Transcript Figure 1: Japan GDP growth

The External Environment for
Developing Countries
November 2009
The World Bank
Development Economics
Prospects Group
Global IP gaining momentum
in the third quarter of 2009
growth %, 3 month saar
15
High-income
Developing excluding China
Global
10
5
0
-5
-10
-15
-20
-25
-30
2008 Q3
2008 Q4
2009 Q1
2009 Q2
Source: World Bank, DEC Prospects Group.
2009 Q3
Gross capital inflows to developing
countries surge in second half of 2009
% share of GDP, 2009*=annualized
5
Corporate bonds
4
Sovereign bonds
Banking
3
Equities
2
1
0
2006
2007
2008
1H-09*
Sources: Dealogic and World Bank
Jul-Oct-09*
Industrial countries
U.S. economy pulls out of recession
with 3.5% growth in Q3-2009 (saar)
6
growth of real GDP, and contributions to growth in percentage points
3.5
4
2
-0.7
0
-2
Stocks
Investment
Government
Consumption
Net exports
-4
-6
-6.4
-8
-10
Q1-2009
Q2-2009
Source: Department of Commerce.
Q3-2009 flash
A favorable employment turn in October
with retail sales maintaining momentum
retail sales growth (saar) [L]; change in employment (‘000, 3mma) [R]
12
100
8
0
Retail sales [L]
4
-100
0
-200
-4
-300
-8
-400
-12
-500
-16
-600
-20
-700
Change in employment [R]
-24
-800
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Source: U.S. Departments of Commerce and Labor.
Oct-09
Manufacturing has led recovery
but services emerging to growth
Headline PMI indices for manufacturing and services sector [50=+growth]
55
PMI Services
50
45
40
PMI manufacturing
35
30
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Source: Institute for Supply Management.
Sep-09
Japan’s GDP growth beats expectations for
the third quarter at 4.8% (saar)
growth of real GDP, and contributions to growth in percentage points
8
4.8
2.7
4
0
-4
Net Exports
Stocks
Government
Consumption
Investment
-8
-12.2
-12
-16
Q1-2009
Q2-2009
Source: Japan Cabinet Office.
Q3-2009 Prelim
Japan’s export- and production growth
waning into the third quarter
export volumes and manufacturing production, ch% saar
80
60
Goods export volumes
40
20
Production
0
-20
-40
-60
-80
Jan-08
May-08
Sep-08
Jan-09
Source: Japan Cabinet Office.
May-09
Sep-09
New Japanese government inherits debt
equivalent to 190% of GDP
200
general government balance as a share of GDP in percent
175
150
125
100
Source: Japan Cabinet Office.
Euro Area emerges from recession
on growth in the ‘Big-3” economies
GDP growth, q/q percentage change saar
4
0
-4
-8
-12
-16
2009-Q1
Euro Area
France
2009-Q2
Germany
Source: Eurostat.
2009-Q3
Italy
U.K.
Euro Area production up in September
on exports and stock rebuilding
manufacturing output, German and French export volumes, ch% (saar)
30
France exports
15
Euro Area IP
0
-15
-30
Germany exports
-45
-60
Jan-08
May-08
Sep-08
Jan-09
Source: Eurostat.
May-09
Sep-09
Houshold spending still a damper on growth
retail volume growth, Euro Area, Germany and France, (ch%, 3mma, y/y)
2
1
Euro Area retail volumes
0
-1
-2
Germany retail volumes
-3
France retail volumes
-4
-5
Jan-08
May-08
Sep-08
Jan-09
Source: EUROSTAT.
May-09
Sep-09
Industrial production
Global IP picked-up sharply
in the third quarter of 2009
growth %, 3 month saar
15
High-income
Developing excluding China
Global
10
5
0
-5
-10
-15
-20
-25
-30
2008 Q3
2008 Q4
2009 Q1
2009 Q2
Source: World Bank, DEC Prospects Group.
2009 Q3
High-income countries emerged to
growth in output during 2009-Q3
growth %, 3 month saar
40.0
United States
Euro Area
Japan
20.0
0.0
-20.0
-40.0
-60.0
2008 Q3
2008 Q4
2009 Q1
2009 Q2
Source: World Bank, DEC Prospects Group.
2009 Q3
Capacity utilization- outside of Europe
trending back toward pre-crisis levels
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Euro Area
Thailand
Turkey
Brazil
United States
Mexico
Philippines
Argentina
0
10
20
30
40
50
60
70
Source: Thomson Datastream and World Bank.
80
90
International trade
East Asian imports step up as Chinese
import momentum begins to slow
imports, 3mma saar % change
100
Chinese imports
80
Other East Asian imports
60
40
20
0
-20
-40
-60
-80
Jan-08
May-08
Sep-08
Jan-09
Source: Haver Analytics.
