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

The External Environment for
Developing Countries
July 2009
The World Bank
Development Economics
Prospects Group
China at the forefront of the global
economic recovery
industrial production, percent (month-on-month)
10
China
World
5
0
USA
-5
Germany
-10
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Source: Thomson/Datastream, Haver, DECPG.
Apr-09
Cross border bank flows to developing
countries continue meagre
billions USD, 3-month moving average
50
40
Syndicated lending
30
20
10
Bonds
0
Jan-05 Aug-05 Mar-06
Oct-06 May-07 Dec-07
Jul-08
Source: Loanware and Bondware.
Feb-09
Industrial countries
Employment losses ease…
with potential positive effects on spending
retail volume growth (y/y) [L]; change in employment (3mma) [R]
2
250
0
Change in employment [R]
50
-2
-150
-4
Retail sales [L]
-350
-6
-550
-8
-10
Jan-07
-750
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Source: U.S. Departments of Commerce and Labor.
U.S. economic activity is stabilzing…
but bank loan charge-offs surging
ISM composite economic activity index [left]; Bank charge-offs (% total C&I loans) [right]
55.0
2.0
ISM composite index [left]
52.5
1.8
50.0
1.5
47.5
1.3
45.0
1.0
42.5
0.8
40.0
0.5
C&I charge-offs [right]
37.5
0.3
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Source: Institute for Supply Management; Federal Reserve Board.
U.S. trade developments may offer
boost for 2nd quarter GDP
export and import volumes, ch% saar
25.0
Export volumes
12.5
0.0
-12.5
Import volumes
-25.0
-37.5
-50.0
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
Source: U.S. Department of Commerce.
May-09
Japan’s trade and production take
a sharp leg up over May/June
60
export volumes and manufacturing output, ch% saar
Export volume
40
20
Production
0
-20
-40
-60
-80
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Source: Bank of Japan and Japan Cabinet Office.
Labor markets deteriorate quickly
while spending continues to falter
unemployment rate (%) [left]; retail sales, ch% yr-on-yr [right]
2
5.5
Retail sales [right]
1
5.0
0
-1
4.5
-2
Unemployment rate % [left]
-3
4.0
-4
-5
3.5
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Source: Japan Cabinet Office.
Feb-09
Jun-09
Japan’s inflation drops well into
negative territory
Toyko CPI and corporate goods prices, ch%, y/y
2
Headline CPI
1
0
-1
-2
-3
-4
Corporate goods prices (PPI)
-5
-6
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: Bank of Japan.
Jan-09
May-09
European labor markets continue to
weaken, but sentiment up on lower CPI
unemployment rate (%) [left]; EC consumer sentiment [right]
9.5
0
Unemployment rate % [left]
-5
9.0
-10
8.5
-15
Euro Area consumer sentiment [right]
-20
8.0
-25
7.5
-30
7.0
Jan-07
-35
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Source: EUROSTAT and European Commission.
Euro Area CPI in negative ground
6
5
HICP headline and core, ch% y/y and EURIBOR (%)
EURIBOR
4
Headline HICP
3
2
HICP-core
1
0
-1
Source: Eurostat.
Industrial production
Deep peak-to-trough declines in industrial
production are now being reversed
Mexico
United Kingdom
United States
Argentina
Malaysia
Colombia
Brazil
Pakistan
Bulgaria
South Africa
Thailand
Singapore
Korea, Rep.
Germany
Turkey
Italy
Slovenia
Spain
Slovak Republic
Japan
Hungary
Taiwan (China)
Percent of
contraction
reversed
Peak-totrough decline
percent change
-60
-40
-20
0
20
40
Source: Thomson/Datastream, DECPG.
60
80
100
China at the forefront of the global
economic recovery
industrial production, percent (month-on-month)
10
China
World
5
0
USA
-5
Germany
-10
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Source: Thomson/Datastream, Haver, DECPG.
Apr-09
Global manufacturing looking up
JPMorgan global PMI summary - Manufacturing
Manufacturing
Output
Feb
33.4
Mar
35.3
Apr
41.3
May
46.9
Jun
50.4
New orders
31.4
35.9
43.8
48.5
49
35
35.9
38.2
39.5
42.2
Employment
Source: JPMorgan.
Source: JPMorgan-Chase
International trade
World export growth appears to be bottoming
exports, ch% seasonally adjusted annual rates (saar)
35
15
-5
-25
-45
-65
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Source: World Bank data.
Jan-09
May-09
Global imbalances ease moderately as
U.S. deficit and China surplus narrow
goods trade balance, U.S. $-bn, seasonally adjusted, annualized
600
400
China
200
0
-200
-400
-600
United States
-800
-1,000
-1,200
Jan-02 Dec-02 Nov-03 Oct-04 Sep-05 Aug-06 Jul-07
Jun-08 May-09
Source: National Agencies through Thomson/Datastream.
