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Japan's problems affect global trade growth

Global trade was flat in Quarter 1 of 2011 due to belt-tightening by governments in the world's major economies and the effects of the earthquake and tsunami in Japan.

Supply Chain Quarterly Staff
By Supply Chain Quarterly StaffJun 20, 2011
Supply Chain Quarterly Staff
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Global trade was flat in Quarter 1 of 2011 due to belt-tightening by governments in the world's major economies and the effects of the earthquake and tsunami in Japan. The impact of that disaster led to a steep, 8.6 percent annual drop in Japan's gross domestic product. These events are expected to have a cascading effect on Japan's trading partners in the near term. For example, U.S. exports of goods and services in Q1 decelerated by some 4.5 percent quarter-over-quarter due to Japan-related trade disruptions.

Elsewhere in Asia, China's government focused its efforts on coping with inflation while maintaining export competitiveness. The conflict between these forces result- ed in a marginal increase of 3 percent in China's total trade volume when compared to Q4/2010; nevertheless China retained its leadership position in the Capgemini Consulting Global Trade Flow Index (Figure 1). Meanwhile, U.S. growth continued to be affected by the public sector's troubled balance sheets, a weak job mar- ket recovery, rising energy costs, and declining home prices.

Article Figures
[Figure 1] CapGemini Consulting Global Trade Flow Index


[Figure 1] CapGemini Consulting Global Trade Flow IndexEnlarge this image
[Figure 2] Container throughput vs. growth in trade


[Figure 2] Container throughput vs. growth in tradeEnlarge this image

In the Eurozone, gradual but sustained growth in the core nations was supported by rising consumer spending and the residual effects of stimulus policy. The outlook for the Indian economy also remained positive due to a 6-per- cent quarter-over-quarter increase in trade volume. That rise was stimulated by robust performance in the manu- facturing sector, strong domestic demand, and improving exports.

Container flow volume decreased in the first quarter as global trade experienced significant disruptions and the growth rate fell by approximately 6 percent quarter-over- quarter (Figure 2). World trade is expected to resume growth in Q2 as Japan's imports rise and its export volume shifts to competitor nations. Geopolitical instability and sovereign debt challenges in Europe and inflation in emerging markets continue to pose risks to robust growth. Enduring U.S. fiscal imbalances also remain a risk for finan- cial market stability.

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