Transcript The External Environment for Developing Countries January 2010 The World Bank Development Economics Prospects Group.

The External Environment for
Developing Countries
January 2010
The World Bank
Development Economics
Prospects Group
Momentum of production is moderating
toward more sustainable rates
industrial production (percent change, saar)
20
10
0
-10
-20
Developing excl China
High Income
-30
World
-40
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: World Bank, Development Prospects Group.
World trade picks up steam
as stimulus measures boost imports
goods import volumes, OECD and developing countries (ch%, saar)
60
Developing imports
40
20
0
-20
OECD imports
-40
-60
-80
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: World Bank, Development Prospects Group.
Industrial countries
Improvements in labor markets now setting
the tone for increased spending
change in employment (‘000, 3mma) [L]; income and retail sales x autos, ch% (saar) [R]
100
10
0
5
retail x autos [R]
-100
0
-200
-300
-5
-400
-10
-500
-15
-600
-20
-700
change in employment [L]
-800
-25
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: U.S. Departments of Labor and Commerce.
Durable goods orders and factory output
momentum fade in late 2009
durable goods orders, mfgr output, ch% (saar) [L]; ISM mfgr headline index (3mma) [R]
20
55
10
Durable goods orders [L]
50
0
-10
Manufacturing
production [L]
-20
45
-30
40
-40
ISM Mfgr index [R]
-50
35
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Source: U.S. Department of Commerce,
Institute for Supply Management (ISM).
Oct-09
Pick-up in energy and commodity
prices lifts CPI to positive territory (y/y)
consumer and producer price indices, ch% (saar and 3mma yr/yr)
15.0
CPI saar
10.0
5.0
0.0
CPI yr/yr
-5.0
-10.0
PPI saar
-15.0
-20.0
1/1/2007 5/1/2007 9/1/2007 1/1/2008 5/1/2008 9/1/2008 1/1/2009 5/1/2009 9/1/2009
Source: U.S. Department of Labor.
Japan spending under pressure from rising
unemployment, falling wages
unemployment rate (%) [L]; real HH expenditures, cash wages, ch% (y/y) [R]
6.0
4.0
Unemployment rate [L]
2.0
5.5
0.0
5.0
-2.0
4.5
-4.0
4.0
-6.0
Cash wages [R]
3.5
-8.0
3.0
-10.0
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Source: Japan Cabinet Office (EPA).
Oct-09
Japan’s corporate and residential investment
(homebuilding) in the doldrums
fixed investment, business and residential (homebuilding), ch% saar
20
Corp GDI
RES GDI
10
0
-10
-20
-30
-40
Q3-2008
Q4-2008
Q1-2009
Q2-2009
Source: Japan Cabinet Office (EPA).
Q3-2009
Japan exports up sharply at year end
as OECD imports revive
Japan machinery orders, export volumes and industrial production, ch% saar
60
40
Japan export volumes
20
Machinery orders
0
-20
-40
-60
Manufacturing production
-80
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: Japan EPA through Thomson/Datastream.
Euro Area sentiment up in the new year
IFO survey (overall and expectations) [left]; Euro Area consumer confidence [right]
Euro Area Consumer Confidence [R]
-10
113
-15
100
-20
-25
88
-30
IFO- overall [L]
IFO- expectations [L]
75
Jan-08
-35
May-08
Sep-08
Jan-09
May-09
Sep-09
Source: IFO and European Commission.
Jan-10
Euro Area unemployment worsens quickly
placing damper on spending
number of unemployed (millions) [L]; retail sales volume, ch% (3mma, y/y) [R]
16
1.0
0.5
Number of unemployed [L]
15
0.0
14
-0.5
-1.0
13
-1.5
12
-2.0
-2.5
11
Euro Area
retail volumes [R]
-3.0
10
-3.5
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: Eurostat through Thomson/Datastream.
German exports pick-up at end-year on
strong orders for capital equipment
German export orders, export volumes and industrial production, ch% saar
60
German export volumes
40
20
Export orders
0
-20
-40
Manufacturing production
-60
-80
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Source: Bundesbank through Thomson/Datastream.
Industrial production
Momentum of industrial production is
moderating
Industrial production (percent change, saar)
20
10
0
-10
-20
Developing excl China
High Income
-30
World
-40
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: World Bank calculations based on Thomson Datastream data
Chinese output momentum supported by
domestic demand and a pick-up in exports
Industrial production (percent change, saar)
40
25
3m/3m saar (right axis)
30
Year-on-year (left axis)
20
20
10
15
0
10
-10
-20
5
-30
-40
0
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: World Bank calculations based on Thomson Datastream data
Euro zone production rises on stronger
demand for intermediate and capital goods
Industrial production (percent change, saar)
10
0
-10
-20
3m/3m saar
Year-on-year
-30
-40
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Source: World Bank calculations based on Thomson Datastream data
International trade
Global imbalances have begun to
stabilize at lower levels
Total goods trade balance, minus all crude oil imports, US$ bn, sa. annualized
450
China excluding oil
250
China total balance
50
-150
-350
USA excluding oil
-550
-750
-950
USA total balance
-1150
Jan-00
Aug-01
Mar-03
Oct-04
May-06
Dec-07
Jul-09
Source: U.S. Department of Commerce; Haver Analytics.