Eurozone exports begin to support more
moderate declines in production
IP and exports, ch% seasonally adjusted annual rates (saar)
25
5
Industrial Production
-15
-35
Exports
-55
Jul-07
Nov-07
Mar-08
Jul-08
Source: Eurostat.
Nov-08
Mar-09
Oil prices
Oil prices and OECD oil stocks
million bbl
$/bbl
140
2800
120
2700
100
2600
80
60
2500
40
2400
20
0
Jan-96
2300
Jan-98
Jan-00
Jan-09
Jan-09
Jan-09
Jan-09
Source: IEA and DECPG Commodities Group.
World Oil Production (mb/d)
55
Non-OPEC
50
45
Non-OPEC x FSU
40
35
OPEC
30
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Source: IEA and DECPG Commodities Group.
Jan-09
WTI Futures Prices - NYMEX
Monthly contract prices to Dec 2014* for
select dates in 2009
$/bbl
90
Jun 11
80
Jul 13
70
60
Feb 18
50
40
30
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Source: NYMEX.
Jan-14
Non-oil commodity prices
Food prices edged higher in June
(2000=100)
350
300
Grains
250
Fats & Oils
Beverages
200
Other Food
150
100
Jan-06
Jan-07
Jan-08
Jan-09
Source: DECPG Commodities Group.
Jan-10
Metals prices ease following large
gains in first-half 2009
9000
55000
8000
50000
Copper
45000
7000
40000
6000
35000
5000
30000
4000
25000
Nickel
3000
20000
15000
2000
Aluminium
1000
10000
5000
Source: LME and DECPG Commodities Group.
Freight rates fall on slowdown in
bulk trade
12000
10000
8000
6000
4000
2000
0
Source: Datastream and DECPG Commodities Group.
International Finance
Flows slowed in June; first-half
volumes halved from a year earlier
Gr oss capi tal flows to em erging markets
$ billion
2007
Tot al
Total
652
2008
H1
H2
2009
Total
H1
Apr
May
Jun
389
106
14
24
21
12
65
36
6
8
3
151 106
257
37
2
9
6
258 132
Bonds
146
Banks
312
Equity
194
54
14
68
33
5
7
12
156
61
29
90
34
2
5
7
45
17
3
20
15
2
1
2
247
99
57
157
22
4
7
5
64
27
8
35
13
3
5
1
188
69
29
98
42
7
10
9
23
7
0
7
6
1
1
0
61
28
17
44
7
0
3
1
Lat. America
Bonds
E. Europe
Bonds
Asia
Bonds
Ot hers
53
Source: DECPG Finance Team.
Cross border bank flows remain well below
the levels seen in previous years
billions USD, 3-month moving average
50
40
Syndicated lending
30
20
10
Bonds
0
Jan-05 Aug-05 Mar-06
Oct-06 May-07 Dec-07
Source: Loanware and Bondware.
Jul-08
Feb-09
EM assets rebound from recent corrections
MSCI equity index, USD [left]; EM bonds spreads, bps [right]
850
750
EMBIG spreads [right]
800
700
750
650
700
600
650
MSCI equity index [left]
550
600
500
550
500
450
450
Jan-09
400
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Source: Morgan-Stanley and JPMorgan-Chase.
Jul-09
Currencies
Dollar weakens vs yen…
trading range around $1.40 against euro
USD per Euro (inverse) [Left] and Yen per USD [right]
Jul-08
1.230
Oct-08
Jan-09
Apr-09
Jul-09
110
1.270
1.310
106
1.350
102
1.390
1.430
98
1.470
94
1.510
1.550
1.590
1.630
USD/Euro (inverse)
yen/USD
Source: Thomson/Datastream.
90
86
Dollar slips vs EM currencies
in seconed quarter
percentage change (USD per LCU) (%)
US NEER
Stronger Local Currency
Indo rph
Ind rpe
First quarter 2009
Brz rei
Second quarter 2009
Tur lra
Cze crn
Mex pso
Hun frt
Rus Rbl
-30
-25
-20
-15
-10
-5
0
Source: Thomson/Datastream.
5
10
15
FOCUS
Developments in real effective exchange
rates
Real effective exchange rates depreciate in
most of the world’s largest economies
January 2008 = 100
130
Japan
120
110
China
100
USA
Euro Area
90
Jan-08 Mar-08 May-08
Jul-08
Sep-08 Nov-08 Jan-09 Mar-09 May-09
Source: Thomson/Datastream, Haver, DECPG.
Real effective appreciation for commodity exporters’
as commodity prices stage a comeback
January 2008 = 100
120
Brazil
110
Australia
100
Canada
90
80
70
South Africa
60
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Source: Thomson/Datastream, Haver, DECPG.
REERs bounce off lows of early 2009
in countries exporting capital goods and autos
BIS effective exchange rate, broad Indices ,January 2008 = 100
120
Hungary
110
Czech Republic
100
90
80
70
South Korea
60
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Source: Bank for International Settlements.
The External Environment for
Developing Countries
July 2009
The World Bank
Development Economics
Prospects Group