May-09
Sep-09
Import recovery in China grounded in
capital-and consumer goods
imports, year-over-year % change
60
Consumer goods
50
Machinery and other equipment
40
30
20
10
0
-10
-20
-30
-40
-50
Jan-08
May-08
Sep-08
Jan-09
Source: Haver Analytics.
May-09
Sep-09
German and Japanese export volumes
surge on rising external demand
60
developing import volumes, German and Japanese export volumes,
3mma saar % change
40
20
0
-20
-40
Developing country imports
-60
German exports
Japanese exports
-80
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Source: World Bank, DEC Prospects Group.
Jul-09
Oil prices
Oil prices break out of recent range…
but market still well supplied
$/bbl
mb/d
140
120
32
OPEC Production [R]
31
30
100
29
80
28
60
27
26
40
Oil price [L scale]
20
0
Jan-00
25
24
Jan-02
Jan-04
Jan-06
Jan-08
Source: IEA and DECPG Commodities Group.
23
Jan-10
OECD total oil stocks
days of forward consumption
62
61
60
59
58
57
56
55
54
53
52
51
50
49
1Q91
1Q93
1Q95
1Q97
1Q99
1Q01
1Q03
1Q05
1Q07
1Q09
Source: IEA and DECPG Commodities Group.
WTI Futures Prices - NYMEX
$/bbl
Monthly contract prices to Dec 2017* for
select dates in 2009
Nov
11
100
90
80
70
Jul 13
60
50
Feb 18
40
30
Jan-09
Jan-11
Jan-13
*Monthly prices interpolated for 2015-17
Jan-15
Jan-17
Non-oil commodity prices
Grains prices rise on late U.S harvest
c/bushel
1,600
800
Soybeans [left scale]
700
1,400
600
1,200
500
1,000
Corn [right scale]
400
800
300
600
200
Wheat [left scale]
400
200
Jan-04
100
0
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Source: Datastream and DECPG Commodities Group.
Metals prices remain rangebound
$/ton
$/ton
9,000
60,000
8,000
50,000
7,000
6,000
5,000
40,000
Copper
30,000
4,000
3,000
20,000
2,000
Nickel
10,000
1,000
Zinc
0
Jan-04
0
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Source: LME and DECPG Commodities Group.
Gold prices surge above $1,100/toz
per toz
1,200
1,100
1,000
900
Gold in US$
800
700
600
500
Gold in euros
400
300
200
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Source: LME and DECPG Commodities Group.
International Finance
Flows to emerging markets surge to
$50 billion in October… a new record
Gros s capital flow s to de ve loping countrie s
$ b illion
2007
2008
2009
Total
H1
Q3
Total
H1
Q3
652
258
82
390
109
94
41
51
Bonds
146
53
9
65
35
34
12
26
Banks
312
151
63
257
40
27
14
6
Equity
194
54
10
68
33
33
15
20
156
61
18
90
36
34
19
30
45
17
1
20
15
19
11
17
247
99
35
157
22
20
3
8
64
27
7
35
13
11
1
5
188
69
18
98
44
32
15
11
23
7
0
7
6
3
1
4
61
28
11
45
7
8
4
2
Total
Lat. America
Bonds
E. Europe
Bonds
Asia
Bonds
Others
Source: DECPG Finance Team.
Sep Oct
Low interest rates in high-income countries
contribute to inflows to emerging markets
Three-month interbank interest rates (%)
25
20
Turkey
15
Indian Rupee
10
EURO-LIBOR
5
US Dollar-LIBOR
0
1-Jan-07
1-Jun-07
1-Nov-07
1-Apr-08
1-Sep-08
1-Feb-09
Sources: Thomson Datastream and World Bank.
1-Jul-09
Deteriorating credit quality for EM sovereigns
net rating: number of upgrades minus downgrades*
40
30
20
10
0
-10
-20
*Includes rating actions from Moody’s, S&P, and Fitch.
-30
2002
2003
2004
2005
2006
2007
2008
Source: Bloomberg and DECPG staff calculations.
2009
Currencies
Dollar’s fall from Spring peaks now
20% vs Euro…10% against yen
USD per Euro (inverse) [Left] and Yen per USD [right]
Oct-08
1.230
1.270
Jan-09
Apr-09
Jul-09
USD/Euro (inverse)
1.310
Oct-09
110
106
1.350
102
1.390
1.430
98
1.470
94
1.510
1.550
yen/USD
90
1.590
1.630
Source: Thomson/Datastream.
86
Dollar fall is half that of 2002-07…
but decline compressed into 6 months
Indices, Jan 1990=100.
200
25% decline
Nominal effective rate [NEER]
175
150
125
100
Real effective rate [REER]
75
1990M01
1993M01
1996M01
1999M01
2002M01
2005M01
Source: JPMorgan-Chase.
2008M01