The External Environment for Developing Countries September 2009 The World Bank Development Economics Prospects Group

1. The External Environment for Developing CountriesSeptember 2009The World BankDevelopment EconomicsProspects Group

2. Liquidity in global inter-bank markets have virtually returned to normal conditions The acute phase of the financial crisis has passedLIBOR-OIS spreads, basis points G-7 meeting Dollar Pre-crisis USD average Euro Source: Thomson/Datastream.

3. The decline in industrial production has turned aroundindustrial production, ch% (saar) World Developing OECD Source: National Agencies through Thomson /Datastream.

4. Industrial countries

5. U.S. consumer spending will cometo support GDP outturns for third quarter real PCE and retail sales growth (saar) [L]; change in employment (‘000, 3mma) [R] Real PCE [L] Retail volumes [L] Change in employment [R] Source: U.S. Departments of Commerce and Labor.

6. Sectoral developments have been upbeat ISM headline Mfgr and Svcs indices [L]; capital goods orders, ch% (saar) [R] Capital goods orders [R] ISM Services ISM Manufacturing Source: Institute for Supply Management, Department of Commerce.

7. U.S. trade developments should offer modest boost to GDP as well goods export and import volumes, ch% saar Export volumes Import volumes Source: U.S. Department of Commerce.

8. Japan’s orders, exports and production take a huge leg up over June and Julycore machinery orders, export volumes and mfgr output, ch% saar Production Core machinery orders Goods export volumes Source: Bank of Japan and Japan Cabinet Office.

9. Japan’s exports receive a boost from improved demand in Asia and United Statescontributions to growth of Japanese export volumes (yr/yr) Source: Bank of Japan and DECPG calculations.

10. Japanese consumer spending retrenchesas labor markets deteriorate quicklyunemployment rate (%) [L]; household spending and retail sales, ch% (y/y) [R] Household expenditure [R] Retail sales [R] Unemployment rate % [L] Source: Japan Cabinet Office.

11. Euro Area GDP outturns improved broadly in second quarterGDP growth Q1-2009 and Q2-2009, ch% (q/q saar) Source: European Commission and Eurostat.

12. German and French exports breach into positive territory, underpinning productiongoods export volumes ch% (saar) France Germany Source: Eurostat.

13. Household spending remains weakas spillovers from trade await consumer spending volumes, ch% (yr–on-yr) Germany Italy France Source: EUROSTAT.

14. Industrial production

15. The pace of decline in industrial production has turned aroundindustrial production, ch% (saar) World Developing OECD Source: National Agencies through Thomson /Datastream.

16. East Asia in the fore, with a general uptrend across all regions industrial production, ch% (saar) Industrial production, percentage change (saar) East Asia & Pacific Middle-East & North Africa South Asia Developing Latin America Europe & Central Asia Source: National Agencies through Thomson /Datastream.

17. Growth recovery fastest among countries that had steepest declines– levels depressed industrial production Oil producing countries Other MIC's and HIC's (incl LAC Resource exporters, US, UK) Capital goods exporters Countries with large imbalances and/or affected via trade channels Source: World Bank, DEC Prospects Group

18. International trade

19. Imports [L] Exports [L] Balance of trade [R] Source: National Agencies through Haver Analytics.

20. Source: Netherlands Central Plan Bureau (CPB).

21. U.S. current balance improves further in second quarter to 2.8% of GDPbillions U.S. dollars Income Services Non-oil BOT Oil balance Transfers Current account Source: Department of Commerce.

22. Oil prices

23. Oil prices supported by improving fundamentals $/bbl mb/d OPEC-11 Production [R] Oil price [L scale] Source: IEA and DECPG Commodities Group.

24. U.S. crude oil inventories decline but remain high M bbl 5-year high-low ranges Source: U.S. Department of Energy and DECPG Commodities Group.

25. WTI Futures Prices - NYMEX Monthly contract prices to Dec 2014* for select dates in 2009 $/bbl Jun 11 Jul 13 Sep 11 Feb 18 Source: NYMEX.

26. Non-oil commodity prices

27. Agriculture prices higher on sharp gains in sugar, rubber and fats & oils (2000=100) Source: DECPG Commodities Group.

28. Metals prices increase on supply constraints $/ton $/ton Copper Nickel Lead Source: LME and DECPG Commodities Group.

29. Gold prices rise on concerns about the dollar, inflation and the economy per toz Gold in USD Gold in euros Source: LME and DECPG Commodities Group.

30. International Finance

31. Flows slowed in August in the wake of a surge in July bond issuance Source: DECPG Finance Team.

32. Emerging Market bond spreads continue to narrowbasis points Corporate spread CEMBI Sovereign spread EMBI Source: JPMorgan-Chase.

33. Global equities continue uptrendMSCI indexes, Jan-2008 = 100. Emerging markets Developed markets Source: Bloomberg.

34. Currencies

35. Dollar depreciation accelerates over August and September USD per Euro (inverse) [Left] and Yen per USD [right] USD/Euro (inverse) yen/USD Source: Thomson/Datastream.

36. Euromarket interest differentials move against the greenback difference: USD 6-month LIBOR and EURIBOR 6-months (basis points) US LIBOR - EURIBOR Source: Thomson/Datastream.

37. Emerging market currencies continue gains against U.S. dollarpercentage change (USD per LCU) (%) Second quarter 2009 Third quarter 2009 Stronger Local Currency Source: Thomson/Datastream.

38. The External Environment for Developing CountriesSeptember 2009The World BankDevelopment EconomicsProspects Group