global trade flow index - capgemini...global trade flow index –q1 2011 edition tsunami in japan...

Global Trade Flow Index

Q1 - 2011

April 2011

Supported by:

2Copyright © 2011 Capgemini. All rights reserved.

Global Trade Flow Index – Q1 2011 edition

AGENDA

Summary

Index

Preview Window for Q2’11

The West-to-East Switch: BRIC

Appendix



Global trade was flat in Q1 2011 due to government tightening measures in

major economies and Tsunami in Japan

Sources: Capgemini Analysis, Stats.oecd.org, 2010, Deloitte Global Economic Outlook Q1 2011, Logest forecast

Key developments

Tsunami in Japan resulted in reduction of

Global Trade volume by approx. 3%

Continuing with government tightening

measures China entered into a new era of

economic development, balancing its inflation

and export competitiveness in the first quarter

of 2011

In US, the public sector’s troubled balance

sheets, a weak job market, rising energy

costs, and declining home prices affected the

growth rate in Q1 2011

In the Eurozone, rising consumer spending –

supported by the lagged effects of policy

stimulus – triggered a gradual but sustained

growth in core nations

The outlook on the Indian economy is positive

due to increase in its trade volume by 6% on

q-o-q basis , as manufacturing sector

performed well due to strong domestic

demand and improving exports

Total trade- top 23 countries (billion usd)



Tsunami in Japan affected its trade with its trading partners in Q1 2011,

resulting in reduction of global trade volume by approximately 3%

Sources: Capgemini Analysis, Stats.oecd.org, 2010, Logest forecast

Japan quake impact seen deep and long over Japan’s economy and is

expected to create a cascading effect on its trading partners in the near future

Japan’s economy crumbled in first

quarter due to strong effect of Tsunami

leading to fall in its GDP by 8.6%

annually, along with a reduction in its

foreign market by 29 % and domestic

market by 7% approx. on q--o-q basis

133

98

0

20

40

60

80

100

120

140

160

Estimated Trade volume before

Tsunami

Trade volume after Tsunami

Japan

Reduced by 27%

(Billion USD)

288 281

213

84

62

38

279 274

212

8161

35

0

50

100

150

200

250

300

350

USA China Germany Korea Russia Australia

Estimated Trade volume before Tsunami Trade volume after Tsunami

Impact on major trading partners

Reduced

by 3%Reduced

by 2%

Reduced

by 1%

Reduced

by 4% Reduced

by 1% Reduced

by 7%

(Billion USD)



AGENDA

Summary

Index



Appendix



China retained its leadership position in the first quarter of 2011 on the basis

of its improving trade (1/2)

CountryRANK

Q1-2011

RANK

Q4-2010

China 1 1

United States 2 2

Germany 3 3

Netherlands 4 6

France 5 5

United Kingdom 6 7

Italy 7 8

Korea 8 9

Japan 9 4

Belgium 10 10

Canada 11 11

Russian

Federation12 12

Trade Volume

Score (A)

Q-o-Q Growth

Score (B)

3.94 3.88

4.00 3.75

3.04 3.88

1.44 3.91

1.45 3.86

1.26 3.84

1.25 3.88

1.16 3.77

1.41 2.85

1.05 3.88

0.99 3.84

0.88 3.92

Global Trade

Index Score*

15.37

15.18

11.77

5.60

5.58

4.88

4.82

4.44

4.26

4.06

3.80

3.47

Foreign Market

Score (C)

Domestic Market

Score (D)

3.85 3.98

3.79 3.85

3.84 3.88

3.88 3.89

3.83 3.87

3.86 3.88

3.85 3.86

3.79 3.92

2.70 3.54

3.87 3.89

3.78 3.89

3.92 4.00

Trade related parameters Market related parameters

Note: * Global Trade Index Score = A x (average of (B,C,D))

Source: Capgemini Analysis, Logest Forecast



Indian economy maintained it’s momentum in Q1’11 as manufacturing sector

performed well due to strong domestic demand and improving exports (2/2)

