Capgemini Consulting Global Trade Flow Index Reveals Slowdown in Worldwide Trade Growth in Q1 2010

| Press release
Paris, July 22, 2010 - Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, today announced figures from the third edition of its Global Trade Flow Index*.

The report tracks trade by quarter based on the latest available official data from national agencies of the 23 Top countries in the global trade arena:

• Figures revealed growth of 5 percent in worldwide trade in Q1 2010, slower than over the previous quarter (8.5 percent), as fear of a sovereign debt crisis affected European economies and the volcanic eruption in Iceland caused considerable trade disruption.
• The largest rise in trade volumes was in the BRIC countries (Brazil, Russia, India and China) where export volumes rose by as much as 15 percent as compared to the previous quarter (Q4 2009) as governments’ liberalization initiatives and industrial capacity improved.

Trade growth remained strongest in Asia and Latin America in Q1 2010 (combined total trade growth of 12.80 percent compared to Q4 2009), but slightly decreased in the euro area (-0.23 percent compared to Q4 2009) due to high unemployment and substantial fiscal deficits. The trade in European economies in the first quarter of 2010 was negatively affected by the fall in the value of the euro and the rising uncertainty surrounding the Greek bailout. Trade volumes in the US increased by 4.6% in Q1 2010 and trade deficit widened as the value of crude imports hit the highest level in the last 18 months, with barrel prices at an average of almost $79/barrel.

Global Trade Flow Index spotlight: Growth in BRIC economies

The third edition of Capgemini Consulting Global Trade Flow Index figures provide further evidence of the incredible growth of the BRIC economies. All four of the BRIC countries have far outpaced original growth projections. In the first quarter of 2010 alone compared with Q4 2009, Brazil (15 percent), Russia (9.1 percent), India (16 percent) and China (14.9 percent) reported total trade growth levels that far exceeded the worldwide average. These growth levels should be noted in the following context:

• Brazil’s economic growth surged in Q1 2010 on strong domestic demand, witnessing a growth rate of 8 percent (compared to Q4 2009), while its export market continued to struggle to reach positive growth.
• India’s economy grew 8.3 percent quarter-on-quarter, indicating strong economic growth, driven in particular by a huge growth in the export of goods and services.
• Despite slowing domestic demand, Russia’s total trade growth came from a boom in certain key sector exports like metal & mining, with ferrous metal exports increasing by 26.7 percent and iron ore concentrate exports increasing by 47.5 percent over the previous quarter
• Chinese export of goods gained momentum in Q1 2010 (+13 percent compared to Q4 2009), while the country is still to make progress toward rebalancing a more consumer-oriented economy.

“The BRIC economies are the biggest driver of global trade flows, with each country having grown stronger than predicted BRIC growth projections. Actual figures for 2009 equate to the same growth levels as originally projected for as much as fourteen years later in Brazil,” said Roy Lenders, Vice President Supply Chain Management at Capgemini Consulting.

The US, Germany, Australia and Korea in particular enjoy a very healthy trade position with the BRIC economies overall. Japan is also a major trading partner for Brazil and China, but lags behind somewhat on its trade with Russia and India. France, the Netherlands and UK also lag overall on their levels of trade with the BRIC countries.

Capgemini Consulting predicts that when final figures for Q2 2010 are collated, we would see a rebound in world trade. With the recent weakness in the euro, fuelled by the Greek debt crisis, European nations may notably struggle to accelerate their exports. In addition, with increasing imports and flow of money within the Chinese economy through government stimulus, China may begin to face inflationary risk that may impact its competitiveness through an increase in its export prices.

See the press release for an extract of the ranking with the 13 leading countries.

*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. The Index tracks trade by quarter, based on the latest available official data from national agencies. The latest version of the Index covers the period January to March 2010. The Index tracks 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 index will be updated and published each quarter to reflect developments in global trade flows. Because of the time lag in the availability of official trade data, data from Q1 2010 is used to publish the indicator at the end of Q2 2010. In addition, each Index also publicizes an early indicator for the subsequent quarter based on data that is already published at that moment in time by some of the 23 countries.

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:

Global Trade Flow Index Q1 2010

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2009 global revenues of EUR 8.4 billion and employs 90,000 people worldwide.

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