January 2013 - present
The World Bank monitors major commodity markets important to the developing countries. This series provides analysis of global financial market trends and a forecast of capital flows to developing countries.
This series is part of: Global Economic Prospects.
External financing conditions for developing countries have been remarkably favorable in recent months, reflecting expectations of a more drawn-out period of monetary policy accommodation in high-income countries and some narrowing of external vulnerabilities. ... See More + Additional easing by the European Central Bank, combined with prospects of modest growth and stable inflation in the United States (Goldilocks recovery), helped pull down bond yields and volatility worldwide. These benign conditions currently provide support to capital inflows and activity across developing countries, but could at the same time increase the risk of greater and potentially more abrupt market adjustments ahead. Despite some reduction of current account deficits in several developing countries, many remain vulnerable to sudden shifts in investors sentiment and capital outflows. Following a brief period of market turmoil at the start of the year, global financing conditions have eased consider-ably from March to June. Bond spreads for developing countries (i.e. yield difference with 10-year U.S. Treasury bonds) have narrowed, bringing down average borrowing costs to their lowest level since the spring of 2013. Stock markets have also recovered rapidly from a significant sell-off in January/February, despite rising geopolitical tensions and evidence of disappointing activity in the first quarter of the year. As presented in the June 2014 edition of Global Economic Prospects, a more favorable global environment is reflected in upward revisions to capital inflow forecasts for developing countries, now projected to remain broad-ly stable as a percentage of GDP in 2014 and 2015, at around 5.6 percent, before declining again in 2016, to 5.1 percent. While baseline forecasts assume an orderly in-crease in long-term interest rates in high-income countries, the risk of more abrupt adjustments from current low levels has recently increased. Escalating geopolitical tensions or financial stress in some developing countries could also potentially trigger a sudden re-pricing of risk. Despite the recent narrowing of current account deficits in some developing countries, many remain vulnerable to a sharp increase in borrowing costs and/or significant currency depreciations, which could put additional strain on corporate and bank balance sheets. See Less -
Working Paper 93995 JUN 01, 2014
Ju Kim, Eung; Stocker, Marc Disclosed
Global financial markets were largely stable during the past year, not with-standing the recent uptick in volatility amid uncertainty over the timing of an eventual tapering off of quantitative easing. ... See More + Improved financial conditions are reflected in a strong rebound in gross capital flows (international bond issuance, cross-border syndicated bank loans and new equity placements) to developing countries, which were 63 percent higher in the first five months of 2013 than during the same period in 2012. Foreign direct investment (FDI) inflows to developing countries increased by 9 percent during the first quarter of 2013 on a year-on-year basis, with a mixed picture across countries. Since late May, financial market volatility has increased, with increased expectations about possible tapering of U.S. quantitative easing in coming months and uncertainty over its impacts. Although there have been some large stock market corrections in some Asian countries, so far the overall impact has been moderate. Bond yields on developing country debt are also on the rise as base rates and spreads increase. See Less -
Working Paper 93992 JUL 01, 2013
Ju Kim, Eung; Aykut, Dilek Disclosed
Global financial conditions have improved substantially since July 2012, a reflection of the cumulative steps taken by high-income countries' central banks. ... See More + Gross capital flows to developing countries, which weakened in mid-2012 due to Euro area turmoil, bounced back in the second half of the year. Foreign direct investment (FDI) inflows to developing countries are expected to have declined slightly in 2012 following increased uncertainty in global financial markets. Gross capital flows have remained strong so far in 2013, with January and February flows 47 percent higher than in the same period in 2012. The level of net capital flows going to developing countries is set to rise through 2015. See Less -
Working Paper 93994 MAR 01, 2013
Aykut, Dilek; Kim, Eung Ju Disclosed
|Title||Document Date||Report No.||Document Type||Also available in|
|Global economic prospects : financial markets outlook (English) See More +||JUN 01, 2014||93995||Working Paper|
|Global economic prospects : financial market outlook (English) See More +||JUL 01, 2013||93992||Working Paper|
|Global economic prospects : financial market outlook (English) See More +||MAR 01, 2013||93994||Working Paper|