CountryRANK

Q1-2011

RANK

Q4-2010

Mexico 13 13

Spain 14 14

India 15 15

Brazil 16 17

Australia 17 16

Poland 18 19

Switzerland 19 20

Sweden 20 18

Austria 21 21

Czech Republic 22 22

Norway 23 23

Trade Volume

Score (A)

Q-o-Q Growth

Score (B)

0.78 3.89

0.73 3.87

0.65 4.00

0.53 3.97

0.51 3.67

0.43 3.95

0.42 3.90

0.42 3.88

0.41 3.88

0.36 3.94

0.27 3.90

Global Trade

Index Score*

3.06

2.82

2.59

2.07

1.92

1.69

1.63

1.62

1.57

1.39

1.05

Foreign Market

Score (C)

Domestic Market

Score (D)

3.92 3.90

3.87 3.86

4.00 3.96

3.88 3.94

3.85 3.82

3.93 3.92

3.89 3.87

3.88 3.88

3.87 3.88

3.89 3.89

3.88 3.89

Trade related parameters Market related parameters

Note: * Global Trade Index Score = A x (average of (B,C,D))

Source: Capgemini Analysis, Logest Forecast



Tsunami in Japan led to a steep fall in its economy creating a direct impact on

trade with major economies

4th Quarter- 2010 1st Quarter- 2011

Source: Capgemini Analysis, Deloitte Global Economic Outlook Q1 2011, Stats.oecd.org, 2010, Logest Forecast

X- Foreign Market Growth (%)

Y- Domestic Market Growth (%)

Bubble– GDP Q4-2010

X- Foreign Market Growth (%)

Y- Domestic Market Growth (%)

Bubble – GDP Q1 2011

* As per the revised Q4 2010 figures released by OECD * As per the Logest Forecast

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

-4,0 1,0 6,0 11,0 16,0

United States

Japan

Russia

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

-4,0 1,0 6,0 11,0 16,0

Japan’s economy crumbled in first quarter due to strong

effect of Tsunami leading to fall in its GDP by 8.6%

annually, along with a reduction in its foreign market by

29 % and domestic market by 7% approx. on q--o-q basis

United States export of goods and

services decelerated by approx 4.5% on q-

o-q , as Tsunami in Japan majorly

affected the trade between the countries

United States

Russia’s GDP grew by 4.7% on q-o-q,

benefiting from the rise in the prices of oil

and natural gas

Russia



AGENDA

Summary

Index



Appendix



World trade is expected to grow in Q2 2011 due to rise in Japan’s imports; at

the same time shifting its exports with the competitor nations

Sources: Capgemini Analysis, Stats.oecd.org, 2010, Quarterly Economic Forecast-TD Economics, Logest Forecast

There is an improvement in the global trade levels though the pace was slower than expected because of the

fear of a sovereign debt crisis in Eurozone and inflation in developing countries.

Total trade (Q2 2011) - top 23 countries (USD bn) KEY RISK

N-threat in Japan could have an impact on

global scale

Geopolitical instability and sovereign debt

challenges in Europe could be the key risks to

the outlook

Inflation in emerging markets could affect its

robust growth

Ongoing massive U.S. fiscal imbalances also

run the risk of creating financial market

instability



AGENDA

Summary

Index



Appendix



Brazil’s foreign trade levels have increased, continuing its

dependency on the US for more than one fourth of its total foreign trade

Sources: Capgemini Analysis, Stats.oecd.org, Goldmansachs.com, “Dreaming With BRICs”, 2003

