Global Economic Prospects and the Developing Countries William Shaw December 1999

Transcription

1 Global Economic Prospects and the Developing Countries 2000 William Shaw December 1999

2 Prospects for Growth and Poverty Reduction in Developing Countries Recovery from financial crisis uneven International environment poses substantial risks Progress on poverty reduction remains slow

3 Real GDP growth for developing countries (percent) 5 4 March forecast Current forecast Source: DECPG staff estimates.

4 Distribution of per capita growth across developing countries excl. China, India (percent) Share of Per capita # of ctrys population* growth <0% % >2% *of total developing countries Source: DECPG staff estimates.

5 Financial misery index since December 1998 (mean of % changes in currency, stock market, interest rates) Argentina India Hungary South Africa Philippines Mexico Poland Czech R. Thailand Korea Malaysia Indonesia Brazil Turkey Russia Better off Worse off Source: DECPG staff estimates

6 Spread on Brady Bonds Basis points Aug Source: Bloomberg and World Bank

7 Change in household net worth in relation to income* in the United States and the personal savings rate (percent) Personal Period Change savings rate 1980s * Disposable income plus IRA investment and capital gains adjusted for inflation and accrued taxes. Source: Gale & Sabelhaus.

8 Share of population in poverty (less than $1 per day) East Asia South Asia Sub-Saharan Africa

9 External Shocks, Financial Crises, and Poverty in Developing Countries The crisis increased poverty in East Asia and elsewhere Social sector expenditures fell in East Asia crisis countries Reducing volatility of income important for poverty reduction

10 Poverty in East Asia (% of total population) Korea (Urban) Indonesia Malaysia Thailand

11 Changes in real wages in East Asia (percent) Korea Indonesia Malaysia Thailand

12 Unemployment Rates in East Asian Countries during the Crisis (percent) Korea Indonesia Malaysia Thailand Sources: Korea: Urban, for 1998 second half, Shin (1999); Indonesia: Data for August,, Islam (1999); Malaysia: Labor Force Survey; Thailand: Unemployed as % of current labor force, average for February and August figures, World Bank (1999d)

13 Terms of Trade and GDP Growth Volatility, (standard deviations, in percent, unweighted averages) Terms of Trade High Income OECD East Asia and Pacific Middle East and North Africa Sub Saharan Africa Real GDP Low and Middle Income South Asia Latin America and the Carribean

14 Asian Restructuring: From Cyclical Recovery to Sustainable Growth Severe structural problems remain Absent restructuring, growth slower, costs higher, and economies vulnerable Healthy banks would contain systemic risks and fiscal cost Corporate restructuring requires allocation of losses

15 Industrial production before and after the crises (index=100 at the start of the crisis) Pre-crisis Thailand Post-crisis Malaysia Korea Indonesia Months *3 months moving averages Source: Datastream

16 Thai nonperforming loans compared with interest rates, June 1998-July 1999 (percent) NPLs ratio (percent) Jun- 98 Jul- 98 Aug- 98 Sep- 98 Oct- 98 Nov- 98 Dec- 98 Jan- 99 Feb- 99 Mar- 99 Apr- 99 May- 99 Jun- 99 Jul months money market rate (percent) Source: Bank of Thailand

17 Bankruptcies in Malaysia Number of bankruptcies 12/1/92 6/1/93 12/1/93 6/1/94 12/1/94 6/1/95 12/1/95 6/1/96 12/1/96 6/1/97 12/1/97 6/1/98

18 Managing the Recent Commodity Price Cycle Primary commodity prices volatile and declining Oil exporters had mixed savings performance and lower investment Non-oil oil exporting countries of SSA increased savings and investment

19 Oil and non-oil prices, Sep 91 to Aug 99 (US$/bbl for oil, index 1990=100 for others) $24 $22 $20 $18 $16 $14 $12 Non-oil commodities Metals & minerals Oil $10 S'91 S'92 S'93 S'94 S'95 S'96 S'97 S'98 60 Source: DECPG, World Bank

20 Current and previous declines of non-oil commodity prices (Peak =100) Feb Jan 1985 June May 1993 May Aug Source: World Bank data. Months from peak

21 Oil exporters savings and investment (change from base period as percent of GDP) Savings Investment Real income

22 Real income, savings and policies in Sub-Saharan African non-oil exporters (change relative to base years, by policy rating) GDP Savings/GDP Real Income/GDP Greater than or less