Transcript Figure 1: Japan GDP growth

The External Environment for
Developing Countries
May 2008
The World Bank
Development Economics
Prospects Group
First quarter GDP growth surprised to
the upside across the OECD...
real GDP growth, percent saar
6
Q3-2007
Q4-2007
Q1-2008
4
2
0
United States
Euro Area
Japan
...but step-up in inflation may pressure
growth globally in coming quarters
U.S. CPI, Euro Area HICP, median developing-country CPI, ch% y/y
10.0
8.0
Developing countries
6.0
4.0
United States
2.0
Euro Area
0.0
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
Source: National Sources through Thomson/Datastream.
Industrial countries
U.S. GDP for Q1-2008
surprises to the upside at 0.9% (saar)
growth of real GDP, and contributions to growth in percentage points
6
Net exports
Change in Stocks
Government
Consumption
Fixed Investment
4.9
4
2
0.6
0.9
Q4-2007
Q1-2008
0
-2
-4
Q3-2007
Source: Department of Commerce and DECPG calculations.
Households reticent to spend as
wage growth slows... confidence ebbs
12
Personal income and consumption expenditures, ch% saar
10
Personal income
8
Personal consumption
expenditure
6
4
2
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
Source: U.S. Department of Commerce.
U.S. inflation underpinned by food, fuels,
and imports under a sliding dollar
15.0
Headline CPI, PPI- and Import price indexes, ch% 3mma y/y
Import price
12.5
10.0
PPI
7.5
5.0
CPI
2.5
0.0
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
Source: U.S. Department of Commerce.
Japan Q1-GDP surprises to the upside
(3.3%) on exports and consumption
growth of real GDP, and contributions to growth in percentage points
6
5
4
Net exports
Fixed Investment
Consumption
Government
Change in Stocks
3
2
3.3
2.6
1.1
1
0
-1
-2
Q3-2007
Q4-2007
Q1-2008
Source: Japan Cabinet Office and DECPG calculations.
Japan’s exports and production
take a leg down in April
10.0
goods export volumes [R], IP manufacturing [L], ch% saar
Exports [R]
25
20
7.5
15
5.0
10
2.5
5
0
0.0
Production [L]
-2.5
-5
-10
-5.0
-15
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
Source: Cabinet Office-- Thomson/Datastream.
Japan’s manufacturers and households
turn more pessimistic
Tankan business conditions [left]; Tokyo consumer confidence [right]
10
8
Consumer
confidence (right)
50.0
47.5
5
45.0
3
42.5
0
40.0
-3
Tankan
(left)
-5
37.5
35.0
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
Source: Bank of Japan and Cabinet Office.
Euro Area Q1-GDP: powered by
investment and growth in Germany
growth of real GDP, and contributions to growth in percentage points
5
4
3
2.6
2
Net exports
Change in Stocks
Fixed Investment
Government
Consumption
3.2
1.2
1
0
-1
Q3-2007
Q4-2007
Q1-2008
Source: Eurostat and DECPG calculations.
European consumer spending continues
in the doldrums through April
retail sales volumes, ch% 3mma year over year
6
4
2
0
-2
-4
-6
-8
Jan-07
Mar-07
May-07
Euro Area
Jul-07
Sep-07
Germany
Nov-07
France
Jan-08
Mar-08
Italy
Source: Eurostat through Thomson/Datastream.
HICP near record highs
pushed by energy costs
4.0
HICP [left]; HICP energy [right], ch% year on year
12
10
3.5
HICP Energy [R]
3.0
8
6
2.5
HICP [L]
2.0
4
2
1.5
0
1.0
-2
Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08
Source: Eurostat through Thomson/Datastream.
Industrial production
US industrial production resilient in the
first quarter... but growth is softening
industrial production
7
Forecast
Old Forecast
Y/Y
Q/Q, saar
4
1
-2
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
Source: World Bank, DECPG.
May-08
Sep-08
Weaker growth in Euro Area hits
countries that export to the Zone
industrial production, year-on-year percent change
20
Forecast
Czech Republic
15
10
5
Turkey
0
Hungary
-5
-10
Jan06
Apr06
Jul06
Oct06
Jan07
Apr07
Jul07
Oct07
Source: Thomson/Datastream.
Jan08
Apr08
Jul08
Downturn in Chinese industrial
production as export growth eases
real IP (q/q saar) and exports (3m/3m, oya )
30
40
Production
25
35
Exports
20
30
15
25
10
20
5
0
15
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Source: Thomson/Datastream.
Jan-08
Apr-08
International trade
Indo-Sino trade continues on rapid
growth course
goods exports: millions U.S. dollars
2500
China exports to India
2000
1500
1000
India exports to China
500
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Source: U.N. COMTRADE Database through WITS.
Chinese yuan continues to appreciate
against the U.S. dollar in real terms
real bilateral exchange rates, ch% year-on-year
15
10
5
Real yuan / USD XR
0
-5
-10
-15
Real yuan / Euro XR
-20
-25
-30
2001M1
2002M1
2003M1
2004M1
2005M1
2006M1
2007M1
2008M1
Source: Thomson/Datastream, DECPG calculations.
