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Slowdown in global trade growth

World trade has slowed by 3.5 per cent over the last quarter, according to the third edition of the Global Trade Flow Index by Capgemini Consulting. The report tracks trade by quarter based on the latest available official data from national agencies within the top 23 countries in the global trade arena.

The index figures revealed growth of five per cent in worldwide trade in 1Q10, slower than over the previous quarter (8.5 per cent). The largest rise was in Brazil, Russia, India and China (the BRIC countries), where export volumes rose by as much as 15 per cent as compared to the previous quarter (4Q09) as governments’ liberalisation initiatives and industrial capacity improved.

All four countries have far outpaced original growth projections. In the first quarter of 2010 alone compared with 4Q09, Brazil (15 per cent), Russia (9.1 per cent), India (16 per cent) and China (14.9 per cent) reported total trade growth levels that far exceeded the worldwide average.

“The BRIC economies are the biggest driver of global trade flows, with each country having grown stronger than predicted,” said Roy Lenders, vice-president supply chain management at Capgemini Consulting. “Actual figures for 2009 equate to the same growth levels as originally projected for as much as 14 years later in Brazil.”

Capgemini predicts that 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 might have an impact on its competitiveness through an increase in its export prices.

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