Brazil GDP growth – Projected vs. Actual Foreign Trade Vs Domestic Market

At current growth levels, Brazil has crossed 2023 GDP levels as per projections

Brazil’s foreign trade has been approx. 9-17% of its domestic

consumption over the past decade

Brazil’s Top 10 Trading Partner Countries

US, Germany and Japan

represents more than 50%

of Brazil's total trade

Change in economic

environment / trade policies

of top trading partners may

impact Brazil’s trade growth

Country

USA

Germany

Japan

Korea

France

Italy

Mexico

Netherlands

Spain

UK

32%

14%

8%

6%

5%

5%

4%

4%

4%

31%

14%

8%

7%

5%

5%

5%

4%

3%

4% 5%

Q1 2010 Q1 2011

(Billion USD)



Russia continues to depend on the Germany for more than one

fourth of its total foreign trade


Russia GDP growth – Projected vs. Actual Foreign Trade Vs Domestic Market

At current growth levels, Russia

has crossed 2011 GDP levels as

per projections

Russia was worst hit from crisis

amongst the BRIC nations

Russia’s foreign trade which was approx. half of its domestic consumption in 2000,

is now 1/4th of the domestic consumption and has gradually decreased over the past decade

Russia’s Top 10 Trading Partner Countries

Germany alone constitutes

1/4th of Russia’s total trade

and more than 3/4th of its

exports consisting of oil,

natural gas, metals & timber

Change in trade policies of

European Union may impact

Russia’s trade growth

because of its high

dependence on European

economies

Country

Germany

Italy

Netherlands

United States

Poland

France

Japan

Korea

Belgium

UK

24%

10%

8%

8%

8%

8%

6%

5%

5%

Q1 2010 Q1 2011

25%

7%

8%

9%

8%

7%

6%

5%

4%

4% 4%

(Billion USD)



India’s actual GDP growth mirrors projections, while its foreign

trade levels have continually expanded


India GDP growth – Projected vs. Actual Foreign Trade Vs Domestic Market

At current growth levels, India


per projections

India’s foreign trade ration has been gradually increasing and has reached

approx. 1/4th of its domestic consumption over the past decade

India’s Top 10 Trading Partner Countries

US alone constitutes 1/4th

of India’s total trade followed

by Germany and Australia

Change in economic


of USA may impact India’s

trade growth

Q1 2010 Q1 2011Country

USA

Germany

Australia

Korea

UK

Japan

Belgium

France

Italy

Netherlands

23%

11%

9%

9%

8%

7%

7%

6%

5%

25%

12%

8%

9%

8%

6%

7%

5%

4%

4% 4%

(Billion USD)



China has surged ahead of GDP growth projections based on strong

domestic demand, while its foreign trade levels have grown more gradually


China GDP growth – Projected vs. Actual Foreign Trade Vs Domestic Market

At current growth levels, China


per projections

China’s foreign trade has been approx. 7-11% of its domestic consumption over

the past decade

China’s Top 10 Trading Partner Countries

US, Japan and Korea

represent more than 50% of

China's total trade

Change in economic


of top trading partners may

impact China’s trade growth

Q1 2010 Q1 2011Country

USA

Japan

Korea

Germany

Australia

France

UK

Canada

Netherlands

Italy

19%

12%

11%

5%

4%

3%

3%

3%

29%

15%

10%

11%

6%

4%

4%

4%

3%

3% 3%

26%

(Billion USD)



AGENDA

Summary

Index



Appendix



AGENDA

Summary

Index



Appendix

- Country Profiles

- Methodology & Base Data Files



China’s low-cost manufacturing capabilities work well especially for

its import and export trade; the country is also well connected to

international markets through its vast port facilities

A rise in wages led China move up the manufacturing value chain.

