source: decpg commodities group
DESCRIPTION
The External Environment for Developing Countries September 2008 The World Bank Development Economics Prospects Group. Commodities retrace a part of gains on falling demand and rising supply... commodity price indices, January 2006=100. Grains. Energy. Non-Energy. Metals / Minerals. - PowerPoint PPT PresentationTRANSCRIPT
The External Environment for Developing Countries
September 2008The World Bank
Development EconomicsProspects Group
Commodities retrace a part of gainson falling demand and rising supply...
commodity price indices, January 2006=100
80
100
120
140
160
180
200
220
240
260
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
Source: DECPG Commodities Group.
Energy
Non-Energy
Grains
Metals / Minerals
70
75
80
85
90
95
100
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
Source: Thomson/Datastream.
... while equity markets see a steeper economic downturn ahead
DJI, DAX, TOPIX, and MSCI-Dev, indexes Jan 1-08 =100
Dow Jones
DAX
MSCI-EM
Topix
Industrial countries
-0.2
0.9
3.3
-3
-2
-1
0
1
2
3
4
5
Q4-2007 Q1-2008 Q2-2008P
Source: Department of Commerce and DECPG calculations.
U.S. Q2-GDP grows 3.3% poweredby external trade and the consumer
growth of real GDP, and contributions to growth in percentage points
Net X
Invest
PCE
Gvt
dStok
U.S. loses jobs for an eighthconsecutive month in August change in non-farm payroll
employment, ‘000
-100
-50
0
50
100
150
200
250
300
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
Source: U.S. Department of Labor.
monthly change
3mma change
U.S. inflation will increase for a timeafter commodity prices retreat
Headline and Core, CPI and PPI indexes, ch% saar
-5
0
5
10
15
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
Source: Thomson/Datastream, DECPG.
PPI Headline
PPI Core
CPI Headline
CPI Core
2.4
3.2
-2.4
-3
-2
-1
0
1
2
3
4
Q4-2007 Q1-2008 Q2-2008 P
Source: Cabinet Office and DECPG calculations.
Japan Q2-GDP falls sharply on consumer and dissapointing exports
growth of real GDP, and contributions to growth in percentage points
Net X
Invest
PCE
dStok
Japan’s housholds and businesssee darker times ahead
Tokyo consumer confidence [L], Tankan business conditions* [R]
32.5
35.0
37.5
40.0
42.5
45.0
47.5
50.0
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
Source: Cabinet Office and Bank of Japan.
Consumer confidence [L]
Tankan [R]
Japan’s export markets turn sluggish contribution to growth of Japan’s export
volumes (%)
-5
0
5
10
15
20
25
30
35
2006-Q1 2006-Q3 2007-Q1 2007-Q3 2008-Q1
Other
Other Asia
China
Europe
USA
Source: Bank of Japan, DECPG calculations
1.4
2.7
-0.8
-2
-1
0
1
2
3
4
Q4-2007 Q1-2008 Q2-2008 P
Source: EuroStat and DECPG calculations.
Euro Area Q2 GDP falls 0.8% on drop in investment, weak exports growth of real GDP, and contributions to
growth in percentage points
Change in StocksGovernment Net Exports
ConsumptionInvestment
European purchasing power hit hard by energy prices
Retail sales volume, ch% y/y [R], HICP-energy, ch% y/y [L]
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
-5.0
-2.5
0.0
2.5
5.0
Source: Eurostat through Thomson/Datastream.
HICP-Energy [L]
France [R]
Germany [R]
Italy [R]
German exports continue decline in July-- in step with export orders export volumes and overseas factory
orders, ch% 3mma
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
Source: Bundesbank-- Thomson/Datastream.
Export volume
Export orders
Industrial production
Eurozone IP plummets on weaker internal and external demand
real IP, ch% (6m/6m, saar)
-2
0
2
4
6
8
Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08
France
Germany
Eurozone
Source: Thomson/Datastream, DECPG.
Industrial production weakening in developing countries outside China
real IP, ch% (3m/3m saar)
-4
-2
0
2
4
6
8
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-085
10
15
20
25
30
Developing countriesexcluding China [left scale] China [right scale]
Source: Thomson/Datastream, DECPG.
Export growth and fiscal stimuluscushion U.S. output from deeper decline
real IP ch% (saar)
-4
-2
0
2
4
6
8
Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08
IP 3m/3mIP 6m/6m
Source: Thomson/Datastream, DECPG.
International trade
OECD import volumes contract in the second quarter
import volumes, ch% (y/y) [left], ch% saar [right]
-5
0
5
10
15
-10
-5
0
5
10
15
20
25
Source: NL CPB and Thomson/Datastream.
3m/3m saar [R]
12m/12m annual [L]
China’s exports ease gradually into 2008
export volumes, ch% (y/y) [left], ch% saar [right]
0
10
20
30
40
-40
-20
0
20
40
60
80
Source: NL CPB and Thomson/Datastream.
3m/3m saar [R]
12m/12m annual [L]
LAC exports follow U.S. imports annual volume growth ch% (12m/12m)
-8
-5
-3
0
3
5
8
10
13
15
U.S. imports
LAC exports
Source: NL CPB and Thomson/Datastream.
