About the Report

The world economy is undergoing a period of slowing growth, unsettled financial markets, and heightened inflationary pressures. Global growth is projected to fall in 2008 to 2.7 percent, from 3.7 percent in 2007, with much of the weakness originating in high-income countries. The growth rate of developing countries is also expected to decline, from 7.8 percent in 2007 to 6.5 percent in 2008, but remain well above the average of the 1980s, 1990s, and even the recent period of 2000-05, indicating that improved underlying structural factors are influencing overall economic performance. Such structural factors reflect the broader forces of globalization, the internationalization of the banking industry, and the coming of age of the emerging-market asset class. Private capital flows to developing countries exceeded $1 trillion in 2007, marking five consecutive years of strong gains. Various indicators, however, signal that the downturn in the global credit cycle will reverse the upward trend.

Demand for international banking services in developing countries has evolved over time in response to their changing position on the global economic and financial stage. Attracted by the prospects of asset growth and risk diversification, foreign banks have been expanding their presence in developing countries through both cross-border lending and local market investment. Efforts by developing countries to reap the benefits of foreign bank presence need to focus on bank soundness at entry through closer coordination with home-country regulators while building necessary safeguards against the risk of financial contagion in the international banking system. At the same time, as regulatory reforms in mature markets take effect, it is vital that developing countries maintain their commitment to the sound macroeconomic and financial policies of the recent past while they factor in changes in the international financial climate.

Concurrent with the ongoing globalization of financial markets, the world is confronting rapid inflation in commodity prices. Indeed, no other issue captures the complexity of the current policy agenda facing the international community. Tackling this challenge requires collective resolve and clear thinking. It is imperative that policy makers in developing and high-income countries alike take firm actions to alleviate the impact of soaring food and energy prices on the poor while addressing the longer-term challenges of financial globalization and economic interdependence.

Global Development Finance 2008, I: Review, Analysis, and Outlookis the World Bank's annual review of recent market trends in and prospects for financial flows to developing countries. Global Development Finance II: Summary and Country Tables includes a comprehensive set of tables with statistical data for 134 countries that report debt under the World Bank Debtor Reporting System, as well as summary data for regions and income groups. It contains data on total external debt stocks and flows, aggregates, and key debt ratios, and provides a detailed, country-by-country picture of debt. Debt data are also available in an electronic format: GDF Online(a subscription database) and the GDF CD-ROM. Each of these databases provides access to 217 time series indiators from 1970 to 2006 and country group estimates for 2007.

"Prospects for the Global Economy" is an online companion to Global Development Finance. It provides information on the global economic outlook, detailed regional forecasts, ad additional features such as interactive graphs, analytical tools, and access to underlying data. It is available in English, French, and Spanish at www. worldbank.org/globaloutlook

The Little Book on External Debt is a publication that provides a quick reference to key debt data in aggreagte and for individual countries.

With analysis and data extending from short-term bank lending to long-term bond issuance in both local and foreign currency, Global Development Finance 2008 is unique in its breadth of coverage of the trends and issues of fundamental importance to the financing of the developing world, including coverage of capital originitaing from developing countries themselves. The report is an indispensable resource for governments, economists, investors, financial consultants, academics, bankers, and the entire development community.