The Chinese economy grew by 4.8% with rise in its domestic market

by 4.9% and foreign market by 1.3% on q-o-q basis

The Total Trade volume has increased marginally by 3% in

comparison with Q4

Country profile – China

Sources: Capgemini Analysis, Stats.oecd.org, Delloit Global Economic Outlook Q1 2011, economywatch.com , Logest forecast

General information Key Trade-related Trends / Facts

Description Values

GDP 1887 Billions USD

GDP Growth (Q-o-Q) 4.80%

Population 1341 Million

GDP per Capita (2010) 7,518 USD

RANK 1

Gross Domestic Product Total Trade Domestic & Export Market



One of the biggest economies in the world, the US has good quality

infrastructure, quality transport infrastructure and efficient custom

administration

US economy continued with the public sector’s troubled balance

sheets, a weak job market, rising energy costs, and declining home

prices in the Q1 2011

Stimulatory fiscal and monetary policies in US are beginning to take

effect after a year of sluggish growth and high unemployment.

Country profile – United States

Sources: Capgemini Analysis, Stats.oecd.org, Deloitte Global Economic Outlook Q1 2011, economywatch.com , Logest forecast


Description Values


GDP Growth (Q-o-Q) 1.73 %



RANK 2




The German economy is heavily export-oriented economy

The outlook for Germany’s traditionally weak private consumption is

good in light of highly favorable labor market conditions, rising real

wages, still-moderate inflationary pressures and buoyant consumer

confidence.

Germany’s GDP grew by 1.5 % in Q1 due to rise in domestic market

by 2.3% on q-o-q basis

Country profile – Germany

Sources: Capgemini Analysis, Stats.oecd.org, 2010, economywatch.com, Logest forecast


Description Values





RANK 3




The Netherlands which depends heavily on foreign trade owns an

outstanding transport Infrastructure, with Rotterdam being one of the

world’s best seaports, enhancing the country’s connectivity to rest of

the world

In Q1, its GDP has rose by 1.71% due to growth in the Domestic

Consumption

The total trade volume rose by 4% in Q1 due to increase in its export

imports by 4% each on q-o-q basis

Country profile – The Netherlands

Sources: Capgemini Analysis, Stats.oecd.org, 2010., economywatch.com, Logest forecast


Description Values





RANK 4




France leads a southern Euro coalition including the Mediterranean

States. It has a large and diverse industrial base. Economic growth

rates in France have been steady for decades due to conservative

planning of the economy

French GDP grew by 1.61% with rise in its total trade volume by 2%

on q-o-q basis

While domestic demand continues to strengthen in Q1 2011, the

push from its exports faded significantly

Country profile – France

Sources: Capgemini Analysis, Stats.oecd.org, 2010, Deloitte Global Economic Outlook Q1 2011, economywatch.com, Logest forecast


Description Values





RANK 5




The UK economy continued to expand though at a slower growth

rate as cuts in government spending ripple through the economy

In Q1 UK economy grew by 1.69% with an expansion of monetary

policy, strong export demand, a weak pound, and increased

business investment.

With consumers still clutching tightly onto their cash reserves, the

scope for a strong recovery in domestic demand appears limited

Country profile – United Kingdom

Sources: Capgemini Analysis, Cia.gov, Stats.oecd.org, 2010, economywatch.com, Logest forecast


Description Values





RANK 6




Italy has strong business clusters, producing goods high in value

chain using latest processes & technology, but the structural

weaknesses in the economy increases business costs and

undermines investor confidence

Italian economy marginally grew by 1.39% as the total trade growth

rate fell from 9% in Q4 2010 to 3% in Q1 2011

Italy’s growth is depends on its export to gain share in foreign

markets and consumers to loosen the purse strings

Country profile – Italy

Sources: Capgemini Analysis, Stats.oecd.org, 2010, www.marketresearch.com/product/display.asp?productid=6066765, economywatch.com , Logest forecast


Description Values





RANK 7




An extremely competitive education system and a highly skilled and

motivated workforce are two key factors driving this knowledge

economy

South Korea relies largely upon exports to fuel the growth of its

economy and in first quarter of 2011 its exports of goods & services

reduced by 0.3% affecting to its GDP’s growth

In recent years, Korea's economy moved away from the centrally

planned, government-directed investment model toward a more

market-oriented one

Country profile – Korea

Sources: Capgemini Analysis, Stats.oecd.org, economywatch.com, Logest forecast


Description Values





RANK 8




Its economy is highly efficient and competitive in areas linked to

international trade, but productivity is far lower in protected areas

such as agriculture, distribution, and services

Japan’s economy crumbled in first quarter due to strong effect of

Tsunami leading to fall in its GDP by 8.6% annually, along with a

reduction in its foreign market by 29 % and domestic market by 7%

approx. on Q-o-Q basis

Japan’s export sector also faced headwinds due to waning demand

and increased competition from other Asia Pacific producers.