Euro Area exports make some
headway despite strength of the euro
dollar per euro [L]; Euro Zone export volume [R], ch% saar
1.60
28
Euro Area Exports [R]
1.50
21
1.40
14
1.30
7
1.20
0
Dollar per Euro [L]
1.10
2005M1
-7
2005M7
2006M1
2006M7
2007M1
2007M7
2008M1
Source: Eurostat and Thomson/Datastream.
Oil prices
Oil prices soar on expectations
of tight markets
$/bbl
million bbl
130
2800
OECD stocks [R]
120
110
2700
100
90
80
2600
70
60
WB Oil price
[L scale]
50
2500
40
30
Jan-04
2400
Jan-05
Jan-06
Jan-07
Jan-08
Source: IEA and DECPG Commodities Group.
Distillate prices rise on ultra-low sulfur
diesel constraints
$/bbl
40
Price differentials relative to crude
30
Distillate
20
Gasoline
10
Crude (WTI)
0
-10
Jan-06
Jan-07
Dec-07
Source: Datastream and DECPG Commodities Group.
WTI Futures Prices - NYMEX
Monthly contract prices to Dec 2013*
on select dates in 2007-08
$/bbl
140
130
May 21 2008
120
110
Apr 30 2008
100
Mar 31 2008
90
Dec 31 2007
80
70
Aug 15 2007
60
Jan 16 2007
50
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
* No monthly futures prices for 2013 for contracts trading before Nov 07
Dec-13
Non-oil commodity prices
Rice prices surge on policy decisions
resulting from fear of shortages
c/bushel
1400
$/ton
1100
Wheat
1200
1000
900
800
1000
700
600
800
500
400
600
300
Rice
400
Jan-06
200
Jan-07
Jan-08
Source: Datastream and DECPG Commodities Group.
Copper prices remain firm on low
stocks and supply problems
‘000 tons
$/ton
Copper price
9000
225
200
8000
175
7000
150
6000
125
100
5000
LME stocks
75
4000
3000
Jan-05
50
25
Jan-06
Jan-07
Jan-08
Source: LME and DECPG Commodities Group.
Freight rates rise on strong demand for
bulk materials and port congestion
12000
Baltic dry freight index
10000
8000
6000
4000
2000
0
Jan-05
Jan-06
Jan-07
Jan-08
Source: Datastream and DECPG Commodities Group.
International Finance
Bank lending falls sharply in April
Gross capital flows to emerging markets
$ billion
2006
2007
Q1 Total
Total
2008
Q1 Total
Q1
Jan
Feb
Mar
Apr
96
494
166
683
113
35
35
44
41
Bonds
42
137
58
146
14
7
4
3
13
Banks
39
246
81
343
80
21
28
30
16
Equity
15
111
26
194
20
6
3
11
13
23
116
38
157
18
9
4
5
13
Bonds
14
41
20
45
5
4
0
1
5
E. Europe
36
179
81
252
38
6
19
13
14
Bonds
17
64
28
64
5
1
3
1
7
25
153
30
213
47
18
8
20
11
8
19
8
23
3
3
0
0
0
12
45
16
60
11
2
4
5
3
Lat. America
Asia
Bonds
Others
Source: DECPG Finance Team.
Trading in EM debt continues
decline in 2008
Emerging Market debt trading volume in billions U.S. dollars
1200
1000
Eurobonds
Local market instruments
800
600
400
200
0
Q1 01
Q4 01
Q3 02
Q2 03
Q1 04
Q4 04
Q3 05
Q2 06
Q1 07
Source: EMTA and and DECPG calculations.
Q4 07
Emerging market equities: strong in May
EM and high-income equity markets, returns by period (%)
8
6
4
2
0
-2
-4
Emerging markets
-6
High-income markets
-8
April
May
Source: Bloomberg.
year to Date
Currencies
Dollar moves higher on expectations
Fed rate cuts finished for near term
USD per Euro (inverse) [Left] and Yen per USD [right]
Jan-08
1.410
Feb-08
Mar-08
Apr-08
May-08
1.430
Jun-08
112
110
1.450
108
1.470
106
1.490
1.510
yen/USD
 USD/Euro (inverse)
1.530
104
102
1.550
100
1.570
1.590
98
1.610
96
Source: Thomson/Datastream.
A move up in USD LIBOR lends some
support to the greenback
5.0
LIBOR-6 months and EURIBOR 6-months, percent
EURIBOR
4.5
4.0
3.5
3.0
USD LIBOR
2.5
2.0
Jan-08
Feb-08
Mar-08
May-08
Source: Datastream and DECPG calculations.
Mixed developments for USD versus
range of currencies over 2008 to date
change early-June 2008 vs. December 2007, percent
Pol zlty
Czk Krna
Brz real
A$
Ch RMB
EURO
YEN
Mex peso
Rus Rbl
Indo rpha
C$
NEER
Tur Lire
Sterling
Thai baht
K won
ZA Rand
-15
Appreciation of Local Currency
-10
-5
0
5
Source: Thomson/Datastream.
10
15
The External Environment for
Developing Countries
May 2008
The World Bank
Development Economics
Prospects Group