Foreign demand for high-income
exports weakens in fourth quarter
Export orders, Germany and the United States (ISM)
140
65
Germany [L]
130
60
120
55
110
50
100
45
90
40
United States [R]
80
35
70
30
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Source: Bundesbank and Institute for Supply Management.
Export growth accelerating in
developing countries
volume of exports, 3m/3m moving average, saar % chg
90
Developing
Latin America
Europe & Central Asia
70
East Asia & Pacific
South Asia
50
30
10
-10
-30
-50
-70
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Source: DECPG.
Jul-09
Oct-09
Oil prices
Oil prices rise above $80/bbl
$/bbl
mb/d
32
140
OPEC Production [R]
31
120
30
100
29
80
28
60
27
26
40
25
Oil price [L scale]
20
24
0
Jan-00
23
Jan-02
Jan-04
Jan-06
Source: IEA and DECPG.
Jan-08
Jan-10
M bbl
U.S. crude oil inventories
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
Source: U.S. Department of Energy and DECPG.
Jan-10
Natural gas and coal prices
$/mmbtu
16
US Gas
Europe Gas
12
LNG Japan
Coal Australia
8
4
0
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Source: World Gas Intelligence, International Coal Report, and DECPG.
Non-oil commodity prices
Agriculture prices continue to
increase on supply constraints
(2000=100)
300
Food
Beverages
250
200
150
Raw Materials
100
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Source: DECPG.
Jan-08
Jan-09
Jan-10
Metals prices rise on expectations
$/ton
of stonger demand
9000
8000
7000
Copper
Zinc
Aluminum
Lead
6000
5000
4000
3000
2000
1000
0
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Source: LME and DECPG.
Jan-09
Jan-10
Gold prices come off their highs
$/toz
1300
1200
1100
Gold in dollars
1000
900
800
700
600
500
Gold in euros
400
300
Source: LME and DECPG.
International Finance
A surge in bank lending at year end
Gross capital flows to emerging markets
$ billion
2008
2009
H1
Q3
Q4 Total
H1
Q3
Q4
Dec
Total
258
82
50 390
110
99
139
45
348
Bonds
53
9
65
36
33
46
7
115
Banks
151
63
43 257
42
34
47
28
123
Equity
54
10
4
68
32
32
45
10
109
61
18
10
90
37
37
57
16
130
Bonds
17
1
2
20
15
18
29
5
61
E. Europe
99
35
23 157
22
21
28
8
71
Bonds
27
7
0.4
35
13
11
9
1
33
69
18
10
98
45
33
48
19
126
7
0
0
7
6
3
7
0
16
28
11
6
45
7
8
6
2
21
Total
Lat. America
Asia
Bonds
Others
3
Source: DECPG.
EM bond issuance activity
off to a strong start in 2010
sovereign bond issuance, monthly, bn USD
12
Avg. 1998-08
2009
2010
10
8
6
4
2
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Source: Dealogic and DECPG staff calculations.
Dec
EM assets appear fairly strong
at the start of 2010
MSCI-EM in USD [L]; EMBIG bond index [R]
1,200
500
EMBIG bond index [R]
1,100
1,000
450
900
800
400
MSCI-EM$ index [L]
700
600
350
500
400
Jan-09
300
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Source: JPMorgan-Chase and Bloomberg.
Jan-10
Currencies
Dollar recoups 2.5% over 2010 to date on
more upbeat growth expectations
USD per Euro (inverse) [Left] and Yen per USD [right]
Jan-09
1.230
1.270
Apr-09
Jul-09
Oct-09
Jan-10
105.00
USD/Euro (inverse)
102.50
1.310
100.00
1.350
97.50
yen/USD
1.390
95.00
1.430
92.50
1.470
90.00
1.510
87.50
1.550
Source: Thomson/Datastream.
85.00
Expectations for growth move in U.S. favor
Consensus mean GDP growth: forecast for 2010 sampled during 2009/10
3.0
United States
2.5
2.0
Euro Area
1.5
1.0
Japan
0.5
Forecast Date in 2009/10:
0.0
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Source: Consensus Economics LLC.
Jan-10
The External Environment for
Developing Countries
January 2010
The World Bank
Development Economics
Prospects Group