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

The External Environment for
Developing Countries
May 2010
The World Bank
Development Economics
Prospects Group
CDS spreads – EU-5 vs. selected EMs
Brazil, Russia, China, Turkey, Indonesia (BRCTI)
450
400
350
300
Average BRCTI (Brazil, Russia, China, Turkey, Indonesia)
Average EU -5 (Greece, Spain, Portugal, Italy, Ireland)
250
200
150
100
50
Oct-09
Nov-09 Dec-09
Jan-10
Feb-10 Mar-10
Source: JPMorgan and World Bank data.
Apr-10 May-10
Claims of EU Periphery banks on EMs
as percent of lender’s GDP
Ireland
Spain
Greece
Italy
Portugal
0%
5%
EE
10%
LAC
15%
Africa / ME
Source: IFC calculations based on BIS data.
20%
Asia
25%
30%
OECD developments
Greek contagion fears were calmed by a
momentous policy package
5-year sovereign CDS spreads (bps)
The €750 million EU package
1200
1000
Greece
800
Portugal
600
Spain
Ratings downgrades of
Greece, Portugal, and Spain
Ireland
400
200
0
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Source: Bloomberg and DECPG staff calculations.
Apr-10
May-10
Euro falls sharply vis-à-vis greenback
USD per euro [left]; CACI and DAX indexes, February-15, 2010=100
1.375
120.0
CACI [R]
1.355
DAX [R]
110.0
1.335
1.315
100.0
1.295
1.275
90.0
1.255
1.235
1.215
Feb-10
USD per euro [L]
Mar-10
Mar-10
Source: Thomson-Datastream
Apr-10
Apr-10
May-10
May-10
80.0
Euro Zone growth dissapoints in first quarter
quarterly growth of real GDP, percentage change , q/q saar
3
Euro Area
Germany
France
Italy
2
1
0
-1
Q3-2009
Source: Eurostat
Q4-2009
Q1-2010
German export orders revive in March
factory orders received from abroad and industrial production, ch% saar
50
German export
orders
industrial production
25
0
-25
-50
-75
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10
Source: Eurostat
U.S. GDP growth eases to 3.2% in Q1-2010
on stocks, investment and exports
8
quarterly growth of real GDP (saar), and contributions to growth in
percentage points
5.6
6
4
2
3.2
2.2
0
-2
Q3-2009
Prv Consumption
change in Stocks
Q4-2009
Gvt Consumption
Q1-2010
Fixed Investment
Net Exports
GDP
Source: World Bank, DEC Prospects Group.
U.S. employment gains now firmly in
positive territory… supporting demand
retail sales x autos ch% saar [left]; change in employment ‘000 (3mma) [right]
12.5
400
RS left
Employment [right]
200
5.0
0
-2.5
-200
-10.0
-400
-17.5
-600
-25.0
-800
1/1/2008
6/1/2008 11/1/2008 4/1/2009
9/1/2009
Source: U.S. Departments of Commerce and Labor.
2/1/2010
Forward-looking indicators also favorable
new orders (ch% saar), DJIA (ch%, y/y) [L]; LEI [R]
50.0
37.5
25.0
110.0
U.S. New Orders [L]
DJIA [L]
Lead Indicator [L]
12.5
107.5
105.0
0.0
-12.5
-25.0
102.5
100.0
-37.5
-50.0
Source: Thomsom/Datastream.
97.5
Japan orders, exports, and IP show moderate
sign of slack– waiting return of demand
private machinery orders, export volumes and production, ch% (3m/3m, saar)
75
50
25
Japan orders
industrial production
export volumes
0
-25
-50
-75
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10
Source: Japan Cabinet Office, METI.
Japanese consumer now adding
meaningfully to growth
4.0
retail sales volume, ch% year-on-year [L];
and Tokyo Consumer Confidence Index [R]
45.0
Retail sales volume [L]
2.0
40.0
Consumer confidence [R]
0.0
35.0
-2.0
30.0
-4.0
Jan-08 May-08 Sep-08
25.0
Jan-09 May-09 Sep-09
Source: Japan Cabinet Office, METI.
Jan-10
Country Focus:
Brazil
20
Domestic demand continues to drive
industrial production inBrazil
retail sales and industrial production
30
20
15
10
10
0
5
-10
-20
0
-5
-30
Retail sales volume [L]
-40
Industrial proudction [R]
-10
1/1/2007
-50
10/1/2007
Source: Thompson/Datastream.
7/1/2008
4/1/2009
1/1/2010
Inflationary pressures are building
Inflation, ch% yr-on-yr [L], SELIC rate, % [R]
7
14
13
6
12
5
4
11
Inflation [L]
SELIC Rate [R]
3
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09
Source: Thompson/Datastream.
10
9
8
Limited spillovers from European Crisis to
Brzilian financial markets
250
EMBI Spreads, basis points [L], BOVESPA [R]
440
420
230
400
210
380
190
360
170
150
1/1/2010
EMBI spread [L]
340
BOVESPA [R]
320
1/31/2010
Source: Thompson/Datastream.
3/2/2010
4/1/2010
300
5/1/2010
Industrial production
The shift to the right in the distribution of
monthly growth in IP points to recovery
35
Monthly growth in
March 2010
30
25
Monthly growth
December 2009
20
15
10
5
0
-15
-10
-5
0
Source: Development Prospects Group.
5
10
15
Industrial production exceeds pre-crisis peaks in
selected countries
pre – crisis peak = 100
130
120
110
Brazil
China
India
Korea
Thailand
Taiwan
100
90
80
70
60
50
Jan-07
Jul-07
Jan-08
Jul-08
Source: Development Prospects Group.