Oil prices
Crude oil prices plunge on increasing concerns about demand
50
75
100
125
150
Jan-07Jul-0
7Jan-08
Jul-08
$/bbl
WTI
Brent
Dubai
Source: Datastream and DECPG Commodities Group.
Growth in U.S. oil demand million barells per day, 3mma (y/y)
-1200
-1000
-800
-600
-400
-200
0
200
400
600
800
1000
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08
Gasoline Distillate Resid Other
mb/d
Source: IEA and DECPG Commodities Group.
WTI Futures Prices - NYMEX
50
60
70
80
90
100
110
120
130
140
150
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13
SEP 9 2008
$/bbl
Monthly contract prices to Dec 2013* on select dates in 2007-08
Jan 16
Aug 15
Dec 31
Jul 3 2008
Jul 31 2008
Source: NYMEX and DECPG Commodities Group.
Non-oil commodity prices
Corn, soybean, wheat prices decline on improving supply prospects
200
400
600
800
1000
1200
1400
1600
Jan-07Jul-0
7Jan-08
Jul-08
c/bushel
Soybeans
Corn
Wheat
Source: Datastream and DECPG Commodities Group.
Metals prices fall on increasing concerns about demand
1000
2000
3000
4000
5000
6000
7000
8000
9000
Jan-05Jan-06
Jan-07Jan-08
10000
15000
20000
25000
30000
35000
40000
45000
50000
55000
Cu Zn $/ton Ni $/ton
Zinc
Copper
Nickel
Source: LME and DECPG Commodities Group.
Gold prices drop on dollar appreciation
400
450
500
550
600
650
700
750
800
850
900
950
1000
1050
Jan-05Jan-06
Jan-07Jan-08
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1.50
1.55
1.60$/toz $/euro
Gold price
$/euro
Source: LME and DECPG Commodities Group.
International Finance
Captial flows depressesd over July / August
Source: DECPG Finance Team.
Gross capital flows to emerging markets
$ billion 2006
Total H1 Total Jan-Aug H1 Jun Jul Aug YTD
Total 494 357 683 472 267 58 29 15 312
Bonds 137 107 146 118 58 19 8 2 68
Banks 246 164 343 240 165 36 20 13 198
Equity 111 86 194 114 44 3 1 0 46
Lat. America 116 69 157 110 54 9 5 2 62
Bonds 41 31 45 37 17 1 1 0.4 18
E. Europe 179 156 252 191 104 35 17 6 127
Bonds 64 50 64 55 33 15 6 0.1 39
Asia 153 110 213 130 90 11 4 6 101
Bonds 19 18 23 22 7 3 1 1 9
Others 45 32 60 41 20 2 2 1 22
2007 2008
Global equities continue decline Mature- and Emerging Market indices, ch
%
-15.0
-12.5
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
Jan Feb Mar Apr May Jun Jul Aug Sep*
Source: Thomson/Datastream.
Emerging Markets
Mature Markets
120
160
200
240
280
320
360
May-07 Aug-07 Nov-07 Feb-08 May-08 Aug-08
10
15
20
25
30
35
Source: Thomson/Datastream.
EM credit spreads widen in step with increasing risk aversion
EMBIG spreads, basis points [L], Equity volatility index [R]
EMBIG spreads [L]
Vix index [R]
Currencies
1.390
1.410
1.430
1.450
1.470
1.490
1.510
1.530
1.550
1.570
1.590
1.610
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
96
98
100
102
104
106
108
110
112
Source: Thomson/Datastream.
yen/USD
USD/Euro (inverse)
Dollar rebounds sharply vis-à-vis the euro
USD per Euro (inverse) [Left] and Yen per USD [right]
European prospects dim... a key factor in the dollar’s rebound Consensus forecasts for 2008 GDP
growth, by month prepared.
1.0
1.5
2.0
2.5
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08
Source: Consensus Economics Ltd.
Germany
USA
Euro Area
85
90
95
100
105
110
115
120
125
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
Source: Thomson/Datastream.
Dollar broadly higher against emerging market currencies
LCU per USD indexes, Jan1 2008=100 [*increase = weaker LCU]
Turkish lira
Brazilian reis
Indonesian rupiah
Korean won
Philippine peso
FOCUSSeptember 2008
U.S. takeover of Fannie and Freddie...market implications
Takeover of Fannie & Freddie followed by drop in mortgage rates...
mortgage spreads in basis points
0
50
100
150
200
250
300
350
400
450
500
08/01/07 11/01/07 02/01/08 05/01/08 08/01/08
Source: Federal Reserve Governors.
30-year fixed mortgage rate – Fed funds rate
30-year fixed mortgage rate – 30-year T-Note rate
30
40
50
60
70
80
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08
Source: Bloomberg Data Service.
... and lower yields on U.S. Agency debt
yield on 30-year Fannie Mae bonds less Treasury bond (basis points)
...as fiscal outlook deteriorates U.S. federal debt held by the public, % of
GDP
25.0
27.5
30.0
32.5
35.0
37.5
40.0
42.5
2007 2008 2009 2010 2011 2012
09-Sep-08
Aug -07 Projection
Source: Congressional Budget Office.
The External Environment for Developing Countries
September 2008The World Bank
Development EconomicsProspects Group