Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, has announced figures from the latest edition of its Global Trade Flow Index*. Its analysis shows continued growth in global trade flows in Q4 2010, with an increase of 2.5 percent, although at a slightly slower pace than the 4.67 percent trade growth recorded in Q3 2010, due to the threat of a sovereign debt crisis in the EU and inflation in developing economies.
The report also highlights a good recovery in US exports in Q4 2010, which witnessed growth of 2 percent compared to the previous quarter (Q3 2010), thanks to a weaker dollar coupled with a rebound in the global economy. At the same time, China’s export of goods and services decelerated by 2.9 percent quarter-on-quarter, leading the United States to regain its position over China in overall trade volumes.
Capgemini Consulting’s Global Trade Flow Index tracks the trade of goods and services by quarter based on an analysis of a number of trade and market-related parameters from the latest available official data (related to the import and export of goods and services) from national agencies of the 23 top countries in terms of global trade. This edition of the report highlights stability in global trade volumes in Q4 2010 due to monetary tightening measures taken by the world’s major economies, although risks such as inflation still remain in many markets.
The report reveals growth in the BRIC countries is beginning to slow as inflation becomes more of a serious threat, particularly in China and India. In China, government monetary tightening measures and a dip in services trade led it to slip from the top spot in global trade volumes, as the market here becomes less focused on export fueled growth and more on producing consumer goods.
In addition, Russia’s GDP grew at a moderate pace as business investment rose and exports of goods & services grew by 6% q-o-q driven by energy and raw material exports in Q4 2010. In Brazil, while foreign trade levels may have increased, with 9 percent growth in total trade volumes in Q4 2010, it is dependent on the US for more than a third of its total trade and any change in the Capgemini News Alert economic environment or trade policy here may impact Brazil’s future growth.
However, India’s exports of goods and services grew by 8.7 percent on Q3 2010 as government stimulus packages were announced and manufacturing, services and agriculture began to recover.
In the Eurozone area, Germany continues to outperform thanks to highly favorable labor market conditions, moderate inflationary pressures and buoyant consumer confidence, despite a 2 percent drop in its trade levels in Q4 2010 compared with Q3 2010 due to a competitive devaluation in its target export markets such as the Netherlands and France.
The Netherlands was also a strong performer with a rise in total trade volumes of 3 percent in Q4 2010 compared to Q3 2010. In general, easier labor market conditions, subdued inflation and an increase in consumer spending is leading to a recovery in trade levels in Europe.
“Government tightening measures in some of the world’s biggest economies mean we are starting to see trade levels in Europe and the US picking up again,” said Roy Lenders, Vice President Supply Chain Management atCapgemini Consulting. “At the same time, rising inflation is causing concern about growth levels in the BRIC countries. These emerging market economies will need to very carefully manage the complex trade-off between robust growth and rising inflation if they are to maintain growth here.”