Jan-09
Jul-09
Jan-10
Strong IP carryover will ensure robust
performance in the second quarter
percent, 3m/3m saar
25
20
15
10
5
0
Source: Development Prospects Group.
International trade
Share of Southern Euro Zone in total exports
percent share of total exports in 2008
19.3
20
15
10
5
0
8.8
3.7
EAP
4.5
LAC
10.0
5.7
Asia
Source: World Bank, UN-COMTRADE.
SSA
ECA
MENA
Share of world trade for developing countries
share of world imports in percent
100%
80%
60%
40%
20%
0%
1996
BRICs
1998
2000
Other LMICs
2002
USA
Source: World Bank, UN-COMTRADE.
2004
Other HICs
2006
2008
EU 25
G20 use of selected temporary trade barriers
By import source, 1997-2009, unique product-exporter combinations
3500
China as exporter
Developing economy as exporter (non-China)
Developed economy as exporter
3000
2500
2000
1500
1000
500
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Bown (2010), Global Anti-dumping Database.
Oil prices
OECD oil stocks
(days of forward consumption)
62
60
58
56
54
52
50
48
1Q91
1Q94
1Q97
1Q00
Source: IEA, Bloomberg and DECPG.
1Q03
1Q06
1Q09
Crude oil prices drop and differentials skew
$/bbl
90
WTI
85
80
Dubai
75
70
Brent
65
Jan-10
Feb-10
Mar-10
Source: Datastream and DECPG.
Apr-10
May-10
WTI Futures Prices – NYMEX
monthly contract prices to Dec 2015* for select dates in 2010
100
$/bbl
Apr 30
90
Mar 31
80
70
60
Jan-10
Jan 29
May 18
Jan-11
Jan-12
Jan-13
Jan-14
* Futures prices extend semi-annually to Dec 2018
Source: NYMEX.
Jan-15
Non-oil commodity prices
Ag- gains led by raw materials and beverages
300
(2000=100)
Food
Beverages
250
200
150
100
Jan-05
Source: DECPG.
Raw Materials
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Metals prices fall on Eurozone woes
60,000
50,000
$/ton
‘000 tons
160
LME stocks
Nickel price
140
40,000
120
100
30,000
80
20,000
60
40
10,000
0
Jan-05
180
20
0
Jan-06
Jan-07
Source: Datastream and DECPG.
Jan-08
Jan-09
Jan-10
Gold prices
1,300
(per troy ounce)
currency/toz
1,200
1,100
Gold in dollars
1,000
900
800
Gold in euros
700
600
Jan-09 Feb-09 Apr-09 Jun-09 Jul-09 Sep-09 Oct-09 Dec-09 Feb-10 Mar-10
Source: Datastream and DECPG.
International Finance
Capital flows steady in April
$ billion
Total
Bonds
Banks
Equity
2008
Q1 Total
2009
Q1 Total
Q1
2010
Jan Feb Mar Apr
103
12
71
20
390
65
257
68
48
18
22
8
353
115
129
109
94
48
19
27
33
21
4
7
17
5
5
7
47
21
13
12
45
26
8
11
Lat. America
Bonds
E. Europe
Bonds
19
5
36
2
90
20
157
35
21
10
6
4
137
62
72
33
29
19
24
17
9
8
12
7
4
2
2
1
17
10
10
8
15
9
14
11
Asia
38
98
18
122
33
12
7
15
11
3
7
5
16
9
7
2
0.3
3
11
45
3
22
8
0.2
3
5
4
Bonds
Others
Source: DECPG.
Relative to Lehman collapse, the magnitude of
recent corrections has been modest
Index
55,000
Basis points
Lehman collapse
Corrections in Jan/Feb
and late-Apr/early-May
50,000
900
800
45,000
700
40,000
600
35,000
500
30,000
400
25,000
300
20,000
200
Apr-08
Oct-08
Apr-09
MSCI EM equity index [Left]
Source: JP Morgan and Bloomberg.
Oct-09
Apr-10
EMBIG spread [Right]
Signs of monetary tightening in some
emerging market countries
Official interest rate (GDP-weighted regional averages, percent)
7.0
4.25
Emerging Europe
Latin America
6.5
4.20
Emerging Asia (right)
6.0
4.15
5.5
4.10
5.0
4.05
4.5
4.00
4.0
3.95
Apr-09
Jun-09
Aug-09 Oct-09 Dec-09 Feb-10
Sources: JP Morgan and DECPG staff calculations
Apr-10
Jun-10
Currencies and inflation
Euro takes large loss vis-à-vis dollar on
“market failure” of EU/IMF Greek package
USD per Euro (inverse) [Left] and Yen per USD [right]
1.213Jan-10
Feb-10
Mar-10
Apr-10
May-10
94.50
1.253
93.00
1.293
1.333
USD/Euro (inverse)
91.50
1.373
90.00
1.413
1.453
Source: Thomson/Datastream.
yen/USD
88.50
Euro- cross exchange rates show
obverse movements for C. European units
105
LCU per euro, index January 2008=100
100
95
90
85
80
1/1/2010
U.S. dollar
Trk lira
Jpn yen
Rus ruble
2/1/2010
Source: Thomson/Datastream.
Czech kor
Pol zloty
3/1/2010
Hun flrnt
IDN rphe
4/1/2010
5/1/2010
Volatility in USD LIBOR not echoed in
interbank rates for other key currencies
1.25
LIBOR-6month rates.. US dollar, euro, sterling and yen
LIBOR
EURIBOR
Euro-Sterling
Euro-yen
1.00
0.75
0.50
0.25
1/1/2010
2/1/2010
Source: Thomson/Datastream.
3/1/2010
4/1/2010
5/1/2010
The External Environment for
Developing Countries
May 2010
The World Bank
Development Economics
Prospects Group