Paris, November 28, 2011 – Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, today announced figures from the latest edition of its Global Trade Flow Index*. Capgemini Consulting’s analysis reveals a slight decline in global trade levels quarter-on-quarter (q-o-q) in Q3 2011 (1.3 percent), indicating a downward trend in global trade levels in Q3 2011, heavily impacted by challenging global economic conditions, including a weakened US economy and Eurozone debt crisis. At the same time, local domestic consumption around the world continues to rise, growing by 7.6 percent between Q3 2010 and Q3 2011, suggesting locally produced goods and services are being increasingly favored above imports.

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 an increasing gap between trade levels in mature and emerging markets, with deceleration in import and export growth affecting all the G7 nations. Trade levels in Europe, heavily impacted by the debt crisis in the eurozone and constrained by an appreciating euro, fell by 2 percent in Q3 2011. Similarly, US trade levels also declined by 2 percent q-o-q, with a weak dollar leading to a decline in its foreign market growth and rising commodity prices further reducing its domestic consumption. Japan saw a decline in trade levels of 1.6 percent in Q3 2011, although this follows a reduction of 5.7 percent in Q2 2011, suggesting signs of recovery in the Japanese market following the continued impact of the earthquake and tsunami disaster earlier this year.

In contrast, trade levels in emerging markets were more stable, with both India and China seeing increases of 1.2 percent and 0.4 percent respectively q-o-q. Similarly, Russia saw only a slight reduction in trade levels of 0.26 percent. Overall, GDP in the BRIC countries (Brazil, Russia, India and China) continues to grow and increased by between 2.7 and 3.5 percent in Q3 2011. However, this is not reflected in global trade flow levels which show that exports to mature markets are only declining. This suggests import volumes into these regions are heavily substituted by locally manufactured products and services.

Due to a particularly tough economic climate, we have seen a slight decline in global trade levels this quarter,” said Roy Lenders, Vice President Supply Chain Management at Capgemini Consulting. “However, growing GDP levels in the BRIC markets are not leading to increased global trade, suggesting this local economic growth primarily benefits companies operating locally. For companies looking to benefit from growth in the BRIC countries, local operations should be the preferred way to market.

Looking ahead to Q4 2011, global trade flows are expected to increase, driven largely by the traditional end of year seasonal upswing in trade due to the holidays. However, inflation, caused by high food prices and volatile commodity markets is a key risk for both emerging and developed markets. Ongoing US fiscal imbalances also run the risk of creating instability in financial markets, although the biggest risk to the overall outlook of the global business environment remains the sovereign debt crisis in the eurozone.

APPENDIX – Capgemini Consulting Global Trade Flow Index (extract of the ranking with the 12 leading countries)

Country

RANK
Q3-2011

RANK
Q2-2011

Trade Volume Score
(A)

Q-o-Q Growth Score (B)

Foreign Market Score (C)

Domestic Market Score (D)

Global Trade Index Score*

China

1

2

3.92

3.97

3.95

3.98

15.55

United States

2

1

4.00

3.87

3.89

3.87

15.50

Germany

3

3

3.04

3.88

3.86

3.87

11.77

Japan

4

4

1.73

3.88

3.81

3.84

6.64

France

5

5

1.42

3.86

3.84

3.87

5.47

Netherlands

6

6

1.40

3.90

3.87

3.87

5.42

Italy

7

7

1.22

3.87

3.84

3.86

4.72

United Kingdom

8

8

1.17

3.84

3.87

3.87

4.52

Korea

9

9

1.12

3.92

3.95

3.90

4.39

Belgium

10

10

1.04

3.87

3.85

3.88

4.02

Russian Federation

11

12

0.97

3.94

3.94

4.00

3.82

Canada

12

11

0.97

3.86

3.81

3.89

3.73

Copyright©2011 Capgemini- All rights reserved

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

*About the Capgemini Consulting Global Trade Flow Index
The Capgemini Consulting Global Trade Flow Index is calculated for the 23 countries with the highest levels of global trade, assessing changes in competitive position of each country individually. Q3 2011 figures are based on estimates (methodology detailed below) ahead of official data for all 23 countries being fully available, in December 2011, to give a robust analysis of the quarter’s performance, while Q2 2011 figures are based on official government data.

The Index tracks global trade levels by quarter, based on Capgemini Consulting’s own analysis of trade and market-related parameters from the latest available official data from national agencies. This analysis is performed by applying the LOGEST formula to historical trade, GDP, domestic and foreign market data. As such, there may be a variance between estimated data and actual data of -3 to 6 percent, which is within standard forecast tolerance levels (10 percent).

The index will be updated and published each quarter to reflect developments in global trade flows. The latest version of the Index covers the period July to September 2011. The Index analyses four sub indicators for each country:

  • Total trade, including both imports and exports
  • Q-o-Q growth in trade
  • Foreign markets for goods produced in a country
  • Domestic market

The Capgemini Consulting Global Trade Flow Index is also supported by:

  • Holland International Distribution Council (HIDC)
  • Global Supply Chain Council in China and India
  • Supply Chain Movement
  • Council of Supply Chain Management Professionals’ (CSCMP) Supply Chain Quarterly

A full copy of the report can be downloaded from:
www.capgemini.com/news-and-events/news/capgemini-consulting-global-trade-flow-index-reveals-downward-trend-in-global-trade-levels-in-q3-2011/

Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group, specializing in advising and supporting organizations in transforming their business, from the development of innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting proposes to leading companies and governments a fresh approach which uses innovative methods, technology and the talents of over 3600 consultants worldwide.
For more information: www.capgemini-consulting.com.

About Capgemini
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