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November 19, 2017
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Global Trade and Container Flow Index: Global economy in a holding pattern

Comment
Gains in mature economies have not been significant enough to offset losses in emerging countries.

Global economic growth is expected to remain in a holding pattern in 2016. Gains in mature economies are not significant enough to offset losses in emerging sectors, creating an environment where a mix of positive and negative conditions balance each other. These conditions include a steadily strengthening U.S. economy and historically low oil prices, combined with a tentative recovery of the Chinese economy and low commodity prices.

Mature economies were led by the U.S., which expanded by 2.1 percent in Q3/2015 and is expected to gain momentum in 2016 thanks to steady increases in the job market and private consumption. Not all trend forecasts are positive, however; accelerating labor costs and rising interest rates could hold back U.S. companies' profits. After experiencing marginal growth in Q3/2015, the eurozone is expected to grow in 2016 as the economy benefits from strong domestic demand and low oil prices. The highest growth will be in Spain, while political uncertainty in Portugal and Greece are cause for concern.

Article Figures
[Figure 1] Container throughput vs. total trade
[Figure 1] Container throughput vs. total trade Enlarge this image
[Figure 2] Capgemini Consulting Global Trade Flow Index
[Figure 2] Capgemini Consulting Global Trade Flow Index Enlarge this image

Among emerging economies, China's long-term focus has shifted from manufacturing low-priced goods to selling domestic services. Meanwhile, Chinese exports will precipitate a deflationary period of decelerating growth in 2016. Brazil's economy, which contracted at the fastest pace in over a decade, shows no signs of recovery. High inflation, low commodity prices, and political unrest are behind that contraction. Lastly, South Africa's exports have tumbled, as exports of gold, iron ore, and platinum hit multiyear lows in 2015.

Global container throughput is expected to have grown by 0.72 percent in the fourth quarter, a slight increase over 0.48 in Q3 (see Figure 1). Total trade is expected to have fallen -3.01 percent in Q4 after deteriorating by -0.80 percent in Q3. Following recent trends, both container throughput and total trade are not expected to change widely and will remain flat in Q1.

Dan Albright is a vice president at Capgemini Consulting. Cathy Chinich is a managing consultant at Capgemini Consulting.

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