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Equities tumbled in January S&P/Citi-Group BMI Global Index, ch%

The External Environment for Developing Countries February 2008 The World Bank Development Economics Prospects Group. Equities tumbled in January S&P/Citi-Group BMI Global Index, ch%. 3 months: from October 2007. 1 year: from January 2007. January 2008. Source: Standard & Poor’s.

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Equities tumbled in January S&P/Citi-Group BMI Global Index, ch%

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  1. The External Environment for Developing CountriesFebruary 2008The World BankDevelopment EconomicsProspects Group

  2. Equities tumbled in JanuaryS&P/Citi-Group BMI Global Index, ch% 3 months: from October 2007 1 year: from January 2007 January 2008 Source: Standard & Poor’s.

  3. Spreads widen, but yields stable EMBIG spread and U.S. 10-year T-note, basis points EMBIG yields EMBIG spreads U.S. 10-year Treasury note Source: JPMorgan-Chase and Thomson/Datastream

  4. Industrial countries

  5. U.S. GDP growth falls to 0.6% in fourth quarter as housing takes a tollgrowth of real GDP, and contributions to growth in percentage points Net exports Government Consumption Fixed Investment Change in stocks Growth 2007 2.2% Source: Department of Commerce and DECPG calculations.

  6. U.S. new home sales drop 33% over 2007– worst in 45 yearsexisting and new home sales, ch% 3mma y/y Existing home sales New home sales Source: National Assn of Realtors and Department of Commerce.

  7. Employment decline in Januarypoints to weaker retail spending aheadretail sales, ch% 3mma y/y [L], change in employment 3mma [R] Employment [R] Retail sales [L] Source: Departments of Labor and Commerce.

  8. Japanese GDP jumps to 3.7% growth in fourth quarter on exportsgrowth of real GDP, and contributions to growth in percentage points Net exports Stocks Fixed Investment Government Consumption Growth 2007 2.1% Source: Cabinet Office and DECPG calculations.

  9. Japan’s public-sector and residential investment show sharp declinespublic- and residential investment, share of real GDP, percent Residential investment Public investment Source: Cabinet Office through Thomson/Datastream.

  10. Japan’s orders momentum up in December supporting exports and productionexport volume and IP, ch% saar [L] machinery orders ch% saar [R] Exports [L] Industrial production [L] New machinery orders [R] Source: Cabinet Office through Thomson/Datastream.

  11. Euro Area growth eases in fourth quarter on consumer and exportspercent change Source: EuroStat.

  12. German exports and production dampened by euro strengthexport volumes and IP ch% 3mma, y/y Exports Production Source: Eurostat through Thomson/Datastream.

  13. ECB hints at cut in policy rates as Euro Area growth slowsHICP inflation (ch% y/y) [L]; Germany IP ch% saar [R] Germany IP [R] HICP inflation (y/y) [L] Source: Eurostat and Bundesbank.

  14. Industrial production

  15. Possible contraction of industrial production in the Euro-zone in 2008-Q1 Euro Area industrial production, 3mma ch%, saar Forecast Source: DECPG

  16. Has the slowdown in U.S.- and Mexican IP bottomed out? Industrial production, 3mma, ch% saar data forecast Mexico United States Source: DECPG

  17. IP growth appears to be moving “sideways” in East Asia Industrial production, 3mma, ch% saar data forecast China Other EAP countries Source: DECPG

  18. High-tech Markets

  19. The tech-cycle has been truncatedby global growth uncertainties and delayed investment spendingglobal semi-chip sales and high-tech exports, ch% saar Exports Semiconductor sales Source: SIA, Thomson/Datastream, Haver.

  20. Production trends still at lofty rates but signs of downturn emergingunit value index in USD terms, ch% year-on-year Global East Asia x Japan Source: National Agencies and DECPG calculations.

  21. G-3 high-tech orders back in negative territoryG-3 orders for high-tech manufactures, US dollar terms, ch% saar G-3 High-tech orders Source: National Agencies and DECPG calculations.

  22. International trade

  23. Developing countries are now key drivers of global imports and trade contribution to global import growth, ch% year-on-year Developing country imports U.S. imports Source: National Agencies through Thomson/Datastream.

  24. Gap between developing export- and high-income import- growth widens growth (USD, y/y percent) developing country exports and high-income imports Developing country export volumes High-income import volumes Source: National Agencies through Thomson/Datastream.

  25. Large emerging economies’ import growth and contributions strengthen contribution to global import growth, ch% year-on-year China Brazil India Russia Source: National Agencies through Thomson/Datastream.

  26. Oil prices

  27. Crude oil prices remain elevated $/bbl WTI Brent Dubai Source: DECPG Commodities Group.

  28. OPEC maintaining production levels mb/d Including Iraq OPEC-10 OPEC-10 Quota Source: OPEC and DECPG Commodities Group.

  29. Thermal coal prices surge on weather supply problems in Australia, China and South Africa Australia Thermal Coal $/ton (fob) WB Oil Price $/bbl Source: DECPG Commodities Group.

  30. Non-oil commodity prices

  31. Grains prices surge on strong competition for feed, food and fuel $/bushel $/bushel Corn Soybeans Wheat Source: DECPG Commodities Group.

  32. Aluminum prices rise on electric power disruptions ‘000 tons $/ton Aluminumprice LME stocks Source: LME and DECPG Commodities Group.

  33. Global steel production growth slowing mil tons Source: LME and DECPG Commodities Group.

  34. International Finance

  35. Sharp decline in bank lending and equity placement in January Source: DECPG Finance Team.

  36. Equities tumbled in JanuaryS&P/Citi-Group BMI Global Index, ch% 3 months: from October 2007 1 year: from January 2007 January 2008 Source: Standard & Poor’s.

  37. All sectors lost ground in January Total return by sector (based on MSCI world stock indices) Source: Bloomberg and DECPG calculations.

  38. Spreads widen, but yields stable EMBIG spread and U.S. 10-year T-note, basis points EMBIG yields EMBIG spreads U.S. 10-year Treasury note Source: JPMorgan-Chase and Thomson/Datastream

  39. Total write-downs, billions U.S. dollars Large credit write-downs reported by major banks Source: Bloomberg.

  40. Corporate default risk at record highsCredit default swaps, basis points CDSs on benchmark European exchange CDSs on the North American index Source: JPMorgan-Chase.

  41. Currencies

  42. Dollar in holding pattern against the majors since mid-Januaryindex, LCU per USD, January 1, 2007 = 100 yen euro Source: Thomson/Datastream.

  43. U.S. capital inflows up since August 2007– demand for Treasuries falling billions U.S. dollars Net foreign purchases of U.S. securities o/w Treasuries/Agencies o/w Private securities Source: TICS data system: U.S. Treasury.

  44. Commodity currencies tradingslightly stronger against the dollarindex, LCU per USD, July 1, 2007 = 100 A$ ruble Brazil Rl C$ Source: Thomson/Datastream.

  45. The External Environment for Developing CountriesFebruary 2008The World BankDevelopment EconomicsProspects Group

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