Transcript The External Environment for Developing Countries April 2009 The World Bank Development Economics Prospects Group.

The External Environment for
Developing Countries
April 2009
The World Bank
Development Economics
Prospects Group
U.S. interest rate developments
suggest Fed actions are having effect
5.0
4.5
4.0
3.5
3.0
USD-LIBOR and EURIBOR, 3 months, percent
Treasury 10-yr
2.5
2.0
1.5
1.0
0.5
0.0
Sep-08
Fed Funds, effective
Oct-08
Nov-08
Dec-08
USD-LIBOR
Jan-09
Feb-09
Mar-09
Apr-09
Source: Federal Reserve, U.S. Treasury through Thomson/Datastream.
“Green shoots”
sprouting in the U.S. economy?
Retail and IP, home sales, CPI and exports, ch% 3mma y/y
5
0
-5
-10
Third quarter 2008
Fourth quarter 2008
-15
2009 yr to date
-20
Retail sales
Existing
home sales
CPI inflation
Mfgr
production
Export
volumes
Source: National Agencies through Thomson/Datastream.
Industrial countries
U.S. equity rally:
running ahead of the data?
115
Indexes: 100 on January 1, 2009
110
NASDAQ
105
100
95
90
85
80
Dow Jones
75
70
Jan-09
Feb-09
Mar-09
Source: Thomson/Datastream.
Apr-09
U.S. retail sales bottom-out despite
substantial job- and income losses
15
retail sales growth (saar) [L]; change in employment (3mma) [R] 400
10
200
Retail sales [L]
5
0
0
-5
-200
-10
Change in
employment [R]
-15
-400
-20
-600
-25
-30
Jan-06
-800
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Source: U.S. Departments of Commerce and Labor.
Some progress in U.S. home sales
...but foreclosures still boost supply
0
sales of new and existing homes ch% 3mma y/y [L]; NAR AI [R]
160
New home sales [L]
-10
140
-20
120
-30
-40
100
-50
-60
NAR Affordability index [R]
Jan-07
Jun-07
Nov-07
Existing home sales [L]
Apr-08
Sep-08
80
Feb-09
Sources: Department of Commerce, National Assn Realtors.
Japanese conditions remain weak
corporate services prices, all-sector index [L], Tankan [R]
3
30
15
0
-3
0
Corporate services
prices (ch% y/y) [L]
-15
All- sector index (ch% y/y) [L]
-30
-6
-45
Tankan (Large Mfgr business conditions) [R]
-9
Jan-07
-60
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Japan Cabinet Office, BOJ.
Jan-09
Japan exports and production declines
flattening– but well “underwater”
goods export volume [L] and industrial output [R] ch% (saar)
50
10
Mfgr output [right]
25
0
-10
0
-20
-25
-30
-40
-50
Export volumes [left]
-75
-50
-60
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Japan Cabinet Office.
Jan-09
Japanese household sentiment
on the economy continues to sour
3
household expenditure growth (y/y) [L]; Tokyo confidence index [R]
2
50
HH expenditure [left]
45
1
0
40
-1
35
-2
-3
Tokyo sentiment
3mma [right]
-4
-5
Jan-07
30
25
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Japan Cabinet Office.
Jan-09
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
2
0
-1.0
-2
-4
-6
Stocks
Government
Consumption
Investment
Net Exports
-5.7
-6.2
-8
Q3-2008
Q4-2008-P
Source: Eurostat
Q4-2008-R
European unemployment begins
to pick up quickly on soft economy
number of unemploymed (millions) [L], unemployment rate (%) [R]
13.5
8.5
Unemployment rate [R]
13.0
8.0
12.5
12.0
7.5
11.5
11.0
7.0
10.5
# of unemployed [L]
10.0
6.5
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09
Source: Eurostat.
German factory orders moving
towards a bottom in February?
factory orders, domestic and export, ch% saar
30
20
10
0
-10
domestic orders
Total
-20
-30
-40
-50
-60
-70
export orders
Jan-07
May-07
Sep-07
Jan-08
May-08
Source: Bundesbank.
Sep-08
Jan-09
Industrial production
OECD industrial production
down 34% in February (saar)
industrial output, ch% (3m/3m saar)
20
Developing countries
10
0
-10
-20
-30
High-income OECD countries
-40
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Thomson/Datastream, DECPG.
Jan-09
Continued declines across emerging
markets (EAP an exception)
industrial production ch% (3m/3m saar)
25
East Asia
13
0
-13
Latin America
South Asia
-25
-38
-50
Jan-07
Europe and Central Asia
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Thomson/Datastream, DECPG.