Country profile – Japan

Sources: Capgemini Analysis, Stats.oecd.org, Deloitte Global Economic Outlook Q1 2011, economywatch.com, Logest forecast


Description Values


GDP Growth (Q-o-Q) -7.91 %



RANK 9




Belgium is poor in its natural resources, it imports raw materials in

great quantity and processes them largely for export

Belgium GDP rose by 1.73% with an increase in its domestic market

by 2.6% and export market by 1.6% on q-o-q basis

Belgium’s total trade volume grew marginally by 3% due to increase

in its exports and imports by 3% each on q-o-q basis

Country profile – Belgium



Description Values





RANK 10




Canada has high availability & quality of transport infrastructure as

well as highly efficient markets but is highly dependent on the United

States as a market, with 3/4th of its exports to US

Canadian economy grew marginally by just 1.8% due to rise in its

domestic market size by 2.7% on q-o-q basis

Total Trade volume grew by 2% as stronger US growth provided a

temporary lift to Canada's exports

Country profile – Canada

Sources: Capgemini Analysis, Stats.oecd.org, Global Economic Outlook Q1 2011, capital economics, economywatch.com, Logest forecast


Description Values





RANK 11




Russia remains over-dependent on oil as high energy prices may

help in the short term but its long-term growth will depend on

stimulating investment in non-commodity industries and utilizing the

abundance of highly-skilled labor.

Russian GDP rose by 4.72% with an increase in its domestic market

by 5.5% and export market by 3%

Russia’s total trade volume rose by 4% due to increase in its export

of goods by 4% and imports of goods by 5%

Country profile – Russian Federation



Description Values





RANK 12




Mexico has an export-oriented economy, more than 90% of Mexican

trade is under free trade agreements (FTAs) with more than 40

countries

Mexico’s exports saw a 3% q-o-q increase in growth rate as US

consumer and industrial demand being the main drivers of its

exports

Mexico’s economy further grew by 2.66%, supported by a recovering

export outlook and an increase in its domestic demand

Country profile – Mexico

Sources: Capgemini Analysis, Stats.oecd.org, 2010, Global Economic Outlook Q1 2011, capital economics, economywatch.com, Logest forecast


Description Values





RANK 13




Spain, the fourth-largest economy in the euro zone and EU accounts

for 70% of Spain's exports

The Spanish economy grew by 1.82% supported by various

government initiative though it is still laboring under a 20%

unemployment rate

A decline in its trade growth probably relates to the growing

economic imbalance in euro zone

Country profile – Spain



Description Values





RANK 14




Services are the major source of economic growth, accounting for

more than half of India's output with less than one third of its labor

force

The outlook on the Indian economy is positive due to increase in its

trade volume by 6% on q-o-q basis

India’s GDP grew by 4.3 % in Q1, as the manufacturing sector is

firing on all cylinders due to strong domestic demand and improving

exports

Country profile – India



Description Values





RANK 15




To promote trade, Brazil has a simple and transparent tariff structure

and as a step towards liberalization, Brazil has signed Free Trade

Agreements with developing economies to remove dependence

Rapid GDP growth and rising global commodity prices have spurred

higher than desirable inflation in Brazil

Brazil’s economy is rapidly growing, as Total Trade volume grew by

5% due to increase in its export by 5% and imports by 6%

Country profile – Brazil



Description Values





RANK 16




Australia has transparent border administration and transport but its

regulatory environment promotes intense domestic competition

along with high domestic and foreign market barriers

Australia’s GDP rose by 2.88%, along with rise in its domestic and

foreign market by 1% each on q-o-q basis

Country profile – Australia



Description Values





RANK 17




Unlike its Central European peers, domestic demand has driven

Poland’s economic rebound in 2010 and will continue to be the main

growth engine in 2011.

