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Transformational Changes in the Global Economy Trade, finance and commodities after the crisis

Transformational Changes in the Global Economy Trade, finance and commodities after the crisis. Hans Timmer World Bank March 1, 2011. Trade, Finance, and Commodities. Trade dynamics illustrate that developing countries have become the drive of global growth.

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Transformational Changes in the Global Economy Trade, finance and commodities after the crisis

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  1. Transformational Changes in the Global EconomyTrade, finance and commodities after the crisis Hans TimmerWorld Bank March 1, 2011

  2. Trade, Finance, and Commodities Trade dynamics illustrate that developing countries have become the drive of global growth

  3. Trade dynamics illustrate that developing countries have become the drive of global growth Financial markets still show the reverberations of the financial crisis Trade, Finance, and Commodities

  4. Trade dynamics illustrate that developing countries have become the drive of global growth Financial markets still show the reverberations of the financial crisis Food price increases reflect major changes in commodity markets Trade, Finance, and Commodities

  5. Source: The World Bank

  6. Japan’s export growth was largely driven by Asian import demand during crisis Contribution to annualized q/q growth (%) Source: World Bank, DEC Prospects Group

  7. Developing countries’ imports stronger than their exports Source: World Bank, DEC Prospects Group

  8. Share of developing countries in global trade more than doubled during last 20 years Source: Comtrade data via WITS

  9. Source: The World Bank

  10. Source: The World Bank

  11. Source: The World Bank

  12. Developing countries have become driver of global trade Sustained strong growth in developing countries is more crucial than rebalancing for global recovery Developing countries should take the lead in trade negotiations

  13. Decline and recovery in capital flows was very concentrated Source: The World Bank

  14. Bank NPLs remain elevated in Europe and Central Asia

  15. Capital flows put upward pressure on many currencies Real-effective exchange rate, January 2009=100 Source: International Monetary Fund

  16. Weak bank-lending implies private capital flows will not recover to pre-crisis levels for some time in billions Percent of GDP Net private capital flows to developing countries, $ billion Source: The World Bank

  17. From FDI inflow…… Percent of GDP

  18. …to FDI outflows

  19. Developing countries’ role in financial markets will dramatically increase Developing countries aim to become less dependent on dollar and US monetary policy. Coming decade will show shift from ingoing FDI to outgoing FDI. While high-income countries look for regulating financial markets, developing countries need to deepen markets, partly through liberalizing them.

  20. The recent boom was one of the largest, longest lasting and involved all commodities MUV-deflated US$ (2000=100) Agriculture Metals Oil Source: World Bank

  21. Source: The World Bank

  22. Technological progress increases the efficiency of resource use Commodity intensity of demand, index 1971 = 1 Source: World Bank.

  23. Most major countries have passed the point where food demand grows much faster than population Source: World Bank Note: Curve fitted on a log scale

  24. Globally, agricultural productivity growth exceeds demand growth Projected annual average growth rates 2000-2030, per cent Source: Productivity (Coelli and Rao, 2005); Food demand, FAO (2006)

  25. Production (history) and demand (forecasts)(annual average percent change) Source: FAO (history) and FAO/OECD (forecasts)

  26. Sharp increase in Chinese demand for metals Decades of weak prices, during which as much as ½ of global demand was being met from idle capacity Impact of oil prices on agricultural prices Adverse weather patterns Larger role of financial market Causes of the boom

  27. High oil prices affect food prices Oil < $50 Oil > $50 Source: DEC Prospects Group.

  28. Improving our capacity to respond to commodity cycles Domestic policy agenda • Improve targeting of social welfare schemes • Invest in rural infrastructure and agricultural R&D • Be prepared to react rapidly because of long-term costs of even a relatively short bout of high food prices Global policy agenda • Proceed with trade liberalization, including improved disciplines governing export bans • Increase the financial independence of World Food Program • Improve information flows and coordination of food stocks

  29. Transformational Changes in the Global EconomyTrade, finance and commodities after the crisis Hans TimmerWorld Bank March 1, 2011

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