Jan-09
8
NIEs and Thailand record positve
monthly IP gains
industrial production ch% (m/m seasonally adjusted)
Korea
5
Thailand
3
0
-3
-5
-8
Hong Kong (SAR, China)
-10
-13
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Thomson/Datastream, DECPG.
Jan-09
International trade
Incidence of trade-related
measures increases quickly
during downturn
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
Source: World Trade Organization.
Terms of trade impacts
July 2008 to February 2009
5
0
-5
-10
h
ut
So
Source: World Bank, DECPG.
ca
Af
ri
As
i
a
EN
A
M
LA
C
a
r/C
.A
si
Eu
a
st
As
i
Ea
De
v
el
o
pi
ng
-15
U.S. trade deficit narrows by
a full $10 billion during February
0
balance on goods: oil- and non-oil, ($bn)
-10
-20
Non-oil balance
-30
-40
-50
-60
Oil balance
-70
-80
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09
Source: U.S. Department of Commerce.
Oil prices
Crude oil prices rise on
OPEC production cuts
$/bbl
140
mb/d
OPEC Production [R]
32
31
120
30
100
29
80
28
27
60
40
26
Oil price
[L scale]
20
25
24
23
0
22
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: IEA and DECPG Commodities Group.
World Oil Consumption Growth
(mb/d y/y)
4.0
3.0
2.0
1.0
0.0
OECD
Non-OECD
-1.0
-2.0
-3.0
-4.0
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
Source: IEA and DECPG Commodities Group.
1Q09
M bbl
U.S. crude oil stocks rise
on weak demand
380
5-year high-low ranges
360
340
320
300
280
260
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Source: U.S. Dept Energy and DECPG Commodities Group.
Non-oil commodity prices
Food prices decline in March on
weak demand
(2000=100)
350
300
Fats & Oils
Grains
250
Beverages
200
Other Food
150
100
Jan-06
Jan-07
Jan-08
Source: DECPG Commodities Group.
Jan-09
Copper prices rebound
on falling stocks
‘000 tons
$/ton
9000
550
Copper price
500
8000
450
7000
400
350
6000
300
5000
250
LME stocks
200
4000
150
3000
100
2000
Jan-06
50
Jan-07
Jan-08
Jan-09
Source: LME and DECPG Commodities Group.
Consumption Growth (% y/y)
Aluminum
Copper
Crude Oil
World China World China World China
2002-06
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
average
Source: DECPG Commodities Group.
International Finance
Capital flows down by two-thirds
from first-quarter 2008 levels
Gross capital flows to emerging markets
$ billion
2007
2008
Q1 Total
Total
2009
Q1 Total
Jan
Feb
Mar
Q1
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
42
156
19
90
9
3
4
17
20
45
5
20
5
3
2
10
79
247
36
157
5
1
0
5
27
64
2
35
2
1
0
3
24
188
38
98
8
4
2
14
8
23
3
7
2
3
0
5
11
61
11
44
0
1
2
3
Lat. America
Bonds
E. Europe
Bonds
Asia
Bonds
Others
Source: DECPG Finance Team.
Strong returns to EM equities in 2009
Total returns yr to date in local currency, %
20
15
10
MSCI Developed
MSCI EM
MSCI BRIC
EM BIG
Developed HY bond
5
0
-5
-10
Jan-09
Feb-09
Mar-09
YTD*
*as of April 17th
Source: Morgan-Stanley through Thomson/Datastream
Volume of EM IPOs has come to a
standstill since September 2008
50
capital raised ($bn) [L], number of deals [R]
160
140
40
120
Capital raised [L]
100
30
# of deals [R]
20
80
60
40
10
20
0
2004 Q1
0
2005 Q1
2006 Q1
2007 Q1
Source: Dealogic
2008 Q1
2009 Q1
Currencies
Dollar re-consolidates
against major partner currencies
USD per Euro (inverse) [Left] and Yen per USD [right]
Jan-08
1.230
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
110
1.270
1.310
106
1.350
102
1.390
1.430
1.470
98
USD/Euro (inverse)
94
1.510
1.550
1.590
1.630
yen/USD
Source: Thomson/Datastream.
90
86
LIBOR 6-month interest rates at parity
USD-LIBOR and EURIBOR, 6 months, percent
5.5
5.0
4.5
4.0
3.5
EURIBOR
3.0
2.5
USD-LIBOR
2.0
1.5
1.0
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Source: Thomson/Datastream.
Mar-09
Apr-09
Net foreign purchases of U.S.
securities down sharply vs. 2008
billions dollars
50
First Qtr-2008
40
First Qtr-2009
30
20
10
0
-10
-20
NFP UST
NFP GSE
NFP Bonds
NFP equity
Source: U.S. Treasury... TICS data system.
The External Environment for
Developing Countries
April 2009
The World Bank
Development Economics
Prospects Group