Ongoing fiscal deterioration in Poland and external dynamics,

particularly in the eurozone, pose the main risks to the growth

outlook

Poland’s Total Trade expanded by 5% due to rise in its export by 5%

Poland’s GDP rose by 2.90%, along with rise in its domestic market

size by 3% on q-o-q basis

Country profile – Poland



Description Values





RANK 18




Switzerland has stable modern market economy with low

unemployment, a highly skilled labor force, and a per capita GDP

among the highest in the world

The Swiss economy has been experiencing a strong recovery, as its

strong domestic economy was supported with growth in foreign

market size

The Total Trade volume grew marginally by 3% due to rise in its

export by 4%

Country profile – Switzerland



Description Values





RANK 19




Swedish GDP grew by 1.87% in Q1 2011 due to increase in its

domestic demand and consumer spending, inventory investments

and declining unemployment

Due to slowdown in both exports and imports growth, the Total

Trade volume marginally rose by 3%

Country profile – Sweden



Description Values





RANK 20




Austria’s GDP rose marginally by 1.77%, along with rise in its

domestic market size by 2% on q-o-q basis

Austria’s Total Trade growth grew by approx. 3% on q-o-q basis, as

the volume for its Imports export of goods rose by 3% each

Country profile – Austria



Description Values





RANK 21




The Czech Republic is a highly export-oriented economy and its

fortunes are largely tied to the economies of its key trade partners,

particularly Germany

Czech Republic’s GDP rose by only 2.08%, as it’s Total Trade grew

by 4% on q-o-q basis

Country profile – Czech Republic



Description Values

GDP 53 Billions USD




RANK 22




The country is highly dependent on the petroleum sector, which

accounts for nearly half of exports

Economic output is struggling due to sluggish external demand and

weak competitiveness

GDP growth is 2.31% in Q1, along with rise in its total trade volume

by 3% due to private sector spending remaining as a main source of

growth in the Norwegian economy

Country profile – Norway



Description Values





RANK 23




AGENDA

Summary

Index



Appendix

- Country Profiles

- Methodology & Base Data Files



Appendix – Global Trade Index – Methodology and Data Sheets

Methodology: Two pronged approach encompassing trade and market related parameters is used to calculate the Index

Trade related parameters

Market related parameters

Global Trade Index

Base Data Files



While predicting the Global trade index, we follow the following steps as mentioned below:

a. LOGEST Calculation:

a. Apply LOGEST Formula (=Logest (Historical Data Range)-1) to the historical data of trade, GDP, Domestic

and foreign market, until the latest available quarter

b. From the derived LOGEST value, predict the next quarter data by multiplying it with the previous quarter

and adding the factor into the previous quarter data

b. Adjustment Factor Calculation:

a. Calculate the variance of prediction against the actual for last 4 quarters and calculate the average

variance

b. Multiply the average variance % with the predicted figures to get the adjusted forecasting

c. Finally, predict the Global trade index based on the adjusted figures

Appendix ‒ Global Trade Index Forecasting Methodology

METHODOLOGY Used:



Variance between Actual vs. Predicted values as per LOGEST method

High level of accuracy observed in 3 Quarters prediction done using LOGEST method, showing variance

between 0 to 5% from the actual which is within the forecast tolerance level of + or -10%.

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Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

Copyright © 2011 Capgemini. All rights reserved.

Prepared and edited by:

Gaurav Bhosle, Capgemini Consulting India

Roy Lenders, Capgemini Consulting Netherlands

global trade flow index - capgemini...global trade flow index –q1 2011 edition tsunami in japan...

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