Thomson/Datastream, DECPG.
-50
-38
-25
-13
0
13
25
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
Continued declines across emerging markets (EAP an exception)
industrial production ch% (3m/3m saar)
East Asia
South Asia
Europe and Central Asia
Latin America
Source: Thomson/Datastream, DECPG.
-13
-10
-8
-5
-3
0
3
5
8
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
NIEs and Thailand record positve monthly IP gains
industrial production ch% (m/m seasonally adjusted)
Hong Kong (SAR, China)
Thailand
Korea
Source: Thomson/Datastream, DECPG.
International trade
Incidence of trade-related measures increases quickly
during downturn
Source: World Trade Organization.
Episodes Countries
10-14 EU, India
7-9 China, Indonesia
4-6 Argentina, Russia, U.S.
1-3 Brazil, Canada, Ecuador, Hong Kong (China), South Korea, Malaysia, Mexico, New Zealand, Paraguay, Philippines, Taiwan (China), Turkey, Ukraine, Vietnam
-15
-10
-5
0
5
Source: World Bank, DECPG.
Terms of trade impacts July 2008 to February 2009
U.S. trade deficit narrows by a full $10 billion during February
balance on goods: oil- and non-oil, ($bn)
-80
-70
-60
-50
-40
-30
-20
-10
0
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09
Source: U.S. Department of Commerce.
Non-oil balance
Oil balance
Oil prices
Crude oil prices rise on OPEC production cuts
0
20
40
60
80
100
120
140
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
22
23
24
25
26
27
28
29
30
31
32
$/bbl mb/d
Oil price [L scale]
OPEC Production [R]
Source: IEA and DECPG Commodities Group.
World Oil Consumption Growth (mb/d y/y)
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09
Source: IEA and DECPG Commodities Group.
OECDNon-OECD
U.S. crude oil stocks rise on weak demand
260
280
300
320
340
360
380
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
M bbl
5-year high-low ranges
Source: U.S. Dept Energy and DECPG Commodities Group.
Non-oil commodity prices
100
150
200
250
300
350
Jan-06 Jan-07 Jan-08 Jan-09
GrainsFats & Oils
Beverages
Other Food
Food prices decline in March on weak demand (2000=100)
Source: DECPG Commodities Group.
Copper prices rebound on falling stocks
2000
3000
4000
5000
6000
7000
8000
9000
Jan-06 Jan-07 Jan-08 Jan-09
50
100
150
200
250
300
350
400
450
500
550
$/ton ‘000 tons
Copper price
LME stocks
Source: LME and DECPG Commodities Group.
Consumption Growth (% y/y)
Aluminum Copper Crude Oil
World China World China World China
2002-06average
7.5 19.9 3.0 9.6 2.0 9.1
2007 10.4 42.8 6.6 34.6 1.2 4.6
1H08 5.6 15.9 0.1 7.4 0.9 5.0
2H08 -6.0 -4.7 -3.5 1.8 -1.5 3.6
1Q09 -20.3 -10.4 -17.6 0.4 -3.7 -3.5
Source: DECPG Commodities Group.
International Finance
Capital flows down by two-thirds from first-quarter 2008 levels
Source: DECPG Finance Team.
Gross capital flows to emerging markets
$ billion
Q1 Total Q1 Total Jan Feb Mar Q1
Total 156 652 103 389 23 8 9 40
Bonds 58 146 12 65 9 7 2 18
Banks 72 312 71 257 8 1 5 13
Equity 26 194 20 68 6 1 2 8
Lat. America 42 156 19 90 9 3 4 17
Bonds 20 45 5 20 5 3 2 10
E. Europe 79 247 36 157 5 1 0 5
Bonds 27 64 2 35 2 1 0 3
Asia 24 188 38 98 8 4 2 14
Bonds 8 23 3 7 2 3 0 5
Others 11 61 11 44 0 1 2 3
2007 2008 2009
Strong returns to EM equities in 2009
-10
-5
0
5
10
15
20
Jan-09 Feb-09 Mar-09 YTD*
Source: Morgan-Stanley through Thomson/Datastream
*as of April 17th
Total returns yr to date in local currency, %MSCI Developed
MSCI EM
MSCI BRICEM BIG Developed HY bond
Volume of EM IPOs has come to a standstill since September 2008
capital raised ($bn) [L], number of deals [R]
0
10
20
30
40
50
2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1
0
20
40
60
80
100
120
140
160
Source: Dealogic
# of deals [R]
Capital raised [L]
Currencies
1.230
1.270
1.310
1.350
1.390
1.430
1.470
1.510
1.550
1.590
1.630
Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09
86
90
94
98
102
106
110
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar re-consolidates against major partner currencies
USD per Euro (inverse) [Left] and Yen per USD [right]
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09
Source: Thomson/Datastream.
LIBOR 6-month interest rates at parity
USD-LIBOR and EURIBOR, 6 months, percent
EURIBOR
USD-LIBOR
Net foreign purchases of U.S. securities down sharply vs. 2008
-20
-10
0
10
20
30
40
50
NFP UST NFP GSE NFP Bonds NFP equity
Source: U.S. Treasury... TICS data system.
billions dollarsFirst Qtr-2008
First Qtr-2009
The External Environment for Developing Countries
April 2009The World Bank
Development EconomicsProspects Group