Capgemini Consulting, has announced figures from the latest edition of its Global Trade Flow Index. Its analysis reveals a decline in global trade flow levels, as a direct impact of the earthquake disaster in Japan and the resulting effect on trade with major economies. The analysis also highlights continued growth in China as it retains its position as global leader in overall trade volumes, beating previous forecasts that the US would regain its leadership position.
While China’s total trade volumes increased only marginally, by 3 percent in comparison with Q4 2010, US total trade volumes declined from $280bn (Q4 2010) to $278bn (Q1 2011) showing negative growth (1 percent),heavily impacted by the government’s troubled balance sheets, a weak job market, rising energy costs and declining property prices.
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.
The Index highlights that the Japan earthquake led to a steep decline in Japan’s economy in Q1 2011, with a fall in GDP of 8.6 percent and a reduction in its foreign market export of 29 percent and domestic market by 7 percent on a quarter-on-quarter basis. This in turn has had a severe impact on trade with major economies. Australia was most heavily impacted, with a fall in trade volumes of 7 percent as a result.
Korea (4 percent reduction), the US (3 percent reduction) and China (2 percent reduction) have also been significantly affected. Another effect of the earthquake has been a rise in the prices of oil and natural gas which is impacting economies around the world. In Russia, as a major exporter in this area, this has actually led to growth in GDP of 4.7 percent quarter-on-quarter.
In the Eurozone, rising consumer spending, supported by the lagged effects of government policy stimulus packages, has triggered gradual but sustained growth in key markets. For example, Belgium’s GDP rose by 1.7 percent in Q1 2011, driven by an increase in its domestic market by 2 percent and export market by 1.6 percent. The Netherlands’ GDP has also risen by 1.7 percent in Q1 due to growth in domestic consumption.
French GDP grew by 1.6 percent in Q1, with a rise in its total trade volumes of 3 percent quarter-on-quarter. Germany’s GDP also grew by 1.5 percent in Q1 2011. However, geopolitical instability and sovereign debt challenges in countries such as Ireland, Greece, Spain and Portugal could pose a significant risk to Europe’s positive outlook.
Looking ahead to Q2 2011, world trade flow levels are expected to grow. A predicted rise in Japan’s import levels together with a shift in exports to Japan’s competitor nations is expected to stimulate trade in a number of markets. However, inflation in emerging markets continues to pose a risk and could affect robust growth in global trade levels. In Russia, for example, the inflation rate rose from 6 percent in December 2010 to 9.5 percent in March 2011. In India it increased from 8.1 percent in December 2010 to 8.8 percent in February 2011 and in China, the inflation rate went up from 3.1 percent in December 2010 to 5.4 percent in March 2011.
“We have seen relatively flat levels of global trade over the last quarter due in large part due to the disaster in Japan,” said Roy Lenders, Vice President Supply Chain Management at Capgemini Consulting. “It is clear that the Japan earthquake will have a significant and long lasting impact on its economy and will create a cascading effect on its trading partners over the coming months. However, we do expect to see some improvement in global trade levels, although the pace will be slower than expected because of the fear of a sovereign debt crisis in the Eurozone and inflation in emerging economies.”
APPENDIX - Capgemini Consulting Global Trade Flow Index
(extract of the ranking with the 12 leading countries)
Copyright©2011 Capgemini- All rights reserved
Note: Global Trade Index Score = A x (average of (B,C,D)
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