Cover -- Title Page -- Contents -- Foreword -- Acknowledgments -- Abbreviations -- CHAPTER Overview -- Introduction -- The global financial crisis threatens short-term prospects in developing countries -- Uncertainty continues to cloud the outlook -- The commodity market boom has come to an end -- Commodity prices are declining in response to slower GDP growth -- In the longer term, growth in the demand for commodities should ease -- Moderating demand for metals depends critically on increased efficiency in China -- Future energy demand depends on improving automobile efficiency -- Over the next 20 years, supplies of extracted commodities are likely to remain ample -- Food demand will slow with lower population growth, but biofuels could expand crop demand very rapidly -- Strong productivity growth and unused crop land should ensure adequate food supply at the global level -- Commodity-producing countries are managing the revenue windfall better than they have in the past -- High commodity prices pose challenges for the poor, especially in consuming nations -- The role for international policy -- References -- CHAPTER 1 Prospects for the Global Economy -- Introduction -- Much tighter credit conditions will see investment and GDP growth slow sharply -- Prudent and vigilant policies are key as uncertainty continues to cloud the outlook -- Financial markets -- The deterioration in financial conditions accelerated markedly in September 2008 -- The turmoil has had a dramatic impact on emerging market assets -- Private capital flows expected to continue decline -- Tightening of credit sharply reduces domestic growth prospects -- Outlook for high-income OECD countries -- A movement to joint recession across key OECD countries -- Financial crisis places outlook under exceptional uncertainty -- Outlook for the developing countries.

Financial turmoil likely to curb investment -- The slowdown is likely to be more pronounced in 2009 -- Inflation has been rising but is now set to decline -- Regional outlooks -- World Trade -- Global current account balances are expected to show substantial shifts -- Commodity markets -- Falloff in demand in high-income countries drives decline in oil prices -- Prices for many metals are falling on the back of weaker demand -- Prices of agricultural commodities are falling sharply from peaks -- Commodity price declines carry significant implications for the terms of trade -- Key risks and uncertainties -- Long-term prospects and poverty forecast -- Notes -- References -- CHAPTER 2 The Commodity Boom: Longer-Term Prospects -- Introduction -- Characteristics of the current commodity price boom -- The size of the price increases are unprecedented -- The boom covers a wide range of commodities and has lasted much longer than previous ones -- The roots of the boom in commodity prices -- An extended period of low prices depressed investment in new capacity -- With spare and dormant capacity absorbed, prices surged in 2004 -- Increasing prices sparked a boom in investment in the oil, metals, and minerals markets -- The boom in agricultural prices reflects both high costs stemming from oil prices and increased demand from biofuels -- Government policy and investment fund activity may have exacerbated the increase in commodity prices -- Long-term demand prospects -- Long-term projections suggest that the main factors driving commodity demand will slow -- Demand prospects for energy -- Efficiency gains and conservation efforts reduced energy demand by 50 percent over the past 35 years -- Strong growth in developing countries is expected to dominate future energy demand -- The future path and mix of energy demand will depend on policy.

Demand prospects for metals and minerals -- After falling for years, metals intensities in developing countries are rising, especially in China -- Slowing global growth and a decline in Chinese metals intensity should see demand growth for metals slow over the next 25 years -- Demand for food and other agricultural products -- Slower population growth will dampen demand for agricultural products -- The implications of biofuels demand for agricultural prices -- Long-term supply prospects -- Energy and metals supply -- The world is unlikely to run out of oil, metals, and minerals in the foreseeable future -- Technological change has kept extraction costs in check even as the quality of mines and wells declined -- Technology has also helped maintain surprisingly stable ratios of reserves to output -- Reserves of metals and minerals have also tended to rise with output -- Increasing scarcity is unlikely to result in resource exhaustion -- Overall, high prices will encourage increased supply and substitution of alternative sources -- Actual results will depend on policy choices and technological progress -- Agricultural supply -- Rising productivity and land under cultivation have boosted agricultural production -- Technological gains are likely to drive continued increases in yields -- Prospects will depend on a number of uncertain factors -- In the long term, climate change and water scarcity could have significant impacts on yields -- Projections -- Agricultural prices are likely to decline over the long term -- Over the long run oil prices are expected to stabilize (in real terms) at around 75 -- Conclusions -- Notes -- CHAPTER 3 Dealing with Changing Commodity Prices -- Introduction -- Commodity dependence and growth -- Resource dependency reflects low GDP, not resource wealth -- Commodity dependence may, but need not, result in slower growth.

Managing primary commodity booms -- Commodity revenues and fiscal spending -- Resource-rich developing countries have shown greater fiscal restraint during the current boom -- Surprisingly the extent to which governments are saving from increased oil revenues is only loosely correlated with the size of their reserves -- Private sector saving from commodity revenues -- Real currency appreciation -- Most resource-rich countries are showing fewer signs of real effective exchange rate appreciation -- New entrants into oil production may be exceptions to these welcome trends -- Governance and transparency -- Sovereign wealth funds -- Dealing with revenue volatility -- Long-term contracting provides large-scale producers with some protection from output volatility -- Market-based conditional contracts offer protection from both price and volume volatility for large-scale market participants -- Food markets are more complicated politically -- Poverty impacts of higher commodity prices -- Higher oil prices and poverty -- The rise in the food bill is attributable to higher prices -- Higher food prices and poverty -- Higher food prices increase urban poverty unambiguously -- Higher food prices also tend to raise poverty in rural areas, but by less -- The actual extent of food price increases varies widely across countries -- Over the long term, higher food prices will raise incomes in the agricultural sector -- Dealing with high food and fuel prices -- The immediate response has been policies designed to mitigate the impact of rising food and fuel prices -- Policies need to be more targeted and more supportive of medium-term adjustment -- Subsidies and price floors are expensive and poorly targeted antipoverty measures -- Price containment policies distort incentives, reducing supply, limiting conservation, and exacerbating and prolonging high prices.

Over the medium term, countries need to move toward more flexible and targeted social safety net schemes -- Although the economics of reform are solid, eliminating existing but inefficient antipoverty measures is politically difficult -- The international response to high commodity prices -- The loss of real income from higher food prices is too great to compensate all consumers -- The international community has reacted swiftly to the rise in food prices -- Improvements are required in the architecture for humanitarian aid to strengthen the response to the food crisis -- Steps to assist the replenishment of international grain stocks would help -- More multilateral discipline in trade policies would help mitigate the rise in food prices -- Conclusions -- Technical Annex: Sensitivity Analysis -- Notes -- References -- Appendix: Regional Economic Prospects -- East Asia and the Pacific -- Recent Developments -- Commodity prices plummet -- export-market growth contracts -- Ripples of the financial crisis are reaching East Asia -- Difficult policy decisions -- Medium-term outlook -- Risks -- Europe and Central Asia -- Recent developments -- The region exhibits diverse performance -- Intensification of global crisis begins to exact toll -- Medium-term outlook -- Risks -- Latin America and the Caribbean -- Recent developments -- Credit conditions tighten, capital flows plummet -- Remittance inflows are slowing -- Inflation remains high, notably in food -- Medium-term outlook -- Risks -- Middle East and North Africa -- Recent developments -- Commodity price changes carry extreme effects across the region -- Effects of financial crisis are fairly muted, but several countries are vulnerable -- Production is mixed -- inflation ramps higher, denting budgets across the region -- Domestic demand, underpinned by substantial FDI, drives growth in the region.

The